International Journal of Business Administration and Management. ISSN 2278-3660 Volume 7, Number 1 (2017), © Research India Publications http://www.ripublication.com

Impact of Lean-Six Sigma approach in Mid Sized Manufacturing Organisation

Pramod Kumar Shrivastava Ph.D Scholar (Management) (2014-2017) Kalinga University, Raipur, C.G. Enrollment No. 15020153 (KU002MMXIV02010678)

Abstract

Founded by Motorola, USA in 1986, is a strategy that optimizes the process of outputting products and services by getting rid of errors so that results are always constant and always growing. Several quality management methods are used to achieve this, including methods based on statistics. A unique infrastructure of people is created within an organization linking together people who are experts in this field. Projects that are carried on in the organization are then done following a series of steps aimed at reaching pre-determined financial targets.

The term Six Sigma is one that comes from the manufacturing sector, in particular statistical modeling of processes involved in manufacturing. A sigma rating is used to indicate the yield of a manufacturing process. This rating is based on the percentage of products manufactured that have no defects. In a six sigma process, the manufacturing process creates products where 99.99966 percent are defect free, this is the equivalent to only 3.4 defects in every 1 million products create d. This study is an attempt to study the role of Lean Six Sigma on mid sized manufacturing organization.

141 International Journal of Business Administration and Management. ISSN 2278-3660 Volume 7, Number 1 (2017), © Research India Publications http://www.ripublication.com

1. Introduction

Lean Six Sigma (LSS) concept is the integration of two (2) quality management concepts which are and Six Sigma whereby it attempts to increase the scope and size of improvements achieved by either concept alone. However, different individual and companies view LSS in different ways. Some would perceive LSS as a fully integrated system between Lean Manufacturing and Six Sigma while others would perceive LSS as two different concepts which is adapted in parallel (Assarlind et al. 2012). Moreover, the integration between the two quality management concepts varies between each integration as Assarlind et. al. (2012) points out that each integration may involve transferring of different tools, ideas and philosophies.

Lean Six Sigma is a management approach for business performance improvement, blending the specialisms of Lean and Six Sigma. Lean focuses on speed, efficiency and reducing waste; Six Sigma’s strength is in continuous improvement including effectiveness and removal of errors.

Customers have been putting pressure on the industry for the products they purchase to be of higher value. This has spark various industry to adopt various quality management tools and concepts in order to strive towards a better quality product, lower lead time and lower cost. This leads to adaptation of different quality management concept into the firm’s production. Two of the most in-trend and proven successful practically quality management concepts in the industry (if applied properly) are the Lean Manufacturing concept and Six Sigma (Buesa 2009; Kaushik et al. 2012). Many researchers and industrial practitioners have been discussing about integrating Lean Manufacturing and Six Sigma to form Lean Six Sigma (LSS) as the latest quality management concept (Hoerl and Gardner 2010; Assarlind et al. 2012). The integration of both models will facilitate the achievement of zero defect manufacturing in organizations complemented by

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the elimination of non-value added activities which leads to greater results than either system can achieve alone (Snee 2010). However, the LSS concept has largely been on a theoretical level; whilst discussion is important, the practicality of the newly integrated quality concept is equally important as well (Assarlind et al. 2012). Little research has been carried out on the practical side of the LSS concept, but early results shown by some researchers in implementing LSS framework to guide larger firms to adopt this concept has so far been successful (Thomas et al. 2009; Laureani and Antony 2010; Ray and John 2011). This further increases the pressure on SMEs to stay in the industry as larger firms could compete with a greater value product with less cost. This paper aims to provide a structured LSS framework which can be adopted in the SME label printing company in order to reduce waste and variation in their production; aiming to increase its productivity while reducing the cost of production.

During the last two decades quality management has been put forward by a number of its promoters as a new management theory; however the description of quality management differs. Quality management can be described as a management revolution, a revolutionary philosophy of management, a new way thinking about the management of organizations, a comprehensive way to improve total organizational performance, an alternative to management by control or as a framework for competitive management.

Over the last two decades, Industrial organizations have embraced a wide variety of management programs that they hope will enhance competition. Currently two of the popular programs are Six Sigma and Lean Management. Six Sigma was founded by Motorola Corporation and subsequently adopted by many US companies, including GE & Allied sigma. Lean management originated at Toyota in Japan and has been implemented by many major firms, including Danaher Corporation and Harley Davidson. Six Sigma and lean management have got diverse roofs. The key issues driving the

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development of Six Sigma was the need for quality improvement when manufacturing complex products having a large numbers of components which often resulted in a correspondingly high probability of defective final products. The driving force behind the development of Lean Management was the elimination of waste, especially in Japan a country with low natural resources and lesser continental area.

3. Objectives and Research Methodology

3.1 Objectives

1. To understand briefly about lean manufacturing.

2. To have an understanding of Lean Six Sigma in manufacturing organization.

3. To understand the impact of Lean Six Sigma in a mid sized manufacturing organization.

3.2 Research Methodology

Research methods can be classified in different ways, the most common distinction is between the quantitative and the qualitative approaches (Myers, 20071). Quantitative approaches were originally used while studying natural sciences like: laboratory experiments, survey methods and numerical methods. A qualitative study is used when the researcher wants to get a deeper understanding on a specific topic or situation. Myers (2007) 2 stated that the qualitative approach was developed in social sciences in order to support the researcher in studies including cultural and social phenomena. Sources included in the qualitative approach are interviews, questionnaires,

1 Myers, M. D. (2007), “Qualitative Research in Information Systems”, MIS Quarterly, vol. 21 No. 2, pp.241-242. 2 Ibid

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observations, documents and the researcher’s impression and reactions. The chosen approach is qualitative.

This study typically takes the form study of secondary data available on Lean Six Sigma manufacturing. approach To understand and conclude the major role of this approach contributing towards the growth of Indian SME industry, we have not only gone through a number of reports and papers but also visited and survey select Mid-sized manufacturing organisations This has the advantages of providing very rich information and avoiding the influence of others on the opinion of any one individual.

4. Impact of Lean-Six Sigma in Mid Sized MSME

Six Sigma works through the use of two sub methodologies; DMAIC which stands for Define, Measure, Analyse, Improve and Control and is used for existing processes, and DMADV which is used for new processes and stands for Define, Measure, Analyse, Design and Verify. Implementing Six Sigma within a business offers a number of benefits. However there are six key advantages that this methodology will offer any company. Amy Harris, Community Manager for Expert Market mentioned six ways Six Sigma can benefit a mid sized manufacturing company. i. Improved Customer Loyalty Any business wants to retain its customers. Indeed, this is a significant factor in determining the success of a firm. But, of course, customer loyalty and retention only ever come as a result of high levels of customer satisfaction.

Surveys suggest the reasons given by most customers for not returning to a business are dissatisfaction with the experience and employee attitude. Often a company will not even know they have a dissatisfied customer as they will simply take their businesses elsewhere.

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Implementing Six Sigma reduces the risk of your company having dissatisfied customers, for once training is complete, so few experiences should be outside of their specifications. To achieve this you may want to consider running a voice of the customer study which helps your business understand which of your products attributes are critical to the customer's perception of satisfaction. ii. Time Management Employing a Six Sigma methodology at your business can help employees manage their time effectively, resulting in a more a efficient business and more productive employees. Users are asked to set SMART goals and then apply the data principles of Six Sigma to those goals. This is done by looking at three key areas; learning, performance and fulfillment.

For instance, under learning, a practitioner of Six Sigma might ask themselves; how often do interruptions take me away from my task and how many of these interruptions require my attention? Similarly, under performance, they might consider how their practices are helping them reach their professional goals. Users can then create an action plan, the result of which can be employees who are up to 30 per cent more efficient and who are happier in themselves, having achieved a better work-life balance. iii. Reduced Cycle Time Unfortunately, most projects firms embark on end up extending beyond their original deadline often because there are changes in project scope or there is a shift in management policy. By using Six Sigma, a business can set up a team of experienced employees from all levels within the organisation and from every functional department. This team are then given the task of identifying factors that could negatively affect the project leading to long cycle times.

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They can then be tasked to find solutions to these potential problems. This method allows business to create shorter cycle times for projects and stick to those schedules, with many firms reporting reductions in cycle times of up to 35 per cent. iv. Employee Motivation Every business, if destined to succeed, needs its employees to act in the right way - but for employees to do so there must be sufficient motivation. Indeed, organisations who are willing to fully engage with employees have consistently demonstrated 25 – 50 per cent increases in productivity. Sharing Six Sigma problem solving tools and techniques will allow for employee development and help create a climate and systems for employee motivation. v. Strategic Planning Six Sigma can play an integral part in any strategic vision. Once your business has used a created a mission statement and carried out a SWOT analysis, then Six Sigma can help you focus on areas for improvement.

For instance, if your business strategy is based on being a cost leader in the market, then Six Sigma can be used to improve internal processes, increase yields, eliminate unnecessary complexity and gain or maintain lowest cost supplier agreements. In fact, whatever your strategy happens to be, Six Sigma can help make your company the best at what it does. vi. Supply Chain Management As previously mentioned, the aim of Six Sigma is to have a defect rate of less than 3.4 per million, and your suppliers have a major influence on whether this target is met. One of the possible ways to reduce the risk of defect is to use Six Sigma to drive down the number of suppliers your businesses has, as this in turn reduces the risk of defects.

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It’s also important to understand if your supplier is planning to implement any changes. For instance, a change in machinery can have an effect like the ripples from a rock thrown into a pond. The most successful firms drive their Six Sigma improvements as far up the supply chain as possible. vii. Increased Efficiency A primary benefit of implementing the LSS methodology for an organization is increased efficiency on many levels. LSS Master Black Belts are trained to analyze each process within a workflow for weaknesses that can be mitigated or eliminated to achieve maximum efficiency in terms of time and resource allocation. LSS integration can be simply explained as the whole being the sum of its parts, so each part needs to operate at its fullest potential to attain the most efficient results. Organizations that successfully implement LSS can expect to achieve measurable increased efficiencies in processes both large and small. viii. Higher-Quality Output In addition to making processes more efficient, LSS programs focus on simultaneously achieving the highest level of quality. This is accomplished by prioritizing areas of the operation such as standards and practices, inventory control, production scheduling and elimination of quality issues in literally all operational processes. By identifying the existing standards associated with these areas, suggesting practical methods of improvement and empowering each employee to own these improvements, the LSS methodology can help any organization achieve a higher level of quality in their products, processes, communications and services. ix. Better Customer Service By increasing the efficiency of the processes and the quality of the output, the LSS methodology will have already achieved a portion of the customer service formula. However, accurate

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man-hour reporting, production scheduling, bar coding and reducing time to meet customer requirements are also aspects of the LSS process primarily focused on delivering a better experience for the customer. By optimizing these areas of the production process, LSS Master Black Belts will enable their employers to achieve top-level customer service. x. A Safer Workplace While possibly not the most obvious benefit of successful LSS implementation, simply by nature of the cultural commitment and employee ownership that are integral components to LSS integration, not to mention the across-the-board process improvements, the net result is a significantly safer workplace. That is a benefit not only to instilling the team culture referred to above, but it goes right to the bottom line as well. xi. Program Implementation The implementation of an LSS program most often represents a complete cultural shift in the way an organization thinks and operates. There are several key aspects of the LSS methodology that organizations must understand before committing to this program.

LSS programs are dynamic processes and need to be continuously and objectively reviewed for opportunities to improve. LSS is a continuous cycle of process creation, process management and process improvement. It requires vigilance on behalf of the organization and the acknowledgement that LSS is not a task, but a mindset that must be embraced by the entire company to be successful. If this program is embraced with a full understanding of these points, any company can be successful in improving their efficiency, quality and customer service.

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5. Conclusion

The small and medium enterprises, especially component manufacturing industries, need to supply large variety and varying quantities of parts in line with the changing demands of their OEM customers. It is something traditional mass production systems find hard to counter. Six Sigma and Lean offers solutions to these problems raising the acceptable quality to a level that mass production cannot easily match. Lean production also significantly lowers the amount of high skill effort needed to produce a product of a given specification. It reduces the cost of production through continuous incremental improvement.

Thus it offsets the low cost advantage of mass production system. Six Sigma fully utilizes advanced technology and automation in ways mass production cannot. It can be stated that lean and Six Sigma approach are not only very much relevant for auto component manufacturing industries it is the need of the hour. At an advanced stage Lean Six Sigma strategy can be adopted by the companies to achieve value leadership along with cost cutting and high yield. A study has been under taken to understand the present level of application of Six Sigma by small and medium component manufacturing industries in India, the common hindrances faced by them, the critical success factors for implementation, etc. The purpose of the study is to bring out a model for implementation of Six Sigma by SMEs in simple way along with lean manufacturing techniques which will ultimately lead to Lean Six Sigma Companies.

6. References

1. Amy Harris (2016), “6 unexpected ways Six Sigma can benefit your company”, http://www.processexcellencenetwork.com/lean-six-sigma-business- transformation/articles/6-ways-six-sigma-can-benefit-your- company.

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2. Ashok Kumar Puri (2012), “Implementing Operations Excellence In Small & Medium Sized Manufacturing Companies . Using Lean-Sigma Techniques”, International Journal of Latest Research in Science and Technology, Vol.1No. 3 :Pp.307- 308.

3. Benefits of Lean Six Sigma, https://www.pm- partners.com.au/benefits-of-lean-six-sigma/.

4. Benefits of the Lean Six Sigma Methodology & Culture, https://www.pddnet.com/article/2015/06/benefits-lean-six-sigma- methodology-culture.

5. Joshua Chan Ren Jie et. al. (2014), “Implementing the Lean Six Sigma Framework in a Small Medium Enterprise (SME) – A Case Study in a Printing Company”, Proceedings of the 2014 International Conference on and Operations Management Bali, Indonesia,pp. 387-395.

6. Myers, M. D. (2007), “Qualitative Research in Information Systems”, MIS Quarterly, vol. 21 No. 2, pp.241-242.

7. Raghunath A, Dr. Jayathirtha R V, “Lean and Six Sigma approach for Manufacturing SMEs”.

8. The Benefits of Using Lean Six Sigma, https://goleansixsigma.com/the-benefits-of-using-lean-six-sigma/.

9. The Importance of Lean Six Sigma, http://www.sixsigmaonline.org/six-sigma-training-certification- information/the-importance-of-lean-six-sigma/.

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