Six-Sigma - Motorola's Learns to Measure Quality

Supply chain manufacturing concepts often seem to emerge fully formed out of nowhere, and while there have been numerous short-lived trends du jour, in reality the legitimate best practices have gestated for many years, sometimes for decades. There's nothing new about lean manufacturing or the Toyota Production System, for example, even though they're currently popular buzzwords. The TPS, after all, emerged in Japan shortly after World War II ended, and in fact was based on concepts popularized even earlier in the twentieth century by Henry Ford. So even though lean is at the top of many people's minds these days, the only thing truly new about lean is the acceptance it's finally gained in the United States.

Another manufacturing concept that is frequently associated with lean is Six Sigma, a structured, quality-centric approach to manufacturing. It began at Motorola in the 1980s as a way of improving the quality and reliability of its products, which would enable the company to deliver a consistently high level of customer service. Based on quality initiatives developed by the Japanese, Motorola's Six Sigma program—like the TPS—involved every employee in the company.

Six Sigma is a measure of quality that strives for near perfection, which is defined as no more than 3.4 defects per million opportunities.

Motorola learned from the Japanese that "simpler designs result in higher levels of quality and reliability," explains consultant Alan Larson, a divisional quality director at Motorola when Six Sigma was launched. The company also learned that it needed to improve manufacturing techniques "to ensure that products were built right the first time."

The term Six Sigma refers to the idea of near perfection, defined as six standard deviations between the mean and the nearest specification limit. In practice, this means a product or process can have no more than 3.4 defects per million opportunities. Six Sigma, like the SCOR Model, focuses on five areas: define, measure, analyze, improve, and control. Six Sigma programs typically use statistical process control (SPC) tools to monitor, control, and improve a product or process through statistical analysis.

To achieve the desired result of enabling continuous improvement, rather than merely putting a temporary bandage on a problem, Larson recommends that every department, group, and unit within a company complete the following six steps:

* Identify the product you create or the service you provide.
* Identify your customers, and determine the customers' needs.
* Identify your suppliers and what you need from them.
* Define your process for doing the work.
* Establish metrics for measuring the goodness of your process and feedback mechanisms to determine customer satisfaction.
* Ensure continuous improvement by establishing a team that measures, analyzes, and completes focused action items.

Proponents of the Six Sigma approach typically cite its lack of ambiguity as a major plus. The Six Sigma methodology applies a mathematical precision to what might otherwise be highly imprecise supply chain processes. A corollary benefit comes when a company insists on getting commitment from every employee, and requiring everybody to focus on the better good for the entire supply chain.

"Getting our business units to accept change has been accelerated because we're talking a common language and common methodology through Six Sigma," observes Lori Schock, site supply manager with Dow Corning, a manufacturer of silicone-based products. "It removes the doubting Thomas attitude because it is a common process based on facts."

Srinivasan' s 14 Lean Principles

Lean is not a quick fix. When 771 managers and executives were asked by the Lean Enterprise Institute to identify the biggest obstacle to implementing lean at their companies, nearly half (48 percent) said it was, "backsliding to the old ways of working." It's also revealing to note that when asked how far along they were with their lean implementations, more than half (53 percent) characterized their companies as being in the early stages. So while a lot of lip service is being paid to the idea of lean manufacturing, there remains a sizable gap on the execution end.

Lean manufacturing is a management philosophy focused on eliminating waste, reducing inventory, and increasing profitability.

As a result, companies continue to seek guidance in how exactly a lean operation should be set up, and just as importantly, how to maintain it. Mandyam Srinivasan, a professor with the University of Tennessee, has identified 14 principles that companies should follow to build and manage lean supply chains:

1. Measure any improvements in subsystem performance by weighing their impact on the whole system.

2. Focus on improving the performance of the lean supply chain, but do not ignore the supply chain's business ecosystem.

3. Focus on customer needs and process considerations when designing a product.

4. Maintain inventories in an undifferentiated (unfinished) form for as long as it is economically feasible to do so.

5. Buffer variation in demand with capacity, not inventory.

6. Use forecasts to plan and pull to execute.

7. Build strategic partnerships and alliances with members of the supply chain, with the goal of reducing the total cost of providing goods and services.

8. Design products and processes to promote strategic flexibility.

9. Develop performance measures that allow the enterprise to better align functions and move from a functional to a process orientation.

10. Reduce time lost at a bottleneck resource, which results in a loss of productivity for the entire supply chain. Time saved at a non-bottleneck resource is a mirage.

11. Make decisions that promote a growth strategy and focus on improving throughput.

12. Synchronize flow by first scheduling the bottleneck resources on the most productive products, then schedule non-bottleneck resources to support the bottleneck resources.

13. Don't focus on balancing capacities—focus on synchronizing the flow.

14. Reduce variation in the system, which will allow the supply chain to generate higher throughput with lower inventory and lower operating expense.

Lean without Silos

To Tom McMillen, director of global logistics with automaker General Motors, implementing lean practices is a continuing adventure. The company is constantly coming up with new ways to optimize its supply network and remove waste in the process of moving parts from its suppliers to a GM assembly plant. "Throughout our organization, lean practices allow us to reduce inventory in plants and streamline business practices. The benefit is more efficiency and productivity in our supply chain."

Taking the supply chain view is the approach Toyota has taken all along, but it's a difficult lesson for many American manufacturers. In the past, too many companies have looked upon the Toyota Production System (TPS) model—the definitive lean manufacturing model—as a departmental solution suitable only for the plant floor and the production line, observes Jim Matheson, a professor with Stanford University. What's more, this short-sighted thinking comes despite Toyota's insistence that lean should be embraced at the enterprise level to guide future growth from senior management levels on down.

The TPS is based on the concept of continuous improvement, which is reinforced by a corporate culture that empowers employees to improve their work environment. "Things that are running smoothly should not be subject to any control," observes Teruyuki Minoura, a senior managing director of Toyota Motor Corp. "If you commit yourself to just finding and fixing problems, you'll be able to carry out effective control on your lines with fewer personnel." That presupposes an environment where people have to think, which is why Minoura says the "T" in TPS can also stand for "Thinking."

The success Toyota and other automotive companies have achieved with lean techniques is being monitored by other industries as well. For instance, Moen, a manufacturer of plumbing products, has studied world-class lean operations with the intent of introducing lean practices and standardizing work within its manufacturing facilities. "We're trying to find the best fit for our operation and determine how much change we can bring about within our organization, and how quickly," says Scott Saunders, Moen's vice president of global supply chain.

Part of that change is being accomplished by having teams determine the best manufacturing processes, document those processes, train each other on those processes, and then implement a plan where they all agree to follow those processes. It's easier to run lean in a self-contained plant, Saunders admits, so it's important to get input from operations managers as to the best way to do the work. Running lean throughout the supply chain, which is where Moen expects to enjoy the most benefits, requires evaluating every step within the manufacturing cycle.