Question

Explain why lean production and Six Sigma are so important to successful supply chain management?

Answer 1

Lean Six Sigma is a conceptual framework that, when properly implemented, extends far beyond the plant floor and into every aspect of a company’s business. It combines two of today’s most influential trends:

· Improving quality, as measured by eliminating defects and process variation, increasing predictability and consistency, and focusing on those products/processes/services that the customer values most (Six Sigma).

· Reducing waste, as measured by eliminating or drastically reducing unnecessary motion, transportation, inventory, processing, production and defects (Lean).

Organizations are now using Lean Six Sigma to eliminate waste and reduce variance in their supply chains. Lean Six Sigma helps increase efficiency in several ways:

Decreasing Order Fulfillment Time

Using Lean Six Sigma to review the organization’s order fulfillment system helps project team’s spot areas with high degrees of waste and variance. Once identified, inefficiencies in the order fulfillment process can be corrected by reducing paperwork, automating picking and shipping planning, and automating shipment verification. The Six Sigma DMAIC cycle helps enhance an existing order fulfillment process, and DMADV helps create a new process.

Building a Responsive Supply Chain

An organization’s supply chain must be agile and quickly responsive to the changing needs of its customers. Companies that are attuned to their customer’s changing needs have completed a vital first step in creating a supply chain that fulfills these needs. The define phase of Six Sigma requires organizations to measure their progress in terms that customers consider to be critical to quality (CTQ).

Reducing Errors to Zero

Supply chains made inefficiently with high error rates need Lean Six Sigma. Many points in the supply chain can benefit from the Lean technique of Poka-Yoke. This is a mistake-proofing procedure that prevents human error by forcing the user to complete the task correctly. For example, a software enabled drill counts the number of holes drilled into a work piece; a buzzer sounds if the work piece is removed before the correct number of holes has been drilled.

The 5S Lean principle also reduces errors by eliminating the wastes that can cause them. The 5S method stands for Sort out, set in order, Shine, Standardize and Sustain. It helps to create a clean, safe, efficient and uncluttered environment that reduces the odds of human error.

Optimizing Order Fulfillment

Orders are filled to completion when they arrive on time, with full and accurate documentation and no delivery damage. Six Sigma does its part to optimize order fulfillment by spotting problems in the system like an outdated planning processes or inefficient execution. Lean then comes into play to reduce waste and improve order fulfillment.

Reducing Waste

Lean eliminates activities that don’t add value to the customer, a.k.a. waste. Lean eliminates non-value added processing to help supply chains function more efficiently. Lean targets the greatest sources of waste.

• Over-production – Building up a greater inventory that customers demand based on speculative forecasting. This results in high inventory costs.
• Transportation – Moving materials around more than needed causes increased production costs and cycle time.
• Non-value added processing – Additional work that adds no value to the product is frequently caused by a poor production facility layout. When Lean simplifies production, the supply chain operates more efficiently.

Lean Six Sigma helps the companies improve the performance of their supply chains. An efficient supply chain provides a sustainable competitive advantage and increases revenue.