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It is a presentation about how to apply Lean Six Sigma(L6S) in Supply Chain Management(SCM).
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Application of Lean Six Sigma (L6S) in Supply Chain Management (SCM) Khaled Soudy Shaker
Total Quality Management (TQM) 1 2 3 People Quality Output Quality System Quality
What is TQM ? • Total Quality Management (TQM) describes a management approach to long-term success through customer satisfaction. In a TQM effort, all members of an organization participate in improving processes, products, services, and the culture in which they work. • Total Quality Management (TQM) is the continual process of detecting and reducing or eliminating errors in manufacturing, streamlining supply chain management, improving the customer experience, and ensuring that employees are up to speed with training. Total quality management aims to hold all parties involved in the production process accountable for the overall quality of the final product or service.
ELEMENTS OF TQM Customer Focused Total Involvement Process Centered Integrated System Systematic Approach Continual Improvement
Customer Focused The customer ultimately determines the level of quality. No matter what an organization does to foster quality improvement—training employees, integrating quality into the design process, or upgrading computers or software—the customer determines whether the efforts were worthwhile. 2. Total Employee Involvement All employees participate in working toward common goals. Total employee commitment can only be obtained after fear has been driven from the workplace, when empowerment has occurred, and when management has provided the proper environment. High-performance work systems integrate continuous improvement efforts with normal business operations. Self-managed work teams are one form of empowerment.
3. Process Centered A fundamental part of TQM is a focus on process thinking. A process is a series of steps that take inputs from suppliers (internal or external) and transforms them into outputs that are delivered to customers (internal or external). The steps required to carry out the process are defined, and performance measures are continuously monitored in order to detect unexpected variation. 4. Integrated system Although an organization may consist of many different functional specialties often organized into vertically structured departments, it is the horizontal processes interconnecting these functions that are the focus of TQM.
5. Strategic and Systematic Approach A critical part of the management of quality is the strategic and systematic approach to achieving an organization’s vision, mission, and goals. This process, called strategic planning or strategic management, includes the formulation of a strategic plan that integrates quality as a core component. 6. Continual improvement A large aspect of TQM is continual process improvement. Continual improvement drives an organization to be both analytical and creative in finding ways to become more competitive and more effective at meeting stakeholder expectations.
Delivers stronger, higher quality products to customers. Results in lower company-wide costs. Minimizes waste throughout the entire production and sale process. Enables a company to become more adaptable. Pros May require substantial financial investment to convert to TQM practices. Often requires conversion to TQM practices over a long period of time. May be met with resistance to change. Requires company-wide buy-in to be successful. Cons Total Quality Management (TQM)
LEAN SIX SIGMA (L6S) INTRODUCTION
What is L6S ? Lean Six Sigma is a team-focused managerial approach that seeks to improve performance by eliminating resource waste and defects. It combines Six Sigma methods and tools with the lean manufacturing philosophy. It strives to eliminate the waste of physical resources, time, effort, and talent while assuring quality in production and organizational processes. Lean Six Sigma teaches that any use of resources that doesn't create value for the end customer is considered a waste and should be eliminated.
Lean Six Sigma (L6S) Kaizen Lean 6 Sigma Focus on People • Focus on System • Focus on Output • Improve People Culture • Improve People Quality • Improve Productiviety • Improve System Efficiency • Minimize Wastes • Minimize Defects • Improve Quality • Minimize Variance Toyota 1990 Motorola 1987 Toyota 1985
1. Kaizen • In 1986, Masaaki Imai released a book with the title: “Kaizen”, the key to Japan’s Competitive Success. Masaaki described the difference in the area of change management between the Western World and Japan. The difference? Kaizen. • Kaizen means “continuous improvement” and is an organized use of common sense to save on spending, to raise quality, to shorten delivery time and to increase customer satisfaction. Kaizen is a culture and not so much a plan of action or a model. There are indeed ways to foster a culture of Kaizen, such as Kaizen events and Gemba Kaizen. Of course, process improvement with Lean Six Sigma contributes to a Kaizen culture. • The kaizen process simply recognizes that small changes now can have huge impacts in the future. Improvements can come from any employee at any time. The idea is that everyone has a stake in the company's success and everyone should strive, at all times, to help make the business model better.
Before After Example of Kaizen
2. Lean • Lean management is an approach to managing an organization that supports the concept of continuous improvement, a long-term approach to work that systematically seeks to achieve small, incremental changes in processes in order to improve efficiency and quality. • The primary purpose of lean management is to produce value for the customer through the optimization of resources and create a steady workflow based on real customer demands. It seeks to eliminate any waste of time, effort or money by identifying each step in a business process and then revising or cutting out steps that do not create value. The philosophy has its roots in manufacturing. • Lean management facilitates shared leadership and responsibility; continuous improvement ensures that every employee contributes to the improvement process. The management method acts as a guide to building a successful and solid organization that is constantly progressing, identifying real problems and resolving them.
Lean management focuses on 3 1 2 Defining value from the standpoint of the end customer. Eliminating all waste in the business processes. Continuously improving all work processes, purposes and people.
3. Six Sigma(6S) • In the 19th century, German mathematician and physicist Carl Fredrich Gauss developed the bell curve. By creating the concept of what a normal distribution looks like, the bell curve became an early tool for finding errors and defects in a process. • In the 1920s, American physicist, engineer and statistician Walter Shewhart expanded on this idea and demonstrated that “sigma imply where a process needs improvement,” according to “The Complete Business Process Handbook: Body of Knowledge From Process Modeling to BPM Vol. 1” by Mark von Rosing, August-Wilhelm Scheer and Henrik von Scheel. • In the 1980s, Motorola brought Six Sigma into the mainstream by using the methodology to create more consistent quality in the company’s products, according to “Six Sigma” by Mikel Harry and Richard Schroeder. • Does it work? Motorola reported in 2006 that the company had saved $17 billion using Six Sigma.
What is Six Sigma ? • Experts credit Shewhart with first developing the idea that any part of process that deviates three sigma from the mean requires improvement. One sigma is one standard deviation. • The Six Sigma methodology calls for bringing operations to a “six sigma” level, which essentially means 3.4 defects for every one million opportunities. The goal is to use continuous process improvement and refine processes until they produce stable and predictable results. • Six Sigma is a data-driven methodology that provides tools and techniques to define and evaluate each step of a process. It provides methods to improve efficiencies in a business structure, improve the quality of the process and increase the bottom-line profit.
Lean Six Sigma is a team-focused managerial approach that seeks to improve performance by eliminating resource waste and defects. It combines Six Sigma methods and tools with the lean manufacturing/lean enterprise philosophy. It strives to eliminate the waste of physical resources, time, effort, and talent while assuring quality in production and organizational processes. • Lean Six Sigma emerged in the 1990s as large U.S. manufacturers attempted to compete with Japan's better-made products. The combination strategy was introduced by Michael George and Robert Lawrence Jr. in their 2002 book Lean Six Sigma: Combining Six Sigma with Lean Speed. • A Lean Six Sigma approach that combines Lean strategy and Six Sigma's tools and techniques highlights processes that are prone to waste, defects, and variation and then reduces them to ensure improvement in a company's operational processes.
Lean Six Sigma vs. Six Sigma • Lean Six Sigma and Six Sigma are two related strategies that can solve process problems. Both can help companies make noteworthy improvements in quality, efficiency, and use of time by analyzing the way their processes function. Both use the DMAIC phases/method. Both are based on creating a problem-solving workplace culture. • However, Six Sigma is focused on reducing defects and process variability to improve process output and quality to meet customer expectations. Lean Six Sigma is focused on reducing or eliminating the wasteful use of resources and defects to improve workflow and create more value for customers. • Lean Six Sigma combines aspects of Six Sigma (such as data analysis) and aspects of the Lean methodology (such as waste-eliminating tools) to improve process flow, maintain continuous improvement, and achieve business goals.
What is Supply Chain Management (SCM) ? Every product or service we use goes through a wide range of operations before it gets into our hands. This is a complete process of Supply Chain Management that allows the complete flow of goods failing to which might affect the groundwork involved in this chain of events may result in an unsatisfactory customer/end-user experience. Supply Chain Management includes all steps necessary to convert raw materials into finished products. SCM is the management of the flow of goods and services. SCM involves streamlining supply-side operations to improve customer value and gain a competitive advantage.
L6S in SCM The optimization of the supply chain is an ongoing challenge. This is as it should be. Businesses today must constantly look for more efficient processes and methods. Lean Six Sigma is a great framework to help you achieve this lean manufacturing goal. It combines the focus on defect prevention of Six Sigma and the emphasis on waste minimization and streamlining provided by Lean thinking. Lean Six Sigma is used by companies all over the world to improve their supply chain test performance.
L6S can help enhance SCM in the following areas:- Perfect Order Fulfillment – This is measured in the percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Six Sigma methodology can help maximize order fulfillment by identifying where possible problems lie, such as outdated planning processes and inefficient execution systems. Lean can then be used to target areas of waste and enhance performance. Reduce Order Fulfillment Cycle Time – A Lean Six Sigma review of the company’s order fulfillment system helps identify problems that need to be addressed. This review will most likely conclude that some obvious improvements are in order. Improvement may require system integration, automated picking, automated shipping planning, automated shipment verification and reduced paperwork. The Six Sigma DMAIC cycle can help improve current processes; DMADV can help implement new processes.
Increase Supply Chain Flexibility – Supply chain performance requires a quick response to changes in supply and demand through the ups and downs of business cycles, as well as during crises. Companies with the most agile supply chains are those that are tailored to the needs of the customer. Establishing critical to quality (CTQ) customer requirements in the Define Phase of Six Sigma helps companies build customer focus and thus flexibility into their supply chains. Zero Errors – Any supply chain that is losing efficiency because of a high error rate in the system is a prime candidate for Lean improvement. The Poka-Yoke or mistake-proofing Lean approach prevents mistakes by forcing the user to do a task one way. For example, lawnmowers now have safety bars that must be engaged before the mower will start. The mower will stop when the safety bar is released.
Implementing the 5S Lean method – Sort out, Set in Order, Shine, Standardize, and Sustain – also reduces errors that interrupt the supply chain efficiency by providing a clean, safe, efficient, and uncluttered environment. • Zero Waste – Lean methodology was created to eliminate waste, which can be defined as activities that don’t add value to the product or customer. Lean helps supply chains function more efficiently by targeting and eliminating non-value added processing: • Over-production – Producing more ahead of demand as the result of a speculative forecast results in high inventory costs. • Transportation – Unneeded movement of materials adds to production cost and cycle time. Lean seeks to eliminate unnecessary transportation. • Non-value added processing – Poor production facility layouts cause additional work that adds no value to the product. Lean simplifies production to make the supply chain operate more efficiently.
Improve Team Member Engagement – Six Sigma allows your team members the freedom to make crucial decisions on issues about the supply chain without consulting superiors. This not only lets you make your team more independent, reducing the number of roadblocks with each decision, but it also creates buy-in for the team members, making them deliver value at a high level.
SUMMARY • Lean Six Sigma strengthens the manufacturing operation in several respects. The emphasis of Lean on eradicating all forms of waste and Six Sigma’s commitment to removing errors helps to create a useful tool to establish continual performance change. • Early improvements can be spectacular, but they appear to tail off after choosing the lesser-hanging fruit. Continued use of Six Sigma, however, will help you chip away from inefficiencies in your supply chain, directly increase operating efficiency and promote long-term commercial development. • By combining these teachings, Lean Six Sigma puts the best of both to work to streamline efficient operations and financial outcomes for all kinds of organizations. • For several years now, Six Sigma and it’s close relative Lean Six Sigma have been effective methodologies for improving supply chain efficiency.
References Shokri, A. (2017). Quantitative analysis of Six Sigma, Lean and Lean Six Sigma research publications in last two decades. International Journal of Quality & Reliability Management. Zhang, Q., Irfan, M., Khattak, M. A. O., Zhu, X., & Hassan, M. (2012). Lean Six Sigma: a literature review. Interdisciplinary Journal of Contemporary research in business, 3(10), 599-605. Chugani, N., Kumar, V., Garza-Reyes, J. A., Rocha-Lona, L., & Upadhyay, A. (2017). Investigating the green impact of Lean, Six Sigma and Lean Six Sigma: A systematic literature review. International Journal of Lean Six Sigma, 8(1), 7-32. Pepper, M. P., & Spedding, T. A. (2010). The evolution of lean Six Sigma. International Journal of Quality & Reliability Management. Taghizadegan, S. (2010). Essentials of lean six sigma. Elsevier. George, M. L., & George, M. (2003). Lean six sigma for service (p. 273). New York: McGraw-Hill.
