DISSERTATION

ON

LEAN SUPPLY CHAIN MANAGEMENT

BY

IC-43496N LT COL VK SINGH

(ON STUDY LEAVE)
STN WKSP EME
CHANDIMANDIR – 134107
(HARYANA)

0
 CONTENTS

PHASE I

1. WHAT IS LEAN SUPPLY CHAIN MANAGEMENT

2. LEAN ENTERPRISE WORKSHOP

PHASE II
1. BENEFITS OF LEAN SUPPLY MANAGEMENT
2. STEPS TO KEEP CHAIN LEAN

PHASE III
1. MANAGING INVENTORY INVESTMENT EFFECTIVELY THROUGH
LEAN SUPPLY CHAIN
2. THE THREE Vs MODEL
3. SIX SIGMA
4. SIX SIGMA METHODOLOGY
5. DESIGN FOR SIX SIGMA
6. SIX SIGMA TRAINING
7. SIX SIGMA BLACK BELT
8. SIX SIGMA IMPLEMENTATION
9. SIX SIGMA CONSULTANTS

PHASE IV

1. CONCLUSION
2. CERTIFICATE BY THE GUIDE

1
PHASE I
WHAT IS LEAN SUPPLY CHAIN MANAGEMENT?

1. Lean is how a properly designed and operated supply chain should function. A
lean supply chain process has been streamlined to reduce and eliminate waste or
non-value added activities to the total supply chain flow and to the products
moving within the supply chain. Waste can be measured in time, inventory and
unnecessary costs. Value added activities are those that contribute to efficiently
placing the final product at the customer. The supply chain and the inventory
contained in the chain should flow. Any activity that stops the flow should create
value. Any activity that touches inventory should create value. Lean Supply Chain
Management is for manufacturing companies to assist them in defining near and
longer-term opportunities and to develop specific action plans so that they can
achieve the enormous benefits that lean supply chain management can deliver.

2. Lean Manufacturing has proven its ability to bring phenomenal cost reductions
and quality improvements with essentially no major capital expenditures.
Organizations that have implemented Lean Manufacturing and Supply Chain
Management now dominate their competitors in terms of quality and unit cost for
production.

3. Following are the steps for transition towards a lean approach: -

(a) Identifying leading-edge lean principles and techniques

(b) Analyzing the existing system
(c) Assisting in the cultural change
(d) Demonstrating the steps to lean implementation

4. Competitiveness depends on an organization's ability to provide customer

satisfaction throughout the customer experience. It also means providing cost-
effective products and services at a lower cost more quickly than competitors. The
principles and techniques that are successful in automobile manufacturing can be
applied to essentially any process that has not yet reached the perfect state of zero
defects, no waste, and total customer satisfaction. It requires the effective
application of above four basic principles described and demonstrated in the
workshop. By clearly understanding their interrelationships and mutual support,
managers can apply lean techniques to achieve competitive supremacy

5. Lean supply chain management is for many companies. It is not just for
manufacturers who practice lean management. It is also for non-manufacturers,
wholesalers, distributors, retailers and inventory holding organizations.

6. Lean companies reduce the number of suppliers for each commodity of purchases
to a minimum, a few or often only one.

2
7. Traditional companies deal with many suppliers, so many that it is impractical to
fully understand the capabilities of any one of them (quality, capacity, cost
structure, or technical capabilities). Divide the volume among many suppliers to
the extent that their company's purchasing bargaining power and influence is low
at all of them focus primarily on price in making buying decisions.

8. The Lean Supply Chain Management Opportunity Assessment could include:

(a) Defining customer value throughout the supply chain

(b) Map sales order processing from order intake to delivery and payment
for selected major product groups throughout the supply chain.
(c) The process mapping will identify:
(d) Value added activities as defined by the customers
(e) Non-value added activities
(f) Essential business processes
(g) Identify how the sales order process can be rationalized to reduce costs,
reduce Lead times, eliminate errors and reduce AR days throughout the
supply chain.
(h) Identify lean manufacturing improvements with suppliers
(j) Identify opportunities for supply chain integration
(k) Identify potential cost savings, improvements in quality and reduced
lead times. A result of lean supply chain management implementation
activities.
(l) Provide a project plan to implement agreed upon recommendations
(m) Identify skills and training requirements to implement lean supply chain
management activities.

LEAN ENTERPRISE WORKSHOP

1. The Lean Enterprise and Supply Chain Management Workshop provides
training and discussion in the following topics. Subjects are presented that
support and improve the supply chain as well as the production process.

(a) Workshop Introduction

(i) Work Shop Goals and Expectations
(ii) Course Overview
(iii) Business Enterprise
(iv) Lean Production Implementation
(v) Lean Production and Six Sigma
(vi) Lean Manufacturing Background
(vii) The Origins of Lean Production
(viii) Lean Thinking
(ix) Holistic Approach

(b) Lean Organization

(i) Communication Strategies
(ii) Product-Focused Responsibility

3
 (iii) Leadership Development
(iv) Operational Roles and Responsibilities

(c) Lean Process Assessments

(i) Process Mapping
(ii) Routing Analysis
(iii) Rolled Through Yield
(iv) Process Maintenance Down Time and Availability
(v) TAKT Calculations
(vi) Workload Balancing
(vii) Lean Processes

(d) Process Control

(i) SMED
(ii) Total Productivity Maintenance
(iii) Poka-yoke
(iv) Housekeeping
(v) Visual Controls
(vi) Graphic Work Instructions
(vii) Statistical Process Control

(e) Lean Metrics

(i) Tools & Techniques
(ii) Output-Based Measurements
(iii) Lean Goal Alignment
(iv) Measurement Definition

(f.) Logistics
(i) Planning and Control
(ii) A, B, C Material Handling
(iii) Service Calls
(vi) Customer Supplier Alignment
(v) Just-in-Time Kanban Demand Signals
(vi) Cell Team Work Plans
(vii) Level Loading
(viii) Mix-Model Manufacturing
(ix) Workable Work

( g) Supply Chain Performance and Identifying Waste

(i ) Value Stream Analysis
(ii) Seven Forms of Waste
(iii) Waste Identification Exercise
(iv) Value Stream Mapping Tools
(v) Value Analysis Time Profile
(vi) Supply Chain Cause & Effect Analysis
(vii) Lean Logistics Strategies

4
 (h) Six Sigma Improvement Projects
(i) Sources of Waste
(ii) Passive Incremental Improvements
(iii) Passive Breakthrough Improvements
(iv) Proactive Enforced Breakthrough Improvements
(v) Proactive Enforced Incremental Improvements
(vi) Lessons Learned.

2. VSE corporation of USA is a professional services firm that specializes in

providing management services like Lean Enterprise workshop.VSE’s Lean

Enterprise Workshop is recommended for the manager who needs to reduce

costs and increase efficiency, for the supervisor who will be expected to
implement lean processes, for the purchasing personnel who will want lean
processes operating within suppliers, for the front-line personnel who will
use its tools, and all personnel actively involved in quality improvement.
On completion of the workshop, participants will be prepared to:

(a) Lead a Process Team

(b) Perform a Lean Process Assessment
(c) Develop a Plan for Lean Process Implementation
(d) Implement Lean Process Improvement
(e) Evaluate the Lean Status of Suppliers
(f) Participate in Supply Chain Lean Projects
(g) Evaluate Supply Chain Lean Enterprise Initiatives

3. VSE offers highly regarded management technical staff members who are
recognized as industry experts in a holistic approach for process
improvement and optimization using Six Sigma and LEAN Enterprise.
Some of key works have been published and are in demand to speak at
technical symposiums. VSE provides consulting, various levels of training
and certification, and implementation support in the areas of Six Sigma and
Lean Enterprise. Highlights of support include:

(a) Organizational Pre-Assessment - Determination of the Potential

and Method of Improvement;
(b) Development of Enterprise Level Process Map/Value Stream
Maps
(c) Assessment of Mission, Vision, Goals, and
Objectives;
(d) Process and Product Optimization;
(e) LEAN Manufacturing;
(f) Project Management/Leadership/Training/Coaching;
(g) Quality Engineering and Reliability Engineering;

5
 (h) Integrated Product and Process Development (IPPD); and,
(j ) Organizational Transformation and Change Management Services.

4. The workshop focuses on training and consulting on practical applications

that
positively affect the quality and productivity of clients’ products and services.
Services in the workshop range from individual improvement projects to global
organizational change programs.

5. Achieving an organization’s goals depends on the continuous ability to capitalize

on the rapidly changing opportunities in the marketplace, in technology, and in the
financial and political environment. This requires that an organization develop
processes and production skills that enable it to minimize waste and maximize
efficiency. The Lean Enterprise and Supply Chain Workshop provides the structure
and vision for the lean organization and the steps required to achieve it.

PHASE II

BENEFITS OF LEAN SUPPLY CHAIN MANAGEMENT

1. Speeds development and fulfillment operations because fewer and more

dependable suppliers make fewer mistakes to cause disruptions

2. Permits much more time to be spent with a supplier to develop a close

relationship and understand his capabilities

3. Makes you a major customer of your important suppliers which allows you to
influence quality, price, delivery schedules, and capacity decisions

4. Reduces the number of variables with which your manufacturing, quality, and
reliability people have to cope, producing better products

5. Allows design engineers to work closely with supplier engineers to effect

functional, cost, and quality improvements in products and to make outsourcing
decisions

STEPS TO KEEP CHAIN LEAN

1. Supply chains gain waste and non-value added activities for many reasons, both
internal to the organization and external. Regaining the lean supply chain may
mean addressing many of the same issues that created the problems of extra and
unneeded time, inventory and costs.

6
2. The ideal approach is to design the perfect supply chain and fit your
organization's operation onto it. Supply chain management is meant to reduce
excess inventory in the supply chain. A supply chain should be demand driven. It
is built on the pull approach of customers pulling inventory, not with suppliers
pushing inventory. Excess inventory reflects the additional time with the supply
chain operation. So the perfect supply chain would be lean with removing
wasteful time and inventory.

3. A supply chain, with the pull, flows back from deliveries to the store or to the
customer warehouse back through to purchase orders placed on suppliers.
Anything that delays or impedes this flow must be analyzed as a potential non-
value added activity.

4. Map the process.

5. Continuous improvement requires ongoing support.

6. Build a multi-discipline team for the project-one that understands lean supply
chain management.

7. Analyze the total supply chain process, not just the outbound part or just the
inbound part.

8. Understand lean is an ongoing, continuous improvement approach as compared

to business process reengineering which can be viewed as a one-time change.

9. Assess for gaps or redundancies that create time, the key waste.

10. Avoid cannibalizing the process, such as focusing on warehousing or

transportation or other activities instead of studying the entire supply chain
process.

11. Realize cause-effect impacts. High freight cost, for example, can be a problem or
a symptom. Heavy inventory can be a problem or, more often, a symptom of a
problem.

12. Drive for root causes not symptoms.

13. Ask customers about how well your supply chain operates. Since the supply
chain is built on customer pull, the end user has a vital view.

14. Comprehend the complexity of supply chains with multiple suppliers,

distribution centers and customers.

15. Appreciate the fundamental impact of international souring and shipping on time

7
 and inventory.

16. Use event management and exception management to add management and
control. Supply chain complexity increases the need for event and exception
management technology and capability.

17. Exercise control on lead times and on lean dynamics

18. Grasp the impact of the organization and culture on supply chain process design
and operation.

19. Calculate the risks of the lean supply chain.

20. Assess where standardization is feasible and where customizing to specific

customer’s requirements is needed.

21. Observe the effect that time has on inventory and on an effective process.

22. Collaborate with suppliers. It is a requirement, not an option; and it is a two-way exchange.

23. Monitor supplier performance. It is vital to a lean supply chain operation.

24. Measure the present process as total cycle time, costs and inventory (both in
dollars and units) and the inventory turns.

25. Integrate the supply chain. Breaks in the flow, both internal and external, can be
pockets of waste.

26. Identify non-value-added activities, their effect and their cause.

27. Rationalize the process.

28. Improve the process to drive change.

29. Streamline the process for unnecessary complexity and unnecessary suppliers and
service providers.

30. Know that technology cannot overcome process flaws.

31. Involve your people-employees, suppliers, service providers-to provides input on

present supply chain effectiveness and for improvements.

32. Make the supply chain visible; recognize that blind spots can be areas of waste.

33. Recognize the viability of outsourcing as a driver of needed changes.

8
 34. Probe for uncertainties that create inventory and other waste. Forecasting
accuracy is one area of opportunity.

35. Investigate reasons why product does not flow in a more consistent and
predictable manner. Order and shipment releases from suppliers, for example, can
create inbound flows that can mitigate time and inventory buffers.

36. Position inventories at the proper distribution centers. The right inventory at the
wrong facility can result in inter-facility transfers that add time and extra
transport costs and can delay customer order deliveries. This is a non-value-
added action that generates waste.

37. Incorporate technology, such as supply chain execution technology, as part of the
process improvement. It is an enabler. Understand where standard ERP and other
software may and may not enable a lean supply chain.

38. Be open to the changes of a lean supply chain. From technology, to a completely
redesigned process, significant change can be expected.

39. Include change management in your lean program requirements.

40. Most organization should pursue at least some of Principles & Practices that
underlie a lean supply chain i.e. lean purchasing, lean logistics and lean
operations. Some key features of purchasing include a drastically reduced supply
base, frequent shipments of small lot Some key features of lean purchasing
include a drastically reduced supply base, frequent shipments of small lot. In the
operations arena, lean techniques include process redesign with cellular layouts,
continuous flow production, level build schedules, inventory pull systems with
visible signals, equipment set-up reduction, preventive maintenance, and total
quality practices.

41. Stream inventory management has proven itself by reducing inventory while still
satisfying customer demand.

42. The primary objective of this structure is to satisfy end-customer requirements at

the lowest total cost, including the effective management of inventory across the
supply chain

43. Lean supply chain management has as its primary objective the shortening of
time between a customer order and shipment to the customer by eliminating
waste, including waste that manifests itself in higher than necessary inventory.

PHASE-III

MANAGING INVENTORY INVESTMENT EFFECTIVELY THROUGH LEAN

SUPPLY CHAIN

9
1. The effective management of inventory investment should be a primary objective
when searching for ways to manage costs, improve profitability, and enhance
shareholder value. This article addresses the critical topic of inventory
management from several perspectives. First, it highlights the impact that better
inventory management can have on key performance indicators. The article next
presents a model for assessing inventory management activities and approaches
from three dimensions inventory volume, velocity, and value. Third, it outlines
various ways to manage inventory investment better, including best-practice
examples. The article concludes with a discussion of how one company is using
inventory management to achieve a superior return on assets.

2. The opportunity to improve financial performance through effective inventory

management practices is great and, at many companies largely unrealized.

3. From a financial accounting perspective, inventory is categorized as a current

asset. When inventory resides in the same category as cash and marketable
securities (which truly are current or liquid assets), one cannot help but feel that
there is something good about inventory. And, for many years, this is precisely
how most managers have viewed this special kind of asset. Unless executive
managers begin to appreciate how the funds committed to inventory affect cash
flow, working capital requirements, and profitability, it is unlikely that they will
undertake serious efforts to manage inventory as an asset. Investments in
inventory simply do not undergo the same rigor and analysis as investments in
other types of assets, particularly plant and equipment.
Any discussion of inventory management needs to identify its impact on key
financial measures. A CEO of an industrial company is not likely to get overly
excited when he or she hears that total inventory turns increased from 8 to 10
because of better inventory practices. Executive managers simply do not think
about, nor are they evaluated by, the performance criteria used to evaluate the
typical supply chain manager. However, these executives will appreciate the
importance of effective inventory management once the financial impact of
increased turns is translated into their impact on key financial indicators.

4. Better inventory management affects return on investment. A doubling of

inventory turns, combined with the benefit of lower inventory-related expenses
that contribute to a higher profit margin, increases return on investment.

5. Identifying the impact of inventory management activities on return on

investment is not the only way to demonstrate the value of such efforts. Inventory
management activities can be translated to reflect their impact on earnings per
share, economic value-add, return on assets, working capital, cash flow, and profit
margin. The point here is that effective inventory management is critical to
managing assets and controlling expenses. Demonstrating how inventory actions
affect key performance indicators is essential for capturing executive
management's attention.

10
 THE THREE Vs MODEL

1. How managers view inventory can differ depending on where one resides in the
value chain. While financial planners view inventory in terms of dollars, which is
reported on the balance sheet, supply chain planners typically view inventory in
terms of units. What is the right viewpoint if we want to manage this investment
effectively? Actually, assuming multiple perspectives about inventory is a
worthwhile way to approach this topic.
Companies that are serious about managing inventory must visualize how their
practices and approaches will affect the three Vs of inventory management - the
volume, velocity, and value of inventory.

2. Volume relates to the amount of inventory that a company owns at any given
time. Key volume measures will relate to total units on hand, including safety-
stock levels. Velocity refers to how quickly raw material and work-in-process
(WIP) inventory can be transformed into finished goods that are accepted and
paid for by the customer. As the rate at which inventory moves from suppliers,
through operations, and on to customers accelerates, the average amount of
inventory on hand at any given time is reduced. Higher velocity requires a lower
commitment of working capital and improves cash flow. Key velocity measures
include material throughput rates, inventory turns, and order-to-cash cycle times.
Finally, value pertains to the unit cost of the inventory. Key measures include
standard costs and the total value of inventory, including raw materials,
components, subassemblies, and finished goods.
While certain actions can predominantly affect a specific variable (velocity,
volume, or value), there is often interdependence among these variables. The
point here is that organizations must pursue activities and approaches that
positively influence the volume, value, and velocity of inventory through and
across the supply chain.

3. Improve Inventory Record Integrity : A logical place to begin when managing

inventory investment is to make sure there is agreement between physical and
electronic inventory. Companies often compensate for error and variability in
supply chains with excess inventory, usually in the form of safety stock and safety
lead-times. This also applies when there is excessive error in record integrity
systems. Perfect record integrity must become a key inventory management
objective. When record integrity is lacking (that is, discrepancies exist between
physical quantities and electronic records), steps must be taken to identify and
correct the sources of error. This will require asking and answering a range of
questions. For example, are record errors displaying a random or systematic
pattern? How severe are the differences between physical stock and electronic

11
 records? Are proper receiving, stock keeping, and withdrawal procedures and
systems in place? Is theft a problem? Are suppliers shipping quantities that match
their documentation? Are effective cycle-counting procedures used? Is inventory
scrap and obsolescence accounted for correctly? Are employees trained to
properly move, handle, and disperse material? These questions highlight the many
areas that can be explored when pursuing improved record integrity.
Unfortunately, record integrity is an essential but often overlooked part of
inventory management. It is difficult to manage inventory when we lack
confidence in knowing what we own or physically have on hand.

4. Improve Product Forecasting : Perhaps the most important piece of information

that moves across a supply chain is the forecast of end-customer demand. Many
companies, however, fail to recognize the effect that inaccurate forecasting has on
inventory volume and velocity. The downside of poor forecasting includes higher
inventory volumes and carrying charges, poor customer service as inventory is
misallocated across locations and products, and excessive safety stock levels. For
companies that are serious about better inventory management, improving the
quality of product forecasts, like improving record integrity, is an ideal place to
start. There is explicit link between better forecasting reduced inventory
requirements & improved financial performance.

5. Create a Planning System and Structure: An emerging organizational trend is to

view the supply chain from an integrated or holistic perspective rather than as a
collection of independent activities. In response to this trend, some organizations
have created new positions and developed systems to support a balanced and
continuous flow of inventory from supplier to end customer.

SIX SIGMA

Six Sigma stands for Six Standard Deviations (Sigma is the Greek letter used to
Represent standard deviation in statistics) from mean. Six Sigma methodology
Provides the techniques and tools to improve the capability and reduce the defects
In any process. It was started in Motorola, in its manufacturing division, where
Millions of parts are made using the same process repeatedly. Eventually Six
Sigma Evolved and applied to other non-manufacturing processes. Today you can
apply Six Sigma to many fields such as Services, Medical and insurance
Procedures, Call Centers.Six Sigma methodology improves any existing business
process by constantly Reviewing and re-tuning the process. To achieve this, Six
Sigma uses a Methodology known as DMAIC (Define opportunities, Measure
performance, analyze opportunity, Improve performance, Control performance).

SIX SIGMA METHODOLOGY

1. Six Sigma methodology involves the following: -

12
 (a) Defining opportunities
(b) Measuring performance
(c) Analyzing opportunity
(d) Improving performance
(e) Controlling performance

SIX SIGMA PROCESS

Determine Benchmarks
DEFINE Set Baseline
Determine Customer Requirements
Get Customer Commitment
Map Process Flow

Develop Defect Measurement

Develop Data Collection Process
MEASURE Collect Data
Create Forms
Complete & display Data

Verify Data
Draw Conclusions from Data
ANALYZE Test Conclusions
Determine Improvement
Opportunities
Determine Root Causes
Map Causes to Effects

Create improvement ideas

Create models
Experiment
IMPROVE Set Goals
Create Problem Statement
Create Solution Statement
Implement Improvement
Methods

Monitor Improvement Progress

Measure Improvement
CONTROL Statistically
Assess Effectiveness
Make Needed Adjustments

13
 2. Six Sigma methodology can also be used to create a brand new business process
from ground up using DFSS (Design for Six Sigma) principles. Six Sigma
Strives for perfection. It allows for only 3.4 defects per million opportunities for
each product or service transaction. Six Sigma relies heavily on statistical
Techniques to reduce defects and measure quality. Six Sigma experts evaluate a
Business processes and determines ways to improve upon the existing process.
Six Sigma experts can also design a brand new business process using DFSS
(Design for Six Sigma) principles. Typically it’s easier to define a new process
with DFSS principles than refining an existing process to reduce the defects. Six
Sigma Incorporates the basic principles and techniques used in Business,
Statistics, and engineering. Six Sigma improves the process performance,
decreases Variation and maintains consistent quality of the process output. This
leads to Defect reduction and improvement in profits, product quality and
customer Satisfaction.
PROBLEM SOLVING METHODOLOGY

Phase 1:
Define
Characterization

Phase 2:
Mass

Breakthrough
Strategy
Phase 3:
Analyze

Phase 4:
Improve
Optimization

Phase 5:
Control

14
 Project are worked through these 5 main
Phases of the Six Sigma Methodology

DESIGN FOR SIX SIGMA

1. DFSS is essentially a Five-phase process, comprising of Define,

Measure, Analyze, Design, and Verify, within which are a number of
crucial steps for performance improvement. For each of these steps a
number of specific tools are associated.

2. The Define phase begins the DFSS process with a formal tie of the Voice
of the Customer (VoC). This phase involves developing a team and team
charter, gathering VoC, performing competitive analysis, and developing
measures for 'Critical to Quality' issues (CTQs).

3. The Measure phase consists of identifying functional requirements,

developing alternative concepts, evaluating alternatives, selecting a best-fit
concept and predicting sigma capability.

4. The Analyze phase requires the use of Benchmarking, process capability

information and a statistical approach to tolerances.

5. The Design phase requires the development of detailed design elements,

Predicting performance, and optimizing designs.The Verify phase consists
of testing and validating the design (Piloting). As increased testing using
formal tools occurs, feedback of requirements should be shared with
manufacturing and souring, and future manufacturing and design
improvements should be noted.

6. We can also help you identify lean supply chain implementation team
members and internal leaders. Identify internal and external barriers to the
change process and how they can be overcome. Create a sense of urgency,
provide external and internal communications, maintain the change
momentum, embed the changes and new culture in your organization.
Projects manage and audit improvements and offer on-going support to
ensure successful implementations.

7. The vital aspect of Lean SCM Training:-

(a) Supply chain mapping techniques and breakthrough thinking
(b) Supply chain strategy
(c) Re-engineering supply chain activities facilitation training
(d) Supplier certification training
(e) Lean manufacturing training
(f) Leadership and teamwork development [Details]

15
 (g) Change and Project Management.
(h) Six Sigma Training

8. Businesses in various industry segments such as Services industry

(Example: Call Centers, Insurance, Financial/Investment Services),
Ecommerce industry (Example: B2B/B2C websites), Education can
definitely use Six Sigma principles to achieve higher quality. Many big
businesses such as GE and Motorola have successfully implemented Six
Sigma but the adaptation by smaller businesses has been very slow.

9. Here are some of the reasons to consider:

(a ) Bigger companies have resources internally who are trained in Six

Sigma and also have 'Train the Trainer' programs using which they
churn out many more Six Sigma instructors. Also many bigger
companies encourage the employees to learn Six Sigma process by
providing Green Belts/Black Belts as mentors.
(b) Effectively applying the Six Sigma techniques is difficult compared to
actually learning the techniques in a class?
(c) Big companies make Six Sigma as part of the Goals for employees
and provide incentives for employees who undergo training and
mentor colleagues.
(d) Many assume that that Six Sigma works for bigger companies only
as they produce in volumes and have thousands of employees. This
notion is not true and Six Sigma can be effectively applied for small
businesses and even companies with fewer than 10 employees.

SIX SIGMA BLACK BELT

1. The terminology of karate was first used to describe levels of expertise at

Motorola during Six Sigma's inception in the 1980's. The highest levels of
expertise in Six Sigma consultants are Master Black Belt and Black Belt.
The Black belt is the tactical leader of the performance improvement team.
They are full time project leaders with the sole responsibility of leading a
number of projects and subsequent teams through performance
improvement (DMAIC) or product/process design (DMADV). Whilst
they must have a firm understanding of all elements of Six Sigma, more
important are superb project management and facilitative skills, such as
ensuring that ground rules for meetings are set, agendas are set and
followed, and intervention of the right level is taken at the
appropriate point if necessary for performance improvement. If the Six
Sigma Black Belt is to take a more participate role in a particularly
difficult meeting then a Master Black Belt should undertake this
facilitative role.

16
 2. The Master Black Belt is the highest level of mastery of the tools,
techniques and concepts associated with Six Sigma Black Belt training
and performance improvement. The Master Black Belt (or Business
Process Leader) should operate firstly as a trainer and then as the internal
quality consultant, coaching teams, providing tutorials and facilitating
meetings with both performance improvement project teams and
executives. Necessary skills to successfully accomplish this role include a
thorough and in depth technical understanding of the many strategic and
tactical elements of Six Sigma, and excellence in the management of
change, facilitative leadership, and communication. Six Sigma Black Belts
denotes the ultimate in tactical leadership.

SIX SIGMA IMPLEMENTATION

1. In order to implement a successful six sigma program it is not only

critical that the executive management team create and sustain the
optimum environment within which process reengineering can occur and
within which the process improvement teams can operate efficiently, but
that each Individual within the organization is given a taste of what Six
Sigma is. Many organizations have adopted the 52/40 approach, which
refers to 40 hours of Six Sigma training being given to each individual in
each 52 Weeks (i.e. one-week each year).

2. This performance improvement training typically starts with organisational

issues such as the financial situation, the competitive environment, and
opportunities within that environment, and move on to the benefits of using
Six Sigma, and what is expected of each employee within a Six Sigma
organization. Following this, processes and sub-processes need to be
assessed, the owners of these processes identified (Often MBBs), and
measures for effectiveness and efficiency created. Subjective measures
should be recorded, and a 4 6 week period of measurement initiated.
When this initial measurement period is over, the actual data from each
process is reviewed, projects are selected and Champions are chosen.
(Process often referred to a "Baselining")

3. Black Belts also need to be trained. This training typically follows the
DMAIC pattern Define, Measure, Analyze, Improve and Control. Beyond
this the critical elements of successful Six Sigma implementation also need
to be taught: change management, facilitative management, and individual
tools clinics and all supported by a well know statistical software (e.g.
Minitab).

MEASURE PHASE

(i) Identify measurement and variation

17
 (ii) Determine data type
(iii) Develop data collection plan
(iv) Perform measurement system analysis
(v) Perform data collection
(vi) Perform capability analysis
SIX SIGMA CONSULTANTS

1. In order to bring real value to an organization, external Six Sigma

consultants must have both substantial and varied strategic and tactical
experience in the field. External Six Sigma consultants should be able to
reference business executives that they have worked with to create and help
manage the strategic elements of Six Sigma, not just the training of project
teams for performance improvement. External Six Sigma consultants can assist
with the development and incorporation of Six Sigma into an organization, but
some real exploratory work needs to be undertaken before hiring the
consultant. A variety of questions should be put to Six Sigma Consultants and
the referees they provide. These questions should include the measurable
performance improvement benefits they have achieved, their key strengths and

2. Weaknesses, and their ability to transfer knowledge across the client

organization. If they were Black belts or Master Black belts another key
leading question is were they ever certified in their role and to which standard?

PHASE IV

CONCLUSION

Lean supply chain management is not about "fixing" what someone else is
doing wrong. It is about identifying and eliminating waste as measured in time,
inventory and cost across the complete supply chain. This requires continuous
effort and improvement. A lean supply chain can take reduce time by 10 to
40%, inventories by 10% to 30% and costs by 10% to 25%. Continuous
improvements can take payback to the upper range-and beyond. This is a
significant benefit to ROI (Return on Investment) and to the bottom line.

18
 CERTIFICATE BY THE GUIDE

This is to certify that this dissertation is written under my supervision.

Date: (Bharat Bhusan)

Lt Col
Instructor CL ‘A’
CMM Jabalpur

19