Six Sigma Process Improvement for Supply Chain Management - dummies

# Six Sigma Process Improvement for Supply Chain Management

Six Sigma is a process improvement method that’s built on statistics. The basic idea is that variation is bad. When you’re running a manufacturing process or a supply chain, you need consistency and predictability. If you don’t have consistency, some percentage of the things that you make probably isn’t useful for your customers. If you do have consistency — that is, if you have a process under control — there’s a much better chance that the products you make are useful. Consistent processes lead to a high quality level for products.

Statisticians describe the variation of a process in terms of the amount of deviation from an average value. The symbol that is used to represent deviation in a mathematical equation is the Greek letter sigma (σ). Any set of data about a process has some deviation, but the more sigmas you have, the more stable your process is. So the statistical basis for Six Sigma is to reduce process variability so much that defects occur only at the sixth sigma (6σ), or 3.4 times per million.

The important thing to understand about Six Sigma is that the goal is to have a very small number of defects — that is, improved quality — as a result of decreased process variation. You get there by measuring processes and using mathematical tools to improve consistency.

You follow five steps to apply the Six Sigma as a process improvement methodology. These steps create the acronym DMAIC (pronounced “duh-may-ick”).

1. Define
2. Measure
3. Analyze
4. Improve
5. Control

Another Six Sigma approach called DMEDI (Define, Measure, Explore, Develop, Implement) is used to design new processes.

## Step 1: Define

The first step is to clearly define the process that you’re trying to improve and why you want to improve it. During this phase, you need to build a business case for why the project is important and what resources you need to complete it. An important part of building the business case is to get feedback from the people who deal with the outputs of a process: the customers. This feedback is called the Voice of Customer (VOC). The overview of the project, including the VOC, should be summarized in a Six Sigma project charter.

Writing up the project charter can be harder than people expect. Don’t get hung up worrying about making the charter perfect. Instead, just create a rough draft that explains what you are trying to do. That will make it easier to clarify your thinking and to get input from other people. The charter is just your starting point. It is okay to make changes and improve it as the project moves forward.

## Step 2: Measure

The second step is measuring the process that you’re trying to improve. Because Six Sigma is a mathematical approach, you need to collect data so that you can measure how the process is working and calculate the amount of variation. Taking good measurements is critical so that you can calculate benefits during the next steps in a project. If your measurements aren’t accurate then your improvement efforts are probably going to be misguided.

## Step 3: Analyze

After you collect data about the process, you analyze the data. In the world of Six Sigma, this analysis often requires a solid understanding of statistics and the use of some statistical analysis software. Generally speaking, the data helps you identify variations in a process and shows how those variations affect the quality of your products. Data analysis can help you understand what things are causing the variability — the root causes — so that you can look for ways to improve the process.

## Step 4: Improve

The next step is putting the knowledge you gained from data analysis into action by making changes to improve the process. These changes can happen at the same time, or they can be phased in over time. Commonly, this phase includes some pilot studies to provide confirmation that the changes provide the expected benefits before you implement them throughout a process. If you decide that there are several improvements that will need to be brought online over time, you can sequence them in a Multi-Generational Project Plan (MGPP). An MGPP is like a roadmap that shows the order in which you will implement improvements.

## Step 5: Control

The funny thing about improving a process is that sometimes, when you stop paying attention to it, the process goes right back to working the way it did before you improved it. In Six Sigma, the final step is establishing a system to ensure that the improvements you made become permanent. Control often involves performing ongoing measurements and reporting to show that the improvements remain in place and continue to provide consistency over time.

The DMAIC approach is used for improving an existing process. DMEDI is used for designing new processes.

There are lots of educational programs available to help people learn about Six Sigma, and many of them will even grant you a certificate when you’re done. Generally, there are four levels for Six Sigma training and certification:

• Yellow belts understand the basic concepts and terminology of Six Sigma and can contribute as a member of a process improvement project.
• Green belts have a solid understanding of Six Sigma and can lead process improvement projects on their own.
• Black belts have mastered Six Sigma and can teach other people how to manage process improvement projects.
• Master Black Belts have such a high level of mastery that they can train and supervise Black belts.

There is so much overlap between Lean and Six Sigma that some people combine them into a single discipline called Lean Six Sigma.