Improving the Supply Chain: Continuous Improvement Part 1

This is a series on Supply Chain Basics looking at the discipline from the Society of Operations Management perspective. Supply chain is also essential to project management as PMs are typically trained in world class contracting. For example, my Masters program had several courses involving contracting and the Defense Acquisition Workforce Improvement Act, DAWIA, certification highlights the combination of project management and supply chain. In this post, we will explore continuous improvement methods adding some additional support as well.

Continuous Improvement Methods Part 1

Numerous well-tested process improvement methods in the last several decades emerged mostly from Total Quality Management, TQM. The goals were to reduce defects and waste in the use of time and materials.  Six Sigma seeks to reduce defects to statistical insignificance. Once the operation is leaned out and defects are reduced to zero, then Just In Time seeks to reduce inventories increasing the leaning out of the operations. meanwhile, the Theory of Constraints, TOC, provides a systemic approach to increasing throughput. As one constraint is removed another will appear in a continuous improvement manner. The remainder of this post will look deeper into the methods of continuous improvement.

Six Sigma:  APICS defines Six Sigma as a methodology that furnishes tools for business process improvement. The intent is to diminish process variation and improve product quality. The specific goals is to achieve near zero defects, 3.4 defects per million samples. In Six Sigma jargon a defect is anything that annoys the customer and an opportunity is the chance to be annoying.  The challenges in Six Sigma include:

• Determining what constitutes a defect.
• Setting meaningful limits on variability.
• Which opportunities will yield the best results.
• Setting the sample size as wide as possible in order to achieve Six-Sigma level of defects.

Not all opportunities are as significant as others. Customers may not tolerate defects that are a cost to them but may embrace a defect that is a benefit.  The Six Sigma process results in a Bell Curve distribution of opportunities for defects; Figure 1. The idea is to push the unacceptable conditions outside the production process through design of the process by making incremental improvements and monitoring for out-of-specification conditions. 

Figure 1: Six Sigma Control

Achieving Six Sigma quality standards requires participation of three elements; the Customer, Process, and Employee. The customer sets the quality standard or acceptable rate of defects. The process has to be assessed from a customer perspective to include low errors and consistent performance. The process measure is to prevent customers from shifting to the competition. Full employee involvement in the quality system is a necessity as there are no irrelevant employees when it comes to customer satisfaction. The lower staff is on the totem pole the more visible to the customer. Hence, the defects become more apparent.  Training with certification levels of green, black, and master black belt ensure that employees have sufficient knowledge to lead quality standards, design, and development. 

The Six Sigma process and tooling begins with DMAIC; Define, Measure, Analyze, Improve, and Control. Each is a phase in the Six Sigma process. Designing and developing new processes is another process model known as DMADV; Define, Measure, Analyze, Design, and Verify.  Six Sigma is data heavy and without that level of visibility, defects / quality cannot be determined. Some of the tools to analyze include process mapping, control charts, and Pareto diagrams. 

The next post will continue this posting by looking at eliminating waste.

Reference:

(2011). APICS Certified Supply Chain Professional Learning System. (2011 ed.). Version 2.2.