Operational Excellence: Using Lean Six Sigma to Translate Customer Value through Global Supply Chains by James William Martin

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Operational Excellence: Using Lean Six Sigma to Translate Customer Value through Global Supply Chains
by James William Martin
Operational Excellence: Using Lean Six Sigma to Translate Customer Value through Global Supply Chains

Contents
Foreword...................................................................................................... xiii
Introduction...................................................................................................xv
About the Author..........................................................................................xxi
Part 1 Adapting Strategies for Global
Competitiveness
1 Enhancing Global Competitiveness........................................................3
Overview......................................................................................................3
Current Trends in Operations Management.................................................4
How the Competitive Environment Transforms Operational Strategy.........5
Developing Adapting Strategies to Enhance Operational Capability..........10
Linking Operational Strategy to Strategic Goals and Objectives................12
Global Metrics and Operational Maturity..................................................15
Internal and External Benchmarking..........................................................22
Summary....................................................................................................25
Suggested Reading......................................................................................25
2 Organizational Change in a Competitive World..................................27
Overview....................................................................................................27
What Is Organizational Change?................................................................29
Understanding Organizational Values........................................................30
Building Organizational Capability............................................................30
Managing Organizational Change..............................................................32
Integrating Operational Initiatives..............................................................32
Deploying Initiatives across an Organization.........................................33
Building High-Performance Teams........................................................36
Deploying Continuous Improvement Teams..........................................38
Deploying Lean Systems....................................................................... 40
Deploying Six Sigma Quality................................................................ 42
Integrating and Fine-Tuning Initiatives..................................................45
Deploying Design Excellence................................................................ 46
Deploying Information Technology Excellence......................................49
Deploying Customer Excellence.............................................................51
Summary....................................................................................................53
Suggested Reading......................................................................................55
3 Understanding the Voice of the Customer (VOC).................................57
Overview....................................................................................................57
Marketing’s Influence on Internal Operations............................................59
Important Marketing Activities..................................................................59
Estimating New Product or Service Demand.............................................61
Using Marketing Information to Estimate Sales.........................................63
Understanding Customer Needs and Value................................................69
Market Segmentation.................................................................................71
Measuring the VOC...................................................................................72
Translating the VOC Using Quality Function Deployment.......................75
Exchanging Value in a Competitive World................................................ 77
Summary....................................................................................................78
Suggested Readings....................................................................................80
Part 2 Translating Customer Value
Elements into Products, Services,
and Workflow Systems
4 Designing for Customer Value Using Design for Six Sigma
(DFSS)...................................................................................................83
Overview....................................................................................................83
Major Objectives of the Design Process......................................................88
Concurrent Engineering Methods in Design............................................. 90
CE Benefits.................................................................................................93
Ten Key Steps to Implement CE.................................................................93
Applying Design for Manufacturing Methods............................................95
Ten Key Steps to Implement DFM.............................................................96
Key Tasks of the Design Process.................................................................97
Concept Phase........................................................................................98
Design Phase........................................................................................100
Target Costing.....................................................................................103
Prototype Phase....................................................................................105
Pilot Phase............................................................................................106
Launch Phase.......................................................................................107
How the Product Life Cycle Impacts the Design Process..........................107
Risk Assessment........................................................................................107
Design for Six Sigma (DFSS).................................................................... 110
Overview of the Five DFSS Phases....................................................... 111
Identify............................................................................................113
Design.............................................................................................113
Optimize......................................................................................... 117
Validate...........................................................................................120
Incorporate......................................................................................121
Design Standards for Global Competitiveness..........................................121
Impact of Mass Customization on Design................................................123
Outsourcing Design Workflows................................................................124
Summary..................................................................................................125
Suggested Reading....................................................................................126
5 Using Lean Methods to Design for Process Excellence.......................127
Overview..................................................................................................127
Designing Process Workflows...................................................................136
Workflow Modeling..................................................................................138
Simulation................................................................................................141
Queuing Analysis.....................................................................................146
Linear Programming................................................................................ 153
Process Failure-Mode-and-Effects-Analysis (PFMEA).............................. 157
How to Improve the Work Environment.................................................. 157
How to Develop High-Performance Work Teams.................................... 159
How to Simplify and Standardize Work................................................... 161
How to Develop an Effective Training Program.......................................164
Summary..................................................................................................165
Suggested Reading....................................................................................166
6 Making Value Flow through a Process................................................167
Overview..................................................................................................167
What Is a Lean System?............................................................................169
Mapping and Analyzing Customer Value.................................................172
Balancing Flow through the System.......................................................... 174
Improving Operational Efficiency.............................................................177
Summary..................................................................................................187
Suggested Reading....................................................................................190
7 Measuring and Improving Productivity..............................................191
Overview.................................................................................................. 191
Creating Shareholder Value......................................................................194
Aligning Performance Metrics with Strategic Objectives..........................196
How to Improve Productivity...................................................................198
Aligning Operational Improvements with Strategy...................................209
Summary..................................................................................................216
Suggested Reading....................................................................................217
Part 3 Op erations Planning, Management,
and Control
8 Capturing Customer Demand.............................................................221
Overview..................................................................................................221
What Is Demand Management?...............................................................225
How to Build Quantitative Forecasting Models........................................236
Time Series Models...................................................................................237
Trend Plot.................................................................................................241
Decomposition Models.............................................................................242
Moving Average Models...........................................................................245
Simple Exponential Smoothing................................................................245
Double Exponential Smoothing (Holt’s Method).....................................247
Triple Exponential Smoothing (Winter’s Method)....................................247
Autoregressive Integrated Moving Average (ARIMA) Models, or
Box-Jenkins Methodology........................................................................248
Regression Models....................................................................................253
Summary..................................................................................................267
Suggested Reading................................................................................... 268
9 Expanding Global Capacity................................................................269
Overview..................................................................................................269
How to Plan Capacity Based on System Forecasts....................................277
Creating Virtual Capacity.........................................................................278
How to Improve Capacity Utilization.......................................................282
Managing Capacity with Insourcing and Outsourcing............................ 284
Summary..................................................................................................290
Suggested Reading....................................................................................291
10 Using Hybrid Decentralization to Increase Productivity...................293
Overview..................................................................................................293
Applying Hybrid Decentralization to Facility Location............................295
How to Locate Facilities across the World................................................296
Facility Location Using Simple Rating Methods.......................................298
Facility Location Using Linear Programming.......................................... 300
Facility Location Using Regression Models..............................................303
Managing Facility Location Risk............................................................. 306
How to Manage Facilities to Ensure Availability..................................... 308
Summary..................................................................................................309
Suggested Reading....................................................................................310
11 Integrating Demand and Supply through Sales and Operations
Planning..............................................................................................311
Overview.................................................................................................. 311
How the S&OP Team Integrates Strategy with Operations......................313
Key Success Characteristics of a Successful S&OP Process....................... 314
Key Activities of the S&OP Team............................................................ 318
Summary..................................................................................................323
Suggested Reading....................................................................................324
12 Lean Scheduling Methods...................................................................325
Overview..................................................................................................325
Operations Scheduling.............................................................................327
Scheduling Algorithms.............................................................................332
Using Pull Scheduling to Increase Flow....................................................339
Summary..................................................................................................345
Suggested Reading................................................................................... 346
13 Dynamic MRPII.................................................................................347
Overview..................................................................................................347
MRPII and Bill-of-Material (BOM) Relationship....................................351
How an MRPII System Functions............................................................353
Creating a Pull System Using Hybrid MRPII and Kanban.......................357
Quick Response Methods to Support Hybrid MRPII.............................. 360
Summary..................................................................................................361
Suggested Reading....................................................................................362
14 Strategic Inventory Management........................................................363
Overview..................................................................................................363
Measuring Inventory Value...................................................................... 366
Why Is Inventory Useful?.........................................................................367
Developing Models to Systematically Reduce Inventory...........................369
Cycle-Counting Systems...........................................................................378
Excess and Obsolete Inventory Management............................................382
Unnecessary Product and Component Proliferation.................................386
Summary..................................................................................................388
Suggested Reading....................................................................................389
Part 4 Collecting, Analyzing, and Sharing
Information across a Global Supp ly Chain
15 Agile Project Management and Workflow Design..............................393
Overview..................................................................................................393
Business Process Management Suite (BPMS)............................................395
Business Process Management (BPM)......................................................398
Business Process Modeling and Analyses (BPMA)....................................399
Business Intelligence (BI)..........................................................................401
Business Activity Monitoring (BAM).......................................................401
Enterprise Application Integration (EAI)..................................................403
Workflow Management (WM)................................................................ 404
Agile Project Management (APM)........................................................... 404
Summary..................................................................................................407
Suggested Reading....................................................................................407
16 Integrating Six Sigma Methods with Operational Strategy............... 409
Overview................................................................................................. 409
Deploying the Six Sigma Improvement Model.........................................412
Define Phase: Basic Tools.........................................................................418
SIPOC.................................................................................................419
Project Charter.....................................................................................419
Quality Improvement Team.................................................................424
Measurement Phase: Basic Tools...............................................................425
Measurement Systems Analysis (MSA).................................................425
Capability............................................................................................427
Cause-and-Effect (C&E) Diagram and Matrix....................................431
Data Collection Activities....................................................................432
Statistical Sampling..............................................................................433
Analyze Phase: Basic Quality Tools..........................................................436
Process Maps........................................................................................436
Histograms...........................................................................................437
Pareto Charts.......................................................................................439
Box Plots............................................................................................. 440
Scatter Plots.........................................................................................441
Time Series Plots..................................................................................441
Analyze Phase: Advanced Quality Tools.................................................. 443
Hypothesis Testing.............................................................................. 443
Statistical Risk.................................................................................... 443
Distribution Fitting (Normality)......................................................... 446
Tests of Means and Medians................................................................447
Tests of Proportions.............................................................................447
Contingency Tables............................................................................. 448
Equal Variance Tests............................................................................450
One-Way Analysis of Variance (ANOVA) Tests...................................451
Multi-Vari Charts.................................................................................452
Correlation...........................................................................................452
Simple Linear Regression.....................................................................453
Improve Phase: Advanced Quality Tools..................................................454
Full Factorial Designs..........................................................................457
2k Experimental Designs......................................................................457
Fractional Factorial Designs................................................................ 460
Response Surface Designs....................................................................461
Control Phase: Basic Quality Tools...........................................................462
Control Charts.....................................................................................463
Quality Control Plan.......................................................................... 464
Summary..................................................................................................465
Suggested Reading....................................................................................467
17 Identifying Productivity Opportunities with Operational
Assessments.........................................................................................469
Overview..................................................................................................469
Aligning Operational Assessments with Strategy......................................472
Preparing for an Operational Assessment..................................................473
Conducting an Operational Assessment...................................................475
Analyzing the Assessment Findings..........................................................477
Project Deployment and Execution...........................................................483
Summary..................................................................................................485
Suggested Reading....................................................................................490
18 Executing Projects with Multicultural Teams.....................................491
Overview..................................................................................................491
Building Globally Diverse Teams.............................................................493
Project Planning.......................................................................................498
Estimating the Critical Path Using PERT................................................498
Project Management.................................................................................505
Managing Project Risk............................................................................ 506
Summary................................................................................................. 506
Suggested Reading....................................................................................508
Part 5 Global Supp ly-Chain Management
Integration and Control
19 Value Integration through Global Supply Chains...............................511
Overview.................................................................................................. 511
Value Integration across the Global Supply Chain....................................513
Several Important Supply-Chain Functions..............................................520
Important Financial and Operational Metrics..........................................523
E-Supply-Chain Evolution........................................................................527
Common Process Breakdowns in Supply Chains......................................531
Summary..................................................................................................533
Suggested Reading....................................................................................534
20 Increasing Organizational Competitiveness through
Standardization...................................................................................535
Overview..................................................................................................535
Supply-Chain Operations Reference (SCOR) Model................................536
The International Standards Organization (ISO)......................................539
Financial Accounting Standards.............................................................. 540
Sarbanes–Oxley Act of 2002....................................................................541
Occupational Safety and Health Administration (OSHA).......................541
Food and Drug Administration (FDA).................................................... 542
Automotive Industry Action Group (AIAG)............................................ 543
Planning Phase.................................................................................... 544
Product Design Phase..........................................................................545
Process Design Phase...........................................................................545
Product and Process Validation Phase................................................. 546
Production Phase, Feedback, and Assessment...................................... 546
Malcolm Baldrige Award......................................................................... 546
Creating Metric Dashboards.....................................................................548
Implementing Effective Process Controls..................................................550
Summary.................................................................................................. 551
Suggested Reading....................................................................................552
Conclusion...................................................................................................553
Appendix I Competitive Solutions........................................................559
Appendix II 110 Key Concepts...............................................................561
Appendix III Figures and Tables..............................................................569
Appendix IV Crystal Ball and Other Simulation Software.....................585
Overview..................................................................................................585
Process Workflow Modeling.....................................................................586
Excel-Based Versions.................................................................................588
Glossary.......................................................................................................591
Index............................................................................................................615


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