MSc Supply Chain Management & Purchasing students have been learning about Lean/Six Sigma.
Lean/Six Sigma is a process for cutting costs and optimising expenditure– a key business driver in the current global financial context.
In Motorola, as of 2006, Six Sigma processes resulted in $16–17 billion in savings to the company.
“I found this course really interesting and useful,” explained Rija, an MSc Supply Chain Management & Purchasing
student who comes from Madagascar, after the course. “We’ll be able to use Lean/Six Sigma tools and methodology in a great many aspects of our work, and it’s highly applicable to the current financial context where cost-cutting is going to become more and more important,” he added.
In class, students examined a number of case studies with Ford, Boeing, and others.
As the name suggests, Lean/Six Sigma is a combination of two complementary business management strategies.
Lean is about cutting waste, thus cutting costs. Specifically, Lean asks: What does the customer actually want? What is the added value for the customer? (Almost) everything that is not added value for the customer is eliminated.
It’s about getting more value with less work.
Lean uses empirical methods to decide what matters, rather than uncritically accepting pre-exiting ideas of what matters.
In Lean, the principal sources of waste are:
1. Transportation (moving people & “stuff”)
2. Inventory ("stuff" waiting to be worked / sold)
3. Motion (unnecessary movement)
4. Waiting (waiting for "stuff")
5. Over-production ("stuff" too much /too early)
6. Over-processing ("stuff" to do that doesn’t add value to the product or service we are producing)
7. Defects ("Stuff" that’s not right & needs fixing)
8. Wasted human talent
Six Sigma was originally developed by Motorola, and is now used widely throughout industries. The Six Sigma process boasts the capacity to achieve manufacturing standards with 99.9997% of finished products within product specifications: very, very close to perfection.
Using Six Sigma, companies eliminate defects as defined by the customer. The process gives tools and methodology for improvement.
One of the methods is to map the process as is. You locate all the possible points of failure, and then rate those failures according to their seriousness, especially from the customer’s point of view. Using the 5 Whys, consequences of those failures are analysed.
Throughout Six Sigma there is an emphasis on quantifiable data and results: decisions are made on the basis of verifiable data, rather than guesswork; and there is a clear focus on achieving measurable and quantifiable financial returns.