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by Derrell S. James

Six Sigma. Lean. What do these initiatives have to do with the supply chain? The short answer is everything. The origins of these approaches are based, in Six Sigma’s case, on continuous improvements in quality and variation control, and in lean’s case, on production velocity and eliminating waste. Both Six Sigma and lean can help improve supply chain efficiency, and companies today are quick to take advantage of one or the other approach throughout their organizations. However, few companies realize that while each approach can be mutually exclusive, an interesting thing happens when the two are combined.

Which brings us to our first question.

Have we forgotten what customers want?

In the “old” days, quality advocates functioned more or less as company cops, authoritative figures who’d get you in trouble for taking shortcuts. Today, and definitely in the future, the quality professional’s role will have less to do with blowing the whistle than seamlessly integrating processes within all business operations relating to customers. This represents a distinct departure from the past and requires specific tools and procedures. To access these tools, companies are combining lean and Six Sigma methodologies. Thus, to answer the question, quality professionals haven’t forgotten what customers want, but the quality community has never fully realized the best approach for recognizing customers: defining value, delivering it and maintaining accountability for those goals.

Which leads us to the next question.

How can we bring value to the supply chain?

First, what is value? Simply, it’s whatever the customer says it is and is willing to pay a company to deliver--whether goods or services. Lean says in order to measure value inhibitors, increase value and eliminate waste, we must construct a value stream map of our current state, create another map for the future that includes the same processes without the waste, and then devise an action plan to take us to that future state and beyond to the ideal state: perfection. Six Sigma tells us to measure these processes and establish variation-reducing controls to ensure a consistent output. That methodology also tells us to ensure conformity. Taken separately, the lean and Six Sigma approaches could possibly be viewed as conflicting. These days, companies are learning that, in fact, the two methodologies are complementary, if not inseparable.

Within the supply chain, quality professionals must ensure adherence to processes, compliance to requirements based on the customer’s definition of value, elimination of nonvalue-adding activities, and documentation for consistency of purpose and practice. To do this, we must position ourselves as authorities on value--and what maximizes value for our companies.

This brings us to our third question.

Is there a tool we can use?

Absolutely. The value stream mapping flowchart on page 35 illustrates a methodology that will lead to a clear map of processes feeding into and through a company before being realized by the customer--i.e., the total supply chain.

Each of the 12 steps follows the lean value-stream mapping methods from James P. Womack and Daniel T. Jones’ invaluable Lean Thinking (Free Press, 2003). These steps involve every function at every level of a company, whether large or small, manufacturing or service. Additionally, when companies recognize that variation is undesirable in the quality world, they can incorporate Six Sigma variation-reduction methods to strengthen the streamlined processes and devise the balanced metrics needed to measure success.

The 12 steps for conducting total supply chain value-stream mapping and analysis are as follows:

Step one

To define your company’s business life cycle, start by answering the following questions:

What is the company’s vision and mission?

What are the company’s major processes or organizational flows?

What are the boundaries?

Who are the key value stakeholders?

How do key value stakeholders--i.e., the company, its suppliers and its customers--define value for the identified business life cycle?

What are the outcomes expected from the business and relationships with suppliers and customers?

For example, a generic business life cycle for a company might look like the figure below.

Step two

Customers’ and suppliers’ interactions occur at points all along the life cycle and thus are inseparable from the company processes noted in step one. If your analysis uncovers communication breakdowns that reduce value, add waste or reduce the passion for success, these should be clearly identified for intense analysis and scrutiny during subsequent steps.

A representation of these total supply chain interactions is required, including the interactions of leadership; any touch points between suppliers, customers and the company; and how these processes are integrated. Make a note of the “softer” side of the relationship by expanding upon the following:

Describe the relationship between each company department and its supplier or customer--is it cordial, collaborative, adversarial, nonexistent?

Describe the personalities of the people involved in the relationships. Are they proactive or reactive, responsive or procrastinating, talkers or listeners? Consider ways in which the relationships can be improved.

At this point, it’s a good idea to evaluate how thorough you want the value stream map to be. Too much analysis will provide inordinate and unmanageable data but too little will hinder you from identifying wasted resources or process steps.

Assess other potential flows or shared services that might not be enterprisewide but run parallel to those already depicted. Enabling infrastructures such as information technology, e-business, human resources, accounting, and social/cultural customs should be included. Finally, analyze external influences--societal, environmental, political--that might affect the map, as well as any destabilizing forces. These might include policies, laws, demographics or other trends.

Step three

Assess and map the flow of products, programs, services, information, money and time based on the business life cycle defined in step one.

The resulting map and lists of influences represent the current state--or level one work breakdown--of the enterprise. At this point, validate boundaries, values, company outcomes, vision and mission as identified in step one. Adjust these as necessary to reflect current business realities.

Step four

Take each portion of the current state and drill down a minimum of one layer to the details of constituent processes, flows, components or influences. Assess the processes and document interfaces as well as the “softer” sides discussed in step two. This drilling down allows you to clearly see the interaction of the various flows, both technical and social, and to gather more specific data for analysis.

Step five

Overlay all informational, social and technical components of the flow not already captured and mapped. Validate the connections, interrelationships and decision points of the work breakdown in its current state. Add any shared service or enabling infrastructures such as IT, human resources and leadership to the map. Ensure that the information gathered reflects your current business reality. Challenge any details that are merely assumptions, exaggerations or oversimplifications.

Step six

Capture relevant data that’s measured in terms defined by the company, suppliers and customers, and ensure definitions are consistently understood to prevent data comparison flaws. You want to capture the metrics or information available for each process piece and analyze/link the behaviors that each generates. Conduct assessments, interviews or nonadvocate reviews to capture other data elements and create a comprehensive view of the total supply chain.

Step seven

Analyze and identify wastes, inhibitors of flow and value, costs, risks to flow and risks to success criteria. Group these findings into enterprise themes and then analyze how each affects time, resources and money. It’s important to re-analyze step five to ensure that nothing was missed.

You may be thinking many of the tasks in steps two through seven are redundant. They are, and that’s intentional. Without a true and complete representation of a company’s current state, any hope of achieving an effective future state is moot.

Step eight

Create an ideal state based on a joint definition (i.e., by supplier, customer and company) of perfection. Include technical and social elements of this state such as work and information on demand; one-by-one processes or single-piece flow; defect-free work in administrative, production or service processes; lowest possible cost; committed and capable workforce; autonomous decision-making; rewards linked to performance; goal alignment and communications. Obviously, achieving perfection is impossible, but setting it as a goal encourages breakthrough thinking and analysis that will create a more robust future state. It also allows quality professionals to more fully integrate into the enterprise, thus eliminating any lingering “quality cop” images.

Step nine

Map out a future state you can reach in a relatively short time--e.g., 12 months--based upon the ideal consensus. Consideration must be taken of the behaviors required for success as well as success criteria determined by the customer, company and suppliers.

Step ten

Assess and analyze the gaps in the company’s ability to achieve the future state. Create a balanced set of measurements for success, and confirm that the behaviors generated conform to future-state directives. A balanced scorecard approach allows those involved to create measures that complement each other. They can also use lean and Six Sigma to evaluate processes.

For example, service turnaround time is a typical lean metric. An additional and balancing Six Sigma metric would be to measure the percentage of service provided within x number of days. This ensures the team meets requirements for average turnaround time and minimizes variation around that average. Execution of that particular process in the future state then becomes a given. What is quality if not the clear and successful execution of agreed-upon requirements between suppliers, customers and the company?

Additionally, validate any gaps found and return to step seven in order to capture, measure and complete the mapping.

Step eleven

Establish and implement actions, programs and events to help create value and eliminate waste, thereby achieving the future state. Create necessary infrastructure to ensure leadership, integration, course corrections, validation and accountability for the changes. Analyze risks, change-management issues and other inhibitors to successful implementation. Ensure actions allow for a total supply chain view that will create a win-win situation for all stakeholders.

Step twelve

Establish a renewal period--say, a rolling 12-month view--to revisit and adjust the future state as it moves toward the ideal. Build into this process stakeholder enrollment, ownership and accountability for all actions and ongoing analyses. Many quality professionals consider this step critical. Each opportunity to discuss, raise issues, analyze and renew activities with the total supply chain allows stakeholders to integrate the social changes needed for success.

Which brings us to our last question.

What is social-technical integration?

To ensure lasting support and buy-in from all stakeholders, companies must integrate the social and technical aspects of change management that occur in a joint lean/Six Sigma transformation. Each stakeholder noted in the 12-step process has a personal stake in the company’s future success and will naturally form emotional attachments to the process in anticipation of the expected outcome.

By integrating lean and Six Sigma approaches throughout the total supply chain, companies can manage change more effectively, engage customers and vendors, and ensure success. Quality professionals must recognize and embrace this concept.

It’s been said many times that the “soft stuff is the hard stuff.” That’s not really true. It’s the interaction of the social aspects of business--typically called the “soft stuff”--with the technical aspects that truly becomes the hard stuff.

The overlapping area in the above diagram denotes where a quality professional can add the greatest value. Leaders must loosen up and realize that success doesn’t happen simply by complying rigidly to a standard. True success comes from delivering value. Great quality systems and leaders in the future will emerge from applying lean and Six Sigma throughout the supply chain. The two approaches will force an internal and external focus well beyond the technical parts of a business.

Quality isn’t a department, and the supply chain isn’t a buzzword for aligning organizational structures, creating centers of excellence or facilitating more silos for servicing customers. If we extend W. Edwards Deming’s fundamental point of eliminating “walls” between organizations to include suppliers and customers as intimate and integral parts of our processes, we’ll truly realize our quality potential.

About the author

Derrell S. James is the general manager of Sypris Test and Measurement’s calibration division. He has 15 years of experience in operations leadership and business development in high-technology manufacturing and service industries. James is a frequent speaker and writer on leadership, lean and continuous improvement, and operational effectiveness.

Sypris Test and Measurement is a leading provider of calibration services, test and measurement services, and specialty products to major corporations and government agencies. Sypris’ nationwide network of state-of-the-art fixed and mobile calibration laboratories are certified by A2LA for ISO/IEC 17025 and are also ISO 9001-registered. Visit www.calibration.com or www.sypris.com for more information.