Lean Six Sigma: Creating a Robust Supply Chain Process

‘Six Sigma’ is a method which provides an organization to improve the quality of the business process. This helps in increasing the performance of an organization by decreasing the variance of the process. It reduces the defects and increases the profit margin of the organization. ‘Six Sigma’ philosophy mainly works in six steps known as DMAIC — Define, Measure, Analyze, Improve and Control. Several qualitative and quantitative tools have been used for process improvement — Control charts, Failure mode effect analysis (FMEA), Process mapping, Cause and effect analysis, Pareto chart etc. In simple statistics, ‘Six Sigma’ quality can be defined as 3.4 numbers of defects per million opportunities (DPMO).

‘Lean Management’ is an approach of business management in which organization is mainly focusing on continuous improvement for long term benefit. Delivering value from customer perspective and reduce the wastage in the process is the main focus in Lean management. Five basics Lean principles are — Identify the customer and what they value, Map the value stream, Create flow to the customer, Establish pull based on customer demand, Seek continuous improvement.

In today’s era Supply Chain Management has become an essential part for any company to survive in the competitive market. Supply Chain is the management of a channel that starts from procurement of raw materials, then production of the product, logistics and distribution to customer. A typical supply chain consists of supplier of raw material, manufacturer, distributor, retailer and finally the customers.

The continues changes in global market is forcing every firms to improve in their supply chain on regular basis and make it more effective and efficient. The main objective of supply chain is to respond to suppliers demand and to offer a high quality product with minimum cost. Planning, evaluation, improvement and optimization in the supply chains help the firm to grow over a period of time. Lean Six Sigma (LSS) is a method of quality management, which is defined as a continuous improvement process that aims in generating better customer satisfaction and waste reduction in the process. Supply chain management can utilize the quality management concepts as well as the ‘Lean Six Sigma’ tools and continues improvement principles to achieve high levels of customer satisfaction regarding cost, quality and delivery.

A supply chain is a network of activities that link with suppliers, warehouse, factories, stores and customers. This activity not only following the delivery of material, but also the flow of funds, information, and several other services. It is all about integrating the processes and optimizing the efforts of all members of the supply chain to improve quality, responsiveness. The general approaches of supply chain is to achieve the efficient integration of all the entities in order to produce and distribute the right quantities, at the right time, to the right place, so that costs can be minimized without losing any service requirements. To build effective supply chain and to improve business process, the supply chain of a firm must focus on:-

· Integration of cross functional activity between different supply chain components to know the real time connectivity and monitoring the functions.

· Optimization in the key areas of logistics and production by establishing a communication system between supply chain members.

· Use of predictive analytics to determining customer future needs and identifying additional markets.

· Use of automation in the supply chain and logistics activities including manufacturing and distribution to make the process smooth.

· Focusing on increasing on time delivery and JIT abilities of own firm.

Implementation of ‘Lean Six Sigma’ helps the supply chain to become more effective and efficient removing all of those activities that are unnecessary and not required for the operations of the business. The main advantages of implementing Lean Six Sigma in supply chain management operations are:-

· Increase in revenue of the firm by improving the quality of supply chain and by reducing the wastage it helps in decreasing the cost of production of the firm.

· ‘Just in Time’ delivery helps in increasing the efficiency of the supply chain process by reducing the lead time.

· The ‘Continuous Improvement’ process help in the growth and development of the firm by reducing the number of inspections in the entire process.

Integration of Six Sigma with supply chain management can bring benefits such as the DMAIC project discipline, sustainability in the process, a well-established human resources framework etc.

1. Define:- In this stage the business problem along with the goal of the organization as well as customers are identified by keeping those factors in mind which leads better quality of the process. Supply chain strategies are formed in this stage.

2. Measure:- In this stage, the performance of the supply chain process are measured considering all the important parameters.

3. Analyze:- In this process the main cause i.e. the root cause of any fault or defect is analyzed.

4. Improve:- In this stage the identified defects are rectified with a certain extend to improve the process quality.

5. Control:- After the improvement of the process, it is necessary to control the process from any further deviation. Different statistical tools are being used to monitor the process.

Few of the researcher claimed that, only with the help of traditional strategic criteria such as cycle times, lead times, delivery performance, total SCM costs, inventory levels etc , it is difficult to measure, monitor and improve the performance of a Supply chain and its entities. Understanding the voice-of-the-customer (VOC) and the critical customer requirements (CCR) including demand management helps a firm to design better supply chain.

Total Quality Management (TQM) is another important component of Lean Six Sigma. It is also a complementary process of statistical process control (SPC), which uses statistical methods for monitoring and controlling business processes. The basic difference between Six Sigma and TQM is the approach. While TQM is a customer-oriented process and aims for continuous improvement of business operations, Six Sigma focuses on improving quality by reducing the number of defects. So implementation of both this concepts in supply chain management makes the entire process smooth and focusing on delivering quality product to the customer considering the profit margin of the firm.

Lean Six Sigma and Supply Chain Management are similar in terms of focusing on processes and solving customer problems to achieve customer satisfaction and help in profit maximization for the organization. They are the complement of each other and can be integrated together. It helps in faster, efficient and systematic management of supply chain management activities. Implementation of quality management and focusing on continues improvement along with lean six sigma, will improve the performance of the supply chain of any firm.