Implementing Lean Six Sigma throughout the Supply Chain: The Comprehensive and Transparent Case Study

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Implementing Lean Six Sigma throughout the Supply Chain: The Comprehensive and Transparent Case Study
By Elizabeth A. Cudney and Rodney Kestle
Implementing Lean Six Sigma throughout the Supply Chain

Contents
Acknowledgments.....................................................................xi
Authors....................................................................................xiii
1 Introduction......................................................................... 1
How To Use the CD...........................................................................2
CD Instructions............................................................................2
2 Lean Six Sigma Overview..................................................... 5
3 Case Study Introduction..................................................... 11
4 Define Phase...................................................................... 15
Introduction...................................................................................... 15
Midwest Logistics, Lean Six Sigma Core Team......................... 16
Develop Initial Documents.............................................................. 19
Project Charter...........................................................................20
Supplier–Input–Process–Output–Customer (SIPOC)................25
Identify Stakeholders and Develop Communication Plan...............28
Communications Strategy List...................................................32
Perform Initial VOC and Identify CTS............................................. 35
Select the Team and Launch the Project..........................................39
Midwest Logistics, Lean Six Sigma Team Additions.................40
Create Responsibility Matrix (RASIC)........................................41
Create Project Plan............................................................................41
5 Measure Phase.................................................................... 55
Introduction...................................................................................... 55
Define the Current Process..............................................................56
Process Mapping........................................................................64
Data Collection Plan, Metrics, and Operational Definitions....84
Create a Baseline.......................................................................97
Define the Detailed Voice of the Customer (VOC)....................... 101
Interview Event........................................................................ 101
Brainstorm Needs.................................................................... 104
Affinity Diagrams.................................................................... 105
Translate Needs to CTQ.......................................................... 108
Survey Customers/Stakeholders.............................................. 115
Customer Needs Map.............................................................. 116
Quality Function Deployment (QFD)..................................... 138
Define the Voice of the Process (VOP) and Current
Performance.................................................................................... 139
Benchmarking......................................................................... 141
Check Sheets............................................................................ 141
Plots, Capability, and Statistics................................................ 148
Pareto Charts, Time Series, Histograms.................................. 149
Validate Measurement System........................................................ 159
Define the Cost of Poor Quality (COPQ) and Cost/Benefit......... 164
Moving to the Analyze Phase........................................................ 164
6 Analyze Phase...................................................................167
Introduction.................................................................................... 167
Develop Cause-and-Effect Relationships........................................ 169
Test for Normality Exercise..................................................... 172
Process Analysis and 8 Wastes................................................ 173
5S.............................................................................................. 176
Failure Mode and Effects Analysis.......................................... 177
Determine and Validate Root Causes............................................ 181
Regression Analysis................................................................. 196
Hypothesis Test....................................................................... 196
Develop Process Capability............................................................ 196
Process Capability.................................................................... 199
7 Improve Phase.................................................................. 207
Introduction....................................................................................207
Identify Breakthrough and Select Practical Approaches...............208
Action (Pilot) Plan.................................................................... 210
Perform Cost/Benefit Analysis....................................................... 211
Design Future State........................................................................ 212
Establish Performance Targets and Project Scorecard................... 214
Gain Approval to Implement, Then Implement............................222
Train and Execute...........................................................................222
8 Control Phase................................................................... 231
Introduction.................................................................................... 231
Measure Results and Manage Change........................................... 232
Report Scorecard Data and Create Process Control Plan.............. 235
FMEA and Control Plan........................................................... 235
Process Capability/DPMO....................................................... 237
Apply P-D-C-A Process..................................................................240
Identify Replication Opportunities.................................................242
Develop Future Plans.....................................................................244
9 Conclusions...................................................................... 247
Lean Six Sigma Glossary........................................................ 249

Lean Six Sigma Overview
Lean and Six Sigma (6σ) are powerful philosophies backed by several tools for improving quality, productivity, profitability, and market competitiveness for any corporation. Lean philosophies focus on eliminating waste and improving flow using various proven methods initially pioneered by the Toyota Manufacturing Company under the banner of the Toyota Production System (TPS). Six Sigma is focused on reducing process variation using problem-solving and statistical tools. It was first perfected by the Motorola Company and most notably deployed by Jack Welch during his tenure as CEO of General Electric (GE). Both methods, when used independently, can produce positive results for the user, but when applied in a holistic manner, they complement each other well and provide more dramatic gains.

Again, Lean emphasizes the elimination of waste and creation of flow within an enterprise. Lean’s primary focus is on the customer, to address value-added (VA) and non-value-added (NVA) tasks. Value-added tasks are the only operations for which the customer is ready or willing to pay. Typically, these are processes that transform the product or service based on customer requirements. The idea of creating flow in Lean is to deliver products and services just in time (JIT), in the right amounts, and at the right quality levels at the right place. This necessitates that products and services be produced and delivered only when a pull is exerted by the customer through a signal in the form of a purchase. A well-designed Lean system allows for an immediate and effective response to fluctuating customer demands and requirements. Lean tools that are most commonly used to eliminate waste and achieve flow are value-stream mapping (VSM), standard work, 5S (sort, set in order, shine, standardize, sustain), single-minute exchange of dies (SMED), and visual management.

Like Lean, Six Sigma is also a customer-focused improvement strategy. At the core of the method, Six Sigma utilizes a discipline that strives to minimize defects and variation of critical variables toward an achievement of 3.4 defects per million opportunities in product design, production, and administrative processes. Customer satisfaction and cost reduction can be realized by reducing variation in processes that produce the products and services that they use. While focused on reducing variation, the Six Sigma methodology uses a well-defined problemsolving approach with the application of statistical tools. The methodology uses five phases: Define–Measure– Analyze–Improve–Control (DMAIC). The purpose of the five phases is to define the problem, measure the process performance, analyze the process for root causes, improve the process by eliminating or reducing root causes, and control the improved process to hold the gains.

The goals of Six Sigma include developing a worldclass culture, developing leaders, and supporting long-range objectives. There are numerous benefits of Six Sigma, including a stronger knowledge of products and processes, a reduction in defects, an increased customer satisfaction level that generates business growth and improves profitability, an increase in communication and teamwork, and a common set of tools.

Six Sigma is commonly credited to Bill Smith, an engineer at Motorola, who coined the term in 1984. The concept was originally developed as a safety margin of 50% in design for product-performance specifications. This safety margin was equivalent to a Six Sigma level of capability. Since its first introduction, Six Sigma has continued to evolve over time and has been adopted throughout the world as a standard business practice.

When Lean or Six Sigma is deployed independently, only a few companies have shown strong improvements. This book demonstrates a synergistic merger of the tools in a Lean Six Sigma case study to be used for training or course instruction. By using the Six Sigma tool of DMAIC, the two methods can be merged based on the time of implementation. An integrated approach to process improvement using Lean and Six Sigma principles is required, since both Lean and Six Sigma represent more of a cultural change in the way that a company does business rather than one-time tools to be used for quick improvement. Without a model to allow merging of the tools, the proper understanding of the tools may be lost.


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