Applying Lean 6 Sigma Principles to the Supply Chain

Fifteen years ago, I worked for a company that embraced Lean 6 Sigma as a core operating fundamental. Just about every member of the management team was a Lean 6 Sigma Black Belt and many had attained a level of Master Black Belt. As Director of Logistics and Planning, part of my responsibilities were to manage our relationships with outsourced manufacturing partners including quality. Shortly after joining the company I underwent an intensive Lean 6 Sigma training program and completed my Lean 6 Sigma Black Belt certification. This certification included the completion of several Lean 6 Sigma projects including Lean Kaizen events at supplier locations and a Lean 6 Sigma project to improve planning capabilities. Fifteen years ago there were few resources to help apply lean principles to supply chain planning. Luckily we have come a long way and today we have many resources available to us.

A History Lesson

Lean manufacturing was developed by the Japanese automotive industry, principally Toyota, following the challenge to re-build the Japanese economy after World War II. They realized that if they were to take on the US auto giants of Ford, General Motors and Chrysler they would have to work smarter. Today, Lean is a concept, a philosophy, a practice and a set of tools all wrapped in one.

The roots of Six Sigma as a measurement standard can be traced back to Carl Friedrich Gauss (1777-1855) who introduced the concept of the normal curve. However Bill Smith, a Motorola engineer is credited for coining the term “Six Sigma”. In fact, Motorola holds a federally registered trademark for “Six Sigma”. Today tens of thousands of companies around the world have adopted Six Sigma as a way of improving their operations.

Applications

The focus of Lean is to maximize quality, minimize unnecessary steps and optimize customer value (provide them what they want when they want it in the most efficient manner). The two primary principles of Lean, Just in Time and Jidoka, are referred to as the pillars of lean philosophy. A Lean organization focuses on providing the best quality within the shortest possible lead time, while minimizing waste (waste being classified as any resource that is not being used properly). To many supply chain professionals, minimizing waste equates to removing inventory. However, time, effort and people are also resources that must be utilized efficiently. Analyzing how resources and people are deployed and how time is spent is a critical step towards minimizing waste.

6-Sigma projects follow the six step DMAIC process which stands for Define, Measure, Analyze, Improve and Control. Just about any process can be improved by working through the many sub-steps in the DMAIC process. This process identifies and eliminates defects and reduces variability to improve the process output

Across my professional career, I have experienced firsthand how supply chain professionals can effectively apply Lean – 6 Sigma principles to reduce costs and improve customer service. Let’s take a look at some Lean tools that evolved from the Toyota Production System and how they might apply to supply chain planning.

Just in Time (JIT) ensures all efforts are directed at providing exactly what is needed, when it is needed. Applying JIT to supply chain planning is a natural extension of providing what customers want when and where they want it. The goals of JIT are aligned with the goals of supply chain planning.

Value Stream Mapping involves mapping out all the steps of your processes, including the flow, timing of each step and wait times for all associated activities. Value Stream Mapping identifies and eliminates waste. There is no doubt that mapping out the various processes in Supply Chain Planning and how they are all connected will lead to a better understanding of the value of each step and how to streamline and eliminate non-value-added activities.

Kaizen (continuous improvement) is an ongoing process of looking for improvements in every area of the process. This philosophy can be embraced at all levels of the organization and applied to any task. Finding ways to do things more efficiently, accurately and effectively minimizes waste and adds value to supply chain planning processes. Doing more with less is all about finding ways to minimize waste and improve efficiencies to work smarter, not harder.

5S (Sort, Straighten, Standardize, Shine and Sustain) is a five step process that organizes all areas of the workplace. The Sort process consists of distinguishing needed tools from unneeded tools and eliminating clutter. Straighten is the concept of keeping everything in the correct place to allow for easy access. Shine focuses on keeping the workplace neat and clean. Standardizing is the process of making the previous three steps habitual. Sustain is the concept of keeping and maintaining established procedures for every function and step of the operation. Substitute “data and/or software” for “tools” and you can see how 5S could apply to supply chain planning.

The Five Whys is the philosophy of always asking questions. Small children are especially good at this lean tool because they love to ask “why?” Asking questions leads to an understanding of how things work and finding potential fixes to problems—this should be a core principle for everyone in supply chain planning. Determining why something happened in the supply chain leads to the ability to anticipate future non-planned events and optimally respond when they happen.

As Lean and Six Sigma disciplines continue to evolve from their origins, they represent enhanced tools that can and should be applied to supply chain planning operations. Supply Chain practitioners should consider adding Lean 6 Sigma to their set of tools to help reduce costs and improve customer service while developing a high functioning supply chain organization.

Is your supply chain organization using Lean 6 Sigma principles to improve your supply chain capabilities?