Generally, all the researches done on the Six Sigma implementation are based on case studies. Hence, I shall be presenting my report based on a case study done by the researchers M. Kumar, School of Management and Law, Napier University, Edinburg, UK., J. Antony, Design Manufacture and Engineering Management, University of Strathclyde, Glasgow. which stands as an evidence, and includes the analyses on the principles, benefits, and limitations on implementing Lean manufacturing with Six Sigma.
In accordance to the aims and objectives of the project, we shall observe the different Operations Research Tools and Techniques and Lean manufacturing principles implemented in four different SMEs as analyzed by the above mentioned researchers in their case study. It gives us an understanding of various avenues to be focused, and make us understand the crucial managerial decisions to implement necessary strategies or techniques in any organization to achieve the cutthroat advantage for sustainability. Also, it briefly clarifies the benefits and limitations of implementing the strategies and techniques in the organization for the continuous improvement.
'The SME's represent the size of enterprises with a major contribution to private-sector output and employment in all economies of the world'[1-5]. 'Also play a major role in enhancing the competitiveness of larger organizations by being an essential element of their supply chain and providing high quality input'[2,3].
There are four major corporate objectives every business enterprise has to focus:
Survival
Growth
Profitability
Environmental Factors
Hence, to survive, any organisation has to be fighting the competition by improving their present strategies and processes. For this improvement, they have to implement some of the strategic management improvement tools and techniques or quality initiatives. 'The different methods available are Total Quality Management, Continuous Improvement methodologies such as Kaizen[6], Business Process Re-engineering' (BPR)[7] and Six Sigma[8,9].
Apparently, as there are many tools and techniques for Lean manufacturing, Six Sigma is one of the powerful tool for process improvement. The Six Sigma is a methodology that focuses on quality issues by decreasing the occurrence of defects early in the design/production stage, and catering to the customers demands by delivering high quality products/service. And the benefits it gives to any organization is in terms of good financial returns, quality production, better management relationship within the organization.
We might also come across a few organizations that are not aware about the benefits from the implementation of Six Sigma, or those who are just planning to implement. This report enlightens some of the factors that influence the decision of an organization with regard to the implementation of the Six Sigma & Lean Manufacturing, along with few other international standards, and quality methods that are essential to any organization based on their category, volume of production, and so on.
7.0 Research Methodology:
The starting point of any research is about the data collection, that is essential to any researcher to collect as much data as possible, which enables a person to study and compare different facts and figures, advantages & drawbacks, business strategies, improvement processes and methods being used in an environment of manufacturing.
In the referred case study, the researchers have conducted interviews from the selected employees of the organization from shop floor level to the senior management to get acquainted with the quality and management procedures adapted by all the four organizations.
The researchers have chosen four organizations to perform the analyses of the different improvement methods and quality standards that have been implemented according to their need and suitability. Following are the brief history of the four organizations A, B, C, and D.
Company A: It was established in 1984, specializing in the design and manufacture of PC data communications hardware. It employs 36 people, with an annual turnover of £3.4 million in 2007. The company has won several awards in the last two decades on account of its success in maintaining a growing manufacturing capability that embraces Lean and Six Sigma.
Company B: Company B was formed in 2002 from the merger of two parent companies who have employed less than 50 employees in each in England. Now, there are 106 employees generating an annual turnover of £5 million. The company specializes in the design and manufacture of high-temperature metal seals, gaskets, CNC machined components, and complementary products for the aerospace, automotive, and industrial sectors.
Company C: Company C was formed in 2002 after splitting from its parent company which had been in business for nearly 70 years. The parent firm employed 300 people in 1977, and the headcount of company C after the split was 88. The company manufactures products that ranges from different types of paper (including adhesives and liners) to thermally coated tags and tickets for the food industry, airline ticketing, and other packaging industries.
Company D: Company D employed 2200 employees in the late 1970's being the sole market leader in providing appliances for boilers and central heating. It currently employs 86 people, with an annual turnover of £6.5 million. Its products, ranging from room and hot-water thermostats to central heating programmers, represent over 60 years of excellence in serving the domestic heating industry.
Every organisation has there own methods and practices of management & production strategies depending on the type and size of the enterprise, either inherent or developed according to their needs and convenience. Similarly, we can observe the different practices adapted by the four organisations identified by the researchers in the case study, shown in the table below.
Table 2 Quality program initiatives
Company A
Company B
Company C
Company D
History of Quality Programme (QP) or certification achieved and the corresponding year
BS 5750 (1994)
AS 9100 (1992)
ISO 9000 (1992)
ISO 9000 (1993)
ISO 9000:2000 (2001)
TSI 6949 (1994)
TQM (1994)
ISO 9001:2000 (2003)
Lean (2001)
Total Quality Management (TQM) (late 1990s)
ISO 9001:2000 (2003)
Lean (2007)
Investors in people(IIP)
IS 9001:2000 (2003)
Six Sigma (2003)
Lean (2005)
Six sigma (2007)
Existing QP
Six sigma; Lean
Six sigma; Lean
ISO 9001:2000
ISO 9001:2000; Lean
It is a well known fact that implementing any new management practice or methods in an organisation is not an easy task, as it involves many decision making personnel and influencing factors of that organisation in every step towards the development. We shall see how the role of top management helps an organisation in these aspects as mentioned by the researchers in the case study.
Top Management support in the companies A & B : In these companies, the implementation of Lean and Six Sigma was supported by the managing director of the company by actively taking part in the entire organisation and locating the competitive advantages provided by the business strategies. They were dedicated to maintain the business sustainable on a long-term basis, which resulted in the implementation of continuous improvement initiatives and allocating resources to make improvements in quality, performance, and customer satisfaction.
As seen in the case study, the MD of company A viewed ISO 9000 as ' a way of retaining and winning business. If adapted, puts some structure in the company, which can make work towards the goal. Company A was better organised as to how the components were stored and had a formal production line, everything labelled and defined(defined assembly process, inspection process, test process) and is considered as a great enabler'. Other staff members expressed their view that ISO helped the company in establishing the structure and implementing procedures and worked as a foundation to get started with Lean and Six Sigma, which is also accepted by other staff in the companies B, C and D.
Influence and benefits of the Employee training:
One of the most important features of Six Sigma theory is the employee training, and which is very much evident from the case study, how the responsible group of employees have been selected and been trained in black belt, yellow belt, green belt and master belt to achieve the results of implementing Six Sigma.
As training is considered to be one of the prime factors in Six Sigma implementation, the training program begins from the top management level and gradually encompasses the whole organization. In general, the training program is selected according to the suitability of the organization focusing on the financial and managerial benefits. The training involves in improving the management methods, team work & leadership culture along with qualitative and quantitative factors.
The four levels of belts in the certified training program are as mentioned below, depending on the organisations decision and requirements, the personnel are selected and trained accordingly.
Yellow Belt: In the process of employee training for Six Sigma implementation, the yellow belt is considered as the starting level, which gives the employee a fundamental knowledge of handling small projects involving some management tools for the process improvement and generally work with the help of the black belt personnel.
Green Belt: This level is next to yellow belt who are not totally dedicated to Six Sigma implementation, but are involved in carrying the projects forward.
Black Belt: The black belts unlike the first two belts, are totally dedicated in the Six Sigma implementation process by handling the teams and projects under the guidance of the master black belts. Also, these professionals train the first two belt levels apart from their routine
Master Black Belt: The master black belts, as the name itself defines, are on the top of all the levels, solely responsible for the implementation methods of the Six Sigma and imparting training for the other levels.
As we notice in the case study, the organisation has selected few suitable professionals for the different level of belt certified training program of Six Sigma, depending on their suitability, and demonstrating the caution taken by the top management in implementing the Six Sigma methodology in a phase wise manner.
Companies A and B
Companies A and B have trained their best people as black belts and green belts to carry out pilot projects who are responsible for implementing Lean, Six Sigma or ISO and driving continuous improvement efforts in the company. This team is selected from the cross-functional departments and was assisted by shop-floor employees( trained as yellow belts) to execute projects with commitment towards training of employees in both the companies.
As the employee training gives a clear sense for better understanding of the fundamentals, tools, and techniques to make sure that managers and employees implement them effectively. It is equally dangerous if not adapted by any organisation, eventually might even lead to failure of the company. As it may be thought as a traditional quality management practice by few organisations, but one has to keep in mind how the top management plays a very important role in improving the quality practices.
Here, in the case of companies C & D, we can see the risks and dangers of not adapting the employee training program, since the top management had different approach and strategies towards the business, as mentioned in the case study below.
Companies C & D: The main focus of these companies behind achieving ISO certification was to improve their market share and retain existing customers. The company C believed that the new standard ISO 9001:2000 eliminates the bureaucracy, with more focus on a proactive approach to data gathering and making continuous improvements. All the employees in companies C & D were emphasized on the point of having standardized procedures in place to understand processes and measure process performance. If the procedures are not formalised, they do the same things in different ways, creating confusion and chaos in the company, since it is very difficult to introduce new business strategies without having established processes and procedures in place. Due to several changes in the management structure, the companies C & D have lost focus on continuous improvement and operated in a dangerous mode for survival in the business. Company C tried to adapt Total Quality Management in 1994 but failed to reap the benefit as it was led by the technical director of the company, who retired in 1995 due to which it was lacking the transferability of learning.
Similarly, under the leadership of a newly appointed director in the late 1990's, company D experienced a serious dent on the continuous improvement, who believed in crisis management, has discouraged the employees who came up with new ideas for process improvement and denied to allocate resources for training and development.
The then present MDs and the senior management teams in companies C and D have realized the importance of initiatives such as Lean and Six Sigma, but struggled to allocate resources and time for the same.
Company C was involved in the basic training to their shop-floor employees as quality was their basic criteria. Company D had invested time and money in training shop-floor staff and middle managers and was welcoming the ideas of Lean and Six Sigma.
The factors influencing the success of an organization and barriers in implementation:
Critical Success Factors and barriers to implementation of Quality Initiatives [1,5,9,11,19,20].
The quality development issues are the major deciding factors for the success for any organization, also evident from the analyses of the four organization in the report.
'These are the factors that are decisive to the success of any organisation and if not achieved with the associated objectives, the organisation will fail'[21]. 'Boynton and Zmud[22] defined CSFs as 'those few things that must go well to ensure success''. Other researchers such as 'Brotherton and Shaw define CSFs as the essential things that must be achieved by the company or the areas that will produce the greatest 'competitive leverage'[23]. The researchers Antony and Banuelas said, 'In the context of Six Sigma project implementation, CSFs represent the essential ingredients without which a project stands little chance of success '[24].
Factors identified as critical to the success of Continuous Improvement initiatives or the follow-up of accreditation achieved are summarised and listed below in table 2 below:
Company A
Company B
Company C
Company D
What aids implementation?
Strong leadership
Commitment from top level
Communication
Leadership
Commitment from top management
Culture
Process documentation
Communication
Commitment from middle manager
Senior management buy-in
Regular audits
Strategic vision
Education and training
Cross-functional team
Data collection measurement
Communication
Empowerment of workforce
Role of middle manager
Empowerment
Communication
Project selection
Full- time facilitator to drive and manage QI
Cross functional team
Education and training
Balance between daily work and BB or GB job
Involvement of finance department
What hinders implementation?
Role of middle managers
Complacency
Change in management
People prefer status quo
BlackBelts and GreenBelts getting involved in other work
Training
Lack of management commitment
Lack of vision
Poor training and coaching
Barrier between shop floor and rest of staff
Allocation of resources
Table 2
Success factors of the companies summarised from the above table:
The main credit can be given to the strong leadership and the management for the success. They believed in walk-the-talk approach instead of talk-the-walk. These companies were committed & dedicated to the Six Sigma introductory training along with participation in project review meetings.
Taking up the Green Belt project training by one of the MD's from the company B gives the evidence of the commitment of the top management towards the organisation. Also, they conduct frequent monthly audits ( 5S) across the cross functional shop floor employees to communicate and resolve any personal and business issues. It can also be noticed that, the employees of both the companies are empowered to decision making for their processes.
As it can be noticed that these two companies put the Six Sigma in the top three priorities of their strategies involving their top management and the senior managers. With the help of the strong leadership, the top management contributed the resources for the employee training to successfully execute the projects without any hurdles. Communication from the top facilitated in breaking down any resistance to change in these two companies. 'One of the key characteristics of Six Sigma that has enticed many CEOs of world-class companies is the link between project execution and hard dollar savings, i.e., the financial impact generated by the initiative' [33,34]. The financial department was involved as a champion in the cost-benefit analysis of the project and in control of deciding where the company can make hard savings.
As it is very clear from the objectives and achievements of these companies stated above in the case study, it can be derived that the Six Sigma approach has proven its worth in all the avenues.
Talking about the other two companies i.e., C and D , we may identify few limitations and barriers which held these companies from achieving the set goals and benefits by believing in their own strategies and improvement methods unlike the companies A & B.
Mainly, the top management in company C has communicated the need for certification to employees and considered it as a goal to achieve quality improvement. The main focus of these companies is on regular audits that help to keep their quality records up to date, i.e., processes are mapped, metrics established, and data collected for auditing purposes, which helped them in few processes. Senior managers in these companies felt that resource allocation was the biggest hindrance in driving the certification effort or implementing initiatives such as Lean and Six Sigma. It is the absence of strong leadership, several changes in management, and lack of vision and commitment from the top that is hindering quality improvement efforts in companies C and D.
One of the typical barriers encountered in company D is separation between the shop-floor employees and the rest of the staff, as there were separate canteens for staff members and shop-floor employees, which further confined the interaction and friendly communication between the two groups.
Another obstacle in companies A and B was involvement of Black-belts and Green-belts in day-to-day activities apart from carrying out projects. Sometimes the role of middle managers in releasing their employees for training and review meetings was also a hindrance in company A.
Motivating factors:
We may notice the different factors that have been supportive to these companies in varied aspects such as funding, knowledge sharing and investments in the employee training.
Interviewees in companies A and B commented on the role of local universities and government bodies in supporting SMEs to embark on Continuous Improvement initiatives. Partial government funding encouraged company A to train more employees in Six Sigma. The employees in companies A and B never supported the idea of bringing in external consultants for Six Sigma training, often requiring large up-front investment and providing only temporary solutions to their chronic problems. From the economic and long-term sustainability perspective, collaboration with local universities through programmes such as Knowledge Transfer Partnership (KTP) was considered imperative for the success of SMEs. Antony 'also stressed the role of academic institutions 'to help SMEs to meet their customer or stakeholder needs and assist them in creating value for their customer. This will ensure development of a stable, long-term, and cost-effective relationship between the organisation and academic institution' [27].
Impact of Quality programme on performance indicators: Interviewees in the case-study companies were asked to rate on a likert scale of 1 to 5, the benefits their organisations have experienced following the implementation of quality initiatives clearly shown in The table 3. The score across each of the performance indicators reflect the improvement made by the SME after implementing the programme.
Table 3 Performance evaluation
Performance indicator
A
B
C
D
Reduction in scrap rate
5
4
3
3
Reduction in cycle time
4
3
6
4
Reduction in delivery time
3
3
3
4
Increase in productivity
4
4
4
3
Reduction in costs
4
5
3
3
Increase in profitability
4
4
3
3
Improved sales
4
5
3
3
Reduction in customer complaints
4
3
4
3
Reduction in employee complaints/grievances
3
3
6
3
Benefits achieved by the companies A & B : It can be seen from the table above that Company A has realized significant improvements in operational measures like reduction in scrap, cycle time, and delivery time, and increase in productivity and strategic measures which include increase in sales & profit and reduction in costs of organisational performance from the implementation of Six Sigma.
Since company B implemented Six Sigma in 2007, they have started to realize improvements in the established performance metrics. The improvement in the performance of company C is not the result of ISO certification, but of the use of tools and techniques of Continuous Improvement, as cited by the interviewees. The company has managed to reduce customer complaints by working close with the customer and through the nature of their personal business. The improvement can be attributed to the company's reaction to changing market forces and stiff competition. However, ISO has helped in developing process thinking, working closely with customers, and improving delivery performance.
Companies C & D :Unlike the other three companies, Company C does not use metrics such as reduction in cycle time or reduction in employee complaints. Similarly, in Company D, improvement is the result of using tools and techniques, implementing the ERP system, and adhering to the basic concept of Lean Manufacturing, i.e., 5S practice. Typical improvements that can be achieved through Lean and Six Sigma are shown in tables 4 and 5.
The tables are based on improvement witnessed in company A. Since the company started Lean, all core processes, from receipt of order to dispatching, have been mapped, resulting in improvements in throughput and overall equipment effectiveness (OEE). The implementation of 5S resulted in reorganisation of the manufacturing line, which in turn brought savings of over £10k per annum. Some of the other improvements through the Lean initiative are listed in table 4.
Table 4 Benefits from Lean implementation
Hard saving
Soft saving
Reduction in changeover time
30% Reduction
Increased employee efficiency
Reduction in rework on purchase order
50% Reduction
Cleaner and safer work environment
Reduction in technical support enquires
15% Reduction
Proactive approach to problem solving
Reduction in floor space utilization
£10 k/year
High job retention
Reduction in scrap rate
84% Reduction
High employee satisfaction
Reduction in raw material and finished good inventory
30% Reduction
Improved technical support process
Since the implementation of Six Sigma, Company A has executed five projects that have had a significant impact on customer satisfaction and bottom-line savings of over £180,000. Some of the benefits from Six Sigma implementation are indicated in table 5.
Table 5 Impact on business from Six Sigma implementation
Project
Impact on Business
Improving OTIF(on time in full) for sales order delivery
Immediate improvement by 28%
Improving raw material stock accuracy
51% reduction
Improved finished good stock accuracy
87% reduction
Reduction in solder shots
Immediate reduction by 98%
Reduction in sales order defect
Currently in progress
Strategic Issues: 'One of the main criticisms is that Six Sigma is nothing new and simply repackages traditional principles and techniques related to quality'[36]. Organizations must realize that Six Sigma is not the universal answer to all business issues, and it may not be the most important management strategy that an organization feels a sense of urgency to understand and implement Six Sigma.
As we notice some of the similarities and differences in the strategic issues in all the four companies what they believed and adapted, are compared in the case study, can be listed as follows:
Strong leadership and top management commitment are the key characteristics of the successful Six Sigma organisations (companies A & B).
Six Sigma SMEs have trained their most talented staff on Six Sigma and execution projects, whereas Process Improvement was the responsibility of the quality department in non-Six Sigma companies.
Staff in the Six Sigma firms were empowered to make decisions for their own processes. The non-Six Sigma firms has entrusted the decision making power to middle -level managers or supervisors on the shop floor.
The finance department was involved in cost-benefit analysis before embarking on any Six Sigma project which was not the same case with the non-Six Sigma firms.
In accordance to the above mentioned, the main focus should be on overall management performance, and not by identifying and counting defects. Researchers and practitioners are trying to integrate Six Sigma with other existing innovative management practices that have been around to make Six Sigma method even more attractive to different organisations that might have not started or fully implemented the Six Sigma method. According to Revere and Black, 'Integrating and comparing principles and characteristics of Six Sigma with Total Quality Management'[37], Wyper and Harrison 'Human Resource Functions'[38], Antony said 'Lean Production' [39], Catherwood 'ISO 9000' [40], Dalggleish 'ISO 9001'[41], and Murrugappan & Keeni 'the capability maturity model' [42] are all part of the quality community's effort to maximize the positive effect of the Six Sigma method.
8.0 Summary:
Six Sigma projects have to be carefully reviewed, planned, and selected to maximize the benefits of implementation. The project has to be feasible, organisationally and financially beneficial, and customer oriented. There has to be a clear set of measures and metrics to incorporate customer requirements.
Six Sigma is about overall business strategy, culture, and change, and the small companies embarking on the Six Sigma initiative need to build all of this into a sound corporate strategy plan[27]. People facing cultural change and challenges due to the implementation of Six Sigma must understand the change first. Hence, requires a clear communication plan and channels, motivating individuals to overcome resistance, and educating senior managers, employees, and customers on the benefits of Six Sigma.
Collaborating with academic universities may facilitate knowledge transfer by improving the existing capabilities within any organisation. The Knowledge Transfer Partnership (KTP) programme[27], academic institutions and industry is an effective vehicle for enabling the introduction and application of Continuous Improvement initiatives within SMEs. Education and training give a clear sense for people to better understand the fundamentals, tools & techniques to make sure that managers and employees apply and implement the complex Six Sigma techniques effectively.
The concepts of Lean manufacturing and Six Sigma have been applied in many organisations of the automotive sector, such as Toyota Motor Company (Toyota Production System), Ford Motor Company ( The Ford Production System), Chrysler ( Chrysler Operating System), Prosche (the Porsche Improvement Process) and General Motors (NUMMI joint venture with Toyota). The tools as Value Stream Mapping, Kanban, Cellular Manufacturing, Good Housekeeping (5S), Total Productive Maintenance and Kaizen are examples of the application of the Lean Manufacturing. These tools & techniques when adapted in the operations, are beneficial for the evolution of the organisation in the process of improvements in the activities that add value to the product or service. The Six Sigma through structuralized methodologies, and the employee training - Black Belts and Green Belts commands the focus to the financial results in the business. The integration of these two concepts allows supplying the necessities of improvements of the results of the organisations. To ensure the long term sustainability of the Six Sigma method, organisations need to analyze and accept its strengths and weaknesses and properly utilize Six Sigma principles, concepts, and tools.
Many benefits are noticed such as reduction of areas, optimization of work stations, improvement of the productivity, reduction of variability, scrap and rework. To have excellent processes, with excellent results, we will need the best people. As we are in the age of the knowledge, the organisations need its intellectual capital as competitive advantage. The top management understands that the change is a process of interaction and participation that needs motivation generated for the good communication, and that managed its Know-How well, will have its suppliers of solutions and the company will gain more through its results.
The operational Excellence promotes the preparation of the individuals and the organisation for the change and to receive the new scene, where the awareness, the training technician, the experience and other proven techniques facilitate to this transition for the best category in class.
10.0 Conclusion
As it has been observed in the report, the integrated approach of Lean manufacturing techniques and Six Sigma approach, support the reduction in the waste. Lean manufacturing focuses on making the flow easy without any interruptions with reduced waste. Whereas, Six Sigma focuses on variation related processes such as quality issues, implying the integration of both the approaches Six Sigma and Lean Techniques.
Talking about the implementation of Six Sigma and Lean techniques from the available models and approaches, is very vital to decide on which method is suitable to a particular organisation and mostly depends on the type of business environment and most importantly the return on investments (ROI). The management has to give a thought to few questions before deciding on the choice of the model or approach being selected. To mention a few:
The present performance level of the organisation?
The goals set by the organisation ?
Time permissibility ?
Which level of the management is responsible for the initiatives ?
The kind of talent available in the organisation ?
What are the key influencing factors in the organisation?
What are the key business metrics?
Suitability of the available methods for the improvement?
Availability of the funds and resources?
Once the decision is made on selecting the perfect and suitable method, then the selected team from the organisation will be trained for the program implementation. By undergoing the intensive training program, the employees and mangers will be benefitted with the better understanding of the business across the functional areas, inheriting the leadership qualities, and by developing high level of confidence in performing the business by achieving better results.
Talking about the role of the top management, in general, the top management such as the managing directors are aware of these tools & techniques and the returns that gave to the other organisations. We might come across some personnel who consider the quality improvement program is limited to the size & type of the organisation, which is not true.
Eventually, in the process of sustaining the competition, an organisation needs to think of adapting to new quality improvement processes and methods such as Six Sigma. This need arises in the event of poor performance of the organisation, lacking to understand the customers needs and expectations, finally loosing the customers and business. In these grave situations, a continuous improvement program means to survival.
In accordance to the theory and with the evidence of the case study, the benefits have been typically noticed in both the approaches such as the customer satisfaction, product & service quality, on-time delivery and shorter development time. Six Sigma, true to its definition, helps us in identifying and reducing the defects, streamlining the processes resulting in the reduced cycle time, work in process, inventory costs, and improved productivity and efficiencies. Six Sigma can also be used in different types of environments such as service, banking, health, engineering, defence, and hospitality to mention a few.
Also, Six Sigma empowers employees by involving them in process improvement, and increased satisfaction and self confidence. Hence, employees bring in a fresh approach towards their duties which adds up to the value to the customer and more importantly the business.
Finally, in addition to the improvements in quality issues, reduced cycle time & costs, customer satisfaction, the key to improving the business is to increase the value of its products and services in the competition. Six Sigma's "voice of the customer" focus and with its associated tools & techniques enable the business to identify what the customer values and then transform those requirements into defined values. The business can thus use the customer requirements to increase the value of its products and services, which then positions the business for continued success by giving a competitive edge over the other organisations.
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