The Strategy of Six Sigma - Essay Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Title : Lean Manufacturing and Six Sigma Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2010 Table of Contents Table of Contents 2 Lean Manufacturing and Six Sigma 3 Introduction 3 Concepts in Six Sigma 3 Lean manufacturing 7 How they might help the business 9 Analysis 9 Importance of Six Sigma and lean manufacturing to Arrod Widget Company 10 Implementation at Arrod Widget Company 11 Conclusion 12 Bibliography 14 Lean Manufacturing and Six Sigma Introduction Historically, Six Sigma stemmed from a set of practices made to improve manufacturing processes and eradicate defects although its application was extended to other forms of processes of business as well. A defect in six sigma is defined as any of the output process that does not reflect the specifications of the customer, or that could result in the creation of an output that does not meet the specifications of the customer. The methodology of six sigma was first formulated by Bill Smirth in 1986 at Motorola. Six Sigma was given impetus by six preceding decades that of quality methodologies of improvement which included Zero defects, TQM, and quality control, based on the work of pioneers such as Deming, Ishakawa, Taguchi, and Juran. Lean manufacturing concepts and practices were initially developed for Toyota system of manufacturing. Ford automobile manufacturers utilized similar concepts in their manufacturing of their model of T automobile. Idea of Henry Ford concerning assembly lines that are continuous with flow systems have been considered as a vital concept of lean manufacturing even currently. Inherent problems of the system resulted into Ford’s system falling apart. Over the years the use of lean manufacturing has continued to impress (Hobbs, 2004). Concepts in Six Sigma Six Sigma is largely known business strategy that makes use of non-statistical and statistical techniques and tools, teamwork skills, a powerful roadmap (DMAIC), project management skills and change management tools to ensure the maximization of return of investment of an organization by means of eradication of defects in the applied processes. Six Sigma can be explained both in business and statistical terms. In statistical perspective six sigma refers to mistakes or defects or failures or errors on every million opportunities. In this perspective sigma refers to the variations in relation to the average of a given process (Harry. & Schroeder, 2006). The basic goal of six sigma process is the implementation of a strategy based on measurement that emphasizes on improvement of process and reduction of variation by use of improvement projects brought about by six sigma. This is ascertained through the utilization of two sub-methodologies applied in six sigma methodology: DMAIC and DMADV. DMAIC is an abbreviation for define, measure, analyze, improve, and control and it is a system of improvement for prevailing processes that are found to fall below specified standards and need improvement that is incremental to bring them to the desired standards. DMADBV is an abbreviation for design, measure, analyze, design, and verify, is a system of improvement applied in developing new products or processes at quality levels of six sigma. It can also be applied if the prevailing processes need more than just mere incremental improvement (Carreira, 2005). The terminology originates from the fact that in case one possesses six standard deviations between the closest specification limit and the process mean, as indicated on the graph, in practical terms there is no item that should fall below specifications. This is a normal distribution curve that underlies assumptions in statistical perspective of six sigma model. Sigma, σ, which is a Greek letter, demarcates the distance between the infection point of the curve and the mean, µ. The larger the distance, the larger is the spread of values obtained. In the curve above, σ = 1 and µ = 0. The lower and upper specification limits (LSL, USL) are at a distance from the mean of 6σ. Owing to the features of normal distribution, values that lie a large distance from the mean are highly unlikely. Regardless of the mean moving left or right by a margin of 1.5σ at some place later on (1.5 sigma shift), there is a presence of a reliable safety cushion. This is the reason why six sigma is geared towards having processes where by the mean lies at least 6σ away from the closest limit of specification. Six sigma training is divided into three categories namely green belt, yellow belt and black belt. The highest level of sigma six is called six sigma champions (Wang, 2010). To take care for this real life escalation in process variation over a period of time, a 1.5 sigma shift which is empirically based is introduced into the process calculation. In accordance to this perspective, a process that puts six sigma between the nearest specification limit and process mean in a short term study would consequently in the long term specifically fit 4.5 sigmas-either because the standard deviation in the long term will be larger that that realized in the short term, or because the mean of the process will move over time, or both. This has resulted in the well known definition of a six sigma process as one that gives 3.4 defective parts per million opportunities (DPMO). This founded on the fact that a process which is normally distributed will possess 3.4 parts for every million beyond any point that is 4.5 standard deviations below or above the mean. Therefore 3.4 DPMO of a process of six sigma in real sense corresponds to 4.5 sigmas, which is namely 1.5 sigma subtracted from 6 sigmas shift brought in to cater for long term variation. This cater for special causes that may result in deterioration in performance process over a period of time and it is designed to prevent underestimating of the levels of defect likely to be founded in real operation. The table below gives long-term DPMO values corresponding to various short term sigma levels. Sigma level DPMO Percent defective Percentage yield Short-term Cpk Long-term Cpk 1 691,462 69% 31% 0.33 –0.17 2 308,538 31% 69% 0.67 0.17 3 66,807 6.7% 93.3% 1.00 0.5 4 6,210 0.62% 99.38% 1.33 0.83 5 233 0.023% 99.977% 1.67 1.17 6 3.4 0.00034% 99.99966% 2.00 1.5 7 0.019 0.0000019% 99.9999981% 2.33 1.83 Six Sigma training Lean manufacturing Lean manufacturing is a comprehensive, unified set of philosophisies, guidelines, rules, techniques and tools for optimizing and improving discrete processes. While lean was founded in huge volume, Lean principles, manufacturing that is repetitive for automotive industry sector and benefit apply to all processes which include service, health care, sales, marketing, high tech and fast foods. Owing to this, some refer to it as Lean Thinking, as opposed to the restrictive title of lean manufacturing. Lean manufacturing commenced as the production system of Toyota, which was developed by Toyota Motor Car Company. Toyota initially called Toyoda commenced by manufacturing looms for cloth manufacturing and then later on branched into bicycles. In due time Toyota embarked on manufacture of engines, trucks, cars, and small delivery vehicle. Management decisions that were poor nearly drove the company into bankruptcy. It was very shameful to the management. The company name was changed from Toyoda to Toyota, workers were subsequently granted life long employment, and an improvement program that was aggressive was embarked on to try as much as possible to work their way back from almost oblivion. Soon enough techniques and tools started to come up that eased the frustrations that come with inefficient, old ways and permitted Toyota to achieve its Toyota Production System goals. Engineers of Toyota looked forward to Taylor (inventor of Industrial Engineering and Modern Management techniques), Dr. W. Deming (Father of Modern Quality Management), and Henry Ford (inventor of the assembly lines). Founded on these early beginnings, techniques were honed, improved and refined in all areas. With the introduction of the Volkswagen in the North American market in the 1960s, and Toyota in 1970s, a world recession, the automotive industry in America was in for de-stabilization and major changes. Watchdogs of automotive in North America were looking for an explanation as to how Toyota would manufacture a car, subsequently ship it to North America, and sell it cheaper and in faster way as compared to domestically manufactured vehicles. Import restrictions and huge import tariffs did not prevent the flow the flow of desirable but cheap cars. Over a period of time the vehicle quality defined by their longevity and reliability began to increase at a rapid rate. The Japanese vehicles innovated rapidly at extreme rate, while on the other hand N. American built and designed vehicles intended to change at a very slow rater. Womack came up with the phrase ‘Lean Manufacturing’ so as to persuade its adoption of Toyota Production System. Lean manufacturing was primary targeted to shorten the time between shipment and the order of the customer. If successfully applied it has resulted in shorter lead time of production, profitability that is greatly enhanced, and inventories that are greatly enhanced. These techniques also ensure enhanced reliability, substantial reduction in costs and improved flexibility (Conner, 2004). How they might help the business Time can be created because of improved method of production and consequently shorter lead time. This the duration of time between which a customer orders for a product and the time the product is delivered to him. Owing to efficient production there is no wastage and few goods on none at all are held in form of inventory. One role of lean manufacturing is to eliminate inventory. The widgets in the Arrod Widget Company will be produced in the most efficient manner. Further more there will be no hold up of material in terms of work-in-progress. This will go along way at helping the company to cut on cost. In this case waste is not seen only in terms of material-if goods are held in form inventory they take up space that could be used to do something else. Besides sometimes the company will lose money in terms of rent if it hires a building. Generally total costs are greatly reduced since the company will respond to only customer demand. Cases of overproduction will be avoided and the company incurring storage costs from high levels of inventory will be a thing of the past (Tennant, 2001). Analysis The assumption that should be made is that Arrod Widget Company has the capacity and is big enough for the implementation of lean manufacturing and Six Sigma. The company also should have the necessary tools and equipment, and moreover should be able to hire any needed expertise in the implementations of the two operation processes. The work force at Arrod Widget Company should be willing and able to embrace these methodologies as the best way of attaining high profitability and efficiency in the manufacturing of the so called widgets. The implementation process of six sigma brings in a huge time of adjustment which is one of the fundamental challenges posed by six sigma. In the Arrod Widget Company metrics should be assigned to all business functions present in the company. Besides all the business functions should be quantified in order to devise ways of improvement. Quality of functions must be analyzed in a quantitative manner. It is important to determine the number of errors made for every million attempts made (Feld, 2000). Importance of Six Sigma and lean manufacturing to Arrod Widget Company Lean manufacturing will lead to improved response to customer demand. Products bearing similar features and price are being offered by multiple manufacturers thereby making them approach commodity status. Product modification through various means of differentiation will be made possible. Once perceived or designed by the customer as a commodity, differentiation of product becomes more and more critical. If the manufacture is unable to differentiate his product using improved technology, price or quality, other means must be used to satisfy and attract customers. Moreover shorter lead time of manufacturing normally always a reduction in the amount of finished goods or inventories of work-in-progress originally carried as an offset to quickly react to demand of customer. Customer needs and wants must be understood and appropriate processes should be applied to meet them. This can only be possible if there is enough time for market research (Carreira, 2005). The ability to deliver faster products in the market translates to an increased market share particular for those customers to whose criteria is based on fastest response time is the primary purchase decision. Six sigma will ensure elimination of defects and consequently customer desires and expectations are achieved as efficiently as possible. This will ensure the target production is achieved in the expected time or in shorter periods. The whole processes lead to high profitability. Six sigma will aid lean manufacturing in the production of customized products and consequently the total efficiency will be enhanced greatly (Carreira , 2005). Implementation at Arrod Widget Company Lean manufacturing is achieved through evaluating the current process, interpreting the customer true desires and future market trends, training and buy in by Sir. Management, developing top most knowledge of the process of manufacturing, applying lean techniques and lean tools at the most critical processes, spreading out implementation of lean to all auxiliary areas to a level that a fully integrated processes of manufacturing is reached, implementation of lean with suppliers, implementation of lean with downstream supply chain organizations, including customers, apply lean into off line and non-manufacturing areas such as Design, Engineering, and Marketing. Lean manufacturing implementation is a murky subject; mostly it has been done through trial and error. Some approach will give wait to stability, continuous flow, and standardized work; pull systems, level production, and continuous improvement (Davis, 2009). Lean manufacturing phases should roll through the whole plant one after another. There is a lot to be looked at before commencement of the implementation program. The management at Arrod Widget Company must analyze the whole available range of techniques and tools and choose which one should be used in its implementation. According to Taiichi, (1988), the order of which elements should come first should be prepared. Eventually it should be decided if lean manufacturing should just be implemented in particular areas or the whole company. The details and duration of the implementation problem should also be determined. In lean manufacturing implementation, a simple manufacturing system should be designed. There should also be recognition that there will be always room for improvement and moreover they should be continuous improvement in the lean manufacturing system design until it is finer and more efficient time after time (Wilson, 2009). Conclusion Both lean manufacturing and six sigma have proved to be essential methodologies applied in production and manufacturing particularly when they are used or implement in the right way following the recommended procedures, many companies are using these methodologies in their daily operations and it is immensely paying dividends. Managers of this error should consider the implementation of six sigma and lean manufacturing approaches in their operations to ensure more efficiency and subsequently profitability. Bibliography Hobbs, D. P., 2004, Lean manufacturing implementation: a complete execution manual for any size manufacturer, J. Ross Publishing, New York. Harry, M. J. & Schroeder R., 2006, Six sigma: the breakthrough management strategy revolutionizing the world's top corporations, Currency, New Jersey. Conner, G., 2004, Lean Manufacturing: Certification Workshop Participant Guide, Lean Enterprise Training, Sheffield. Wang, J. X., 2010, Lean Manufacturing: Business Bottom-Line Based, CRC Press, Tennant, G., 2001, Six Sigma: SPC and TQM in manufacturing and services, Gower Publishing, Ltd. Pande P. S. & Neuman R. P., 2000, How GE, Motorola, and other top companies are honing their performance, McGraw-Hill Professional, Melbourne. Summers D. S., 2007, Six sigma: basic tools and techniques, Pearson/Prentice Hall, New York. Wilson L., 2009, How to Implement Lean Manufacturing. New Jersey: McGraw Hill Professional. References Feld M. W., 2000, Lean manufacturing: tools, techniques, and how to use them, Parts 2-4, St. Lucie Press, Harvard Taiichi, Ō., 1988, Toyota production system: beyond large-scale production. New York: Productivity Press. Davis, J., 2009, Lean Manufacturing: Implementation Strategies That Work: a Roadmap to Quick and Lasting Success. London: Industrial Press Inc. Carreira B., 2005, Lean manufacturing that works: powerful tools for dramatically reducing waste and maximizing profits. AMACOM Div American Mgmt Assn. Read More