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Using Six Sigma to Maximize Supply Chain Efficiency Through S&OP Processes

Date: 21 February 2018

Lean and Six Sigma may have been on the radar of supply chain managers for some time, but there has been a certain amount of skepticism surrounding its role in sales and operations planning (S&OP) processes. However, even though these methodologies have fallen in and out of favor with supply chain managers, the value of aligning Lean and Six Sigma within S&OP processes has never been more crucial.

WHAT ARE LEAN CONCEPTS?

Six Sigma methodologies have been around since the 1980s, but that doesn’t mean everyone understands what a Six Sigma green belt, black belt, or master black belt does.

Six Sigma is highly process focused, following a sequence of steps with specific value targets. Six Sigma projects are data-driven and disciplined – by identifying defects and errors and reducing variability, they work to improve processes.

Lean Six Sigma combines Lean management, focusing on minimizing resources, eradicating non-value-adding activities, simplifying processes, and reducing waste.[1]

IMPROVING SUPPLY CHAIN EFFICIENCY

So what are the benefits of aligning Lean and Six Sigma within a sales and operations planning process model?

The supply chain is focused on the value stream as a whole. By applying Lean principles, businesses are able to boost customer value and generate measured results. Here’s how Lean Six Sigma can improve your supply chain and your bottom line.

1 Improving Performance and Reducing Cost

With a focus on avoiding waste and minimizing errors, Lean Six Sigma can improve quality and reduce the need for rework. By using a core Lean supply chain principle to implement flow and pull systems, organizations can benefit from a supply chain that delivers greater velocity and shorter lead times, meaning less money and time is wasted.

2 Increasing Efficiency and Productivity

The DMAIC process (define, measure, analyse, improve and control) allows supply chain professionals to identify, measure and remove process defects and inefficiencies. Prioritizing root-cause analysis means projects and timelines are assessed based on impact and risk to ensure time and resources are well allocated.

3 Boosting ROI

Lean Six Sigma programs can be measured by financial results. Tracking supply chain improvements and measuring costs is possible with the help of key statistical tools and techniques. Companies seen to be implementing these methodologies are often favored by shareholders who are looking for assurances that a company is doing everything it can to cut waste and drive up profits. An increase in shareholders means greater value for customers, giving that company a competitive edge.

According to a study by the American Society for Quality, effective implementation of Six Sigma, on average, led to 1.7% savings and a return of more than $2 per dollar invested in direct savings.[2]

4 Keeping Customers Happy

Lean Six Sigma always puts the customer first. It allows businesses to better understand what their customers value and helps them boost customer satisfaction. More satisfied customers means greater sales – this is possible due to lower lead times, reduced costs, and greater first-time quality rates.

THE VALUE OF S&OP TEAMS IN SUPPLY CHAIN EFFICIENCY

With a focus on alignment and synchronicity across all organizational functions, S&OP is playing an increasingly important role in supply chain management. Smart organizations looking to make their supply chains Lean are looking to S&OP teams.

Acting as a conduit for Lean Six Sigma project deployment and a cross-functional body, S&OP teams are able to circumvent the challenges created by complex organizational structures and functional silos. By carefully considering the constraints of an interrelated supply chain, they are able to assess its impact on demand, capacity, logistics, planning and purchasing. Put simply, they determine what’s working, what’s not working, and what adjustments need to be made to improve the situation going forward.

DSJ Global can help you embrace Lean working by tapping into a niche talent pool and finding candidates who are the right fit for your company. If you would like to learn more about these trends, as well as others in the industry, get in touch with DSJ Global today. 

 



[1] http://www.apics.org/apics-for-individuals/apics-magazine-home/magazine-detail-page/2017/09/13/sop-lean-six-sigma

[2] http://asq.org/qic/display-item/index.html?item=35200