The global pandemic of 2020 made a profound impact on our world, disrupting lives, changing how we work and do business, and upending social norms. And while there are still side effects rippling through our society (look at how popular working at home has become!), there’s one particularly annoying consequence that we’re still struggling with and probably will continue to for some time.
Supply chain disruption.
Supply chain disruption is today’s commercial sector’s big boogeyman and scapegoat. Is your item back ordered for six weeks? It’s the supply chain! Is your preferred model or color of an item not available? It’s the supply chain! Why is your brand-new couch so expensive? Because that item has become scarcer. Why? Supply chain!
Is there any hope? Can there be any relief from the constant woes brought on by supply chain issues? That’s why we’re here. This article deals with how logistics can be improved by incorporating the Six Sigma methodology. First, we will cover Six Sigma logistics, including why Six Sigma is a good choice and how to improve logistics using Six Sigma.
But before we get to the heart of the issue, let’s define some terms.
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Six Sigma: A Refresher
Six Sigma is a popular, data-driven methodology designed to improve business processes by employing statistical analysis instead of guesswork. Each process step is defined and evaluated, and improvements are made by controlling variation and understanding their intricacies, resulting in greater predictability and more profitable business processes. Six Sigma is not just a training method; it’s an approach based on data meant for projects with quantifiable business outcomes.
Six Sigma is divided into five steps called DMAIC. This term stands for:
1) Define the issue and the project’s goals
2) Measure the current process’s different aspects
3) Analyze data to uncover the process’s root defects
4) Improve the process. What needs to be done?
5) Finally, control the process, so it performs at this high level in the future
We will soon see how Lean Six Sigma logistics uses these five steps to improve quality. But now, let’s define logistics.
Also Read: What is Lean Methodology?
What is Logistics?
Logistics is the supply chain management process that covers how goods, services, and related data are procured, stored, and transported from their origin to the final point of consumption. Furthermore, this transport process assumes the deliverables arrive timely and in good shape. In addition, logistics management involves identifying potential distributors and suppliers and ascertaining their accessibility and effectiveness.
Based on this definition, you can see the potential value of Lean Six Sigma in warehousing and delivery. That’s good because now we’ll explain how these two concepts mesh together.
So, What Does Six Sigma Logistics Involve?
Six Sigma was initially designed to be applied to manufacturing, but fortunately, it works on all processes. When employed in a logistical context, Six Sigma can identify mistakes or defects and eliminate them to reduce the amount of variability, improving the logistical process, improving the entire supply chain process.
It seems a daunting task for a company to manufacture a product with Six Sigma efficiency (defined as 99.9997 percent) and distribute it as rapidly as possible with Six Sigma efficiency. However, organizations can achieve this lofty goal by implementing the Six Sigma methodology during the logistical planning phase. For example, suppose a business implements the Six Sigma process during every process, taking the product from the origin point to the point of consumption. In that case, it can eliminate waste, shrink lead time, boost the supply chain flow, reduce inventory cost, and decrease shipping variation. If Six Sigma logistics is implemented correctly and consistently at each stage, it will create an almost perfect logistics plan for any business.
For Six Sigma to succeed in logistics, it must assess related performances and analyze available data to ensure and maintain an almost perfect flow. Fortunately, checks and balances and safeguards are in place to guarantee this efficiency exists throughout the logistical process’s lifecycle. After all, defects are not only a bad look for the company; they’re costly, and the more defects in the supply chain, the more negative impact they will have on the organization’s bottom line. But with Six Sigma, teams are trained to identify defect causes and logistical delays, then develop statistically-driven and practical techniques to remove them..
Six Sigma’s primary goals are finding, diagnosing, and fixing defects and errors, regardless of where they are in the supply chain, and that includes complex logistical processes. Six Sigma professionals scrutinize each phase of the supply chain to ascertain where the defects come from and how to remedy them. This activity helps the organization achieve a 6-Sigma perfection level or just 3.4 defects per million in plain language. The net result is higher profits and happier customers.
Now let’s outline the top reasons why your organization should implement Six Sigma logistics.
Note:A Six Sigma Calculator is a powerful tool for measuring process performance, determining defect rates, and identifying improvement opportunities using statistical methods.
The Top Reasons Why You Should Choose Six Sigma for Your Logistics
We’ve touched on Six Sigma’s advantages throughout our article, but let’s list them for easy reference. Here is why Six Sigma logistics is the best way to go.
1) It reduces errors, therefore cutting costs. Six Sigma logistics identifies and eliminates waste. One of the most significant issues for businesses today, especially given our current global situation, is how to decrease lead time by streamlining inventory. Six Sigma makes it easier to devise effective ways of achieving near-perfect quality and speed.
2) It improves overall product quality. It stands to reason that if you reduce errors, the product’s quality correspondingly rises. On a related note, customers may perceive the product’s quality differently if it takes too long to arrive. Six Sigma’s positive effect on the supply chain helps preserve the product’s integrity.
3) It leads to more customer loyalty. Deliver a high-quality product in a timely fashion, and people start to notice, cultivating loyalty to the brand. Organizations that employ Six Sigma in both the fabrication and delivery processes are more likely to develop a consistent following and good reputation among consumers, leading to increased business and a healthier bottom line..
4) It creates a healthier corporate culture. Six Sigma encourages a hierarchy so everyone knows their role and what the organization expects of them. In addition, Six Sigma shows everyone how the various teams must work together to effect positive changes. When these teams meet their short- and long-term goals, they develop bonds that strengthen the overall company. Also, as employees begin to see the results of their hard work (e.g., fewer defects, more profits, and happy, loyal customers), this boosts morale and encourages people to keep up the good work.
How to Use Six Sigma to Improve Logistics
Here are select ways that Six Sigma can improve an organization’s logistics.
1) Eliminate mistakes. The more errors found in a logistical process, the less efficient it is. Six Sigma often employs a tool called Poka-Yoke, which is Japanese for “mistake-proofing” and involves a mechanism that forces people to act in a desired way. Six Sigma also uses the 5s process to minimize errors. The parts of 5s are:
b) Set in order
2) Reduce Order Fulfillment Cycle Time. We define order fulfillment as the process of moving a product from the point of purchase to the customer’s home. Customers become dissatisfied if this process suffers delays. Six Sigma not only helps the goods arrive on time but also ensures they will even get there faster. Organizations use Six Sigma to analyze the order fulfillment process and spot problems that raise the cycle time. Once the issues are identified, the team can then address the concerns and reduce cycle time, typically by using the DMAIC methodology mentioned above.
3) Boost Order Fulfillment Efficiency. Cycle time and efficiency are two different concepts. Teams can increase fulfillment efficiency by a combination of streamlining the logistical processes, spotting and eliminating errors, and reducing cycle time.
Is Lean Six Sigma a Different Concept?
It’s common to see Six Sigma and Lean Six Sigma used interchangeably. However, there is a distinction, and that matters when discussing logistics. So let’s figure out what differentiates Lean Six Sigma logistics from plain Six Sigma logistics.
Lean Six Sigma combines two popular and respected business methodologies, lean and Six Sigma, into a single methodology to improve the organization’s performance and eliminate wasteful practices. Organizations turn to both methodologies to eliminate waste and improve business processes. However, lean management relies on people to identify the problems causing waste and has a philosophy of doing more with less.
However, Six Sigma relies on something other than staff to find the problems; instead, it uses data. It depends on tools like statistical analysis, engineering process control, and stochastic optimization, management strategies like DMAIC (short for define, measure, analyze, improve, control), and DMADV (which stands for define, measure, analyze, design, verify).
When you use Lean Six Sigma, whether for manufacturing or logistics, you identify eight types of waste, summed up by the handy acronym DOWNTIME.
1) Defects. Are there defective products that don’t meet the organization’s quality standards?
2) Overproduction. Does production excessively surpass demand?
3) Waiting. Are there bottlenecks? If so, where are they? And does the process experience unplanned downtimes?
4) Non-utilized talent. Are employees being underutilized, and are their talents and skill sets being improperly allocated?
5) Transportation. Are there any poorly managed shipping and transportation methods?
6) Inventory. Is there a supply surplus that exceeds customers’ demands?
7) Motion. Is there an excess movement of products, machines, or personnel?
8) Extra processing. Are there unnecessary or redundant tasks? Are these tasks doing more than what’s called for?
Although Lean Six Sigma was primarily designed for manufacturing processes, it only takes a little imagination to see that the above questions can easily apply Lean Six Sigma to logistics. This is because Lean Six Sigma takes the two-fisted approach, covering the human element and the role of data, resulting in a vast improvement in the company’s logistics process.
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