Operational Excellence

Analysis Article
A technological approach to the development of logistic projects using
Lean Six Sigma.
Mexicali Baja California,
March 2014.
1. Introduction
In the article the authors mention the importance of ecient logistics to improve
customer service activities, attention and satisfaction. Optimizing marketing stages and
distribution can achieve increased competitiveness and protability, increased produc-
tion eciency, reduced inventory and costs and most importantly the increased value
creation. Why focus on adding value both during the manufacturing process? Because
not all the activities that the company performs in the manufacturing process adds
value to the products they oer, some studies reveal that only 5 % of the total of all
the activities add value and 60 % does not add anything [1]; On the other hand, ma-
nufacturing companies wasted around 70 per cent of its resources [3] and the portion
of time in which really adds value in the supply chain is between 0.05 % - 5 % of the
time of delivery [4].
Therefore, authors present a methodological proposal whose main objective is to
make more ecient logistics operations by reducing variability and waste in the value
chain. Based on the techniques of Lean Manufacturing and Six Sigma, the methodology
proposed by the authors is called Lean Six-Sigma Logistics (LSSL) which combines two
powerful tools to be able to achieve the best results and to obtain the benets that
both oer.
On the one hand, the Lean Manufacturing has as main objectives the elimination
of waste, the increase of speed and ow of supply chain and the creation of value.
To achieve this we should implement the ve principles of the process: Value (focused
on what the customer wants), Value Streams (focused on adding value and eliminate
waste), Flow (maintain a good structure in the ow of the value chain), Pull (produce
according to the customers request) and Perfection (perfecting the process). On the
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other hand, Six Sigma is a methodology used to identify the causes of errors, defects
and delays in the various processes of the business. In the deployment of Six Sigma
is used the process DMAIC and statistical methods for the interpretation of the data.
Applying Six Sigma provides a better product or service, through the elimination of the
variability in the processes and the achievement of a level of defects less or equal to 3.4
defects per million opportunities in the processes. Goldsby (2005, p.5) says If we can
understand and reduce variation in our processes, then we can implement improvement
initiatives that will center the process and ensure accuracy and reliability of the process
around customer expectations.
2. Lean Six Sigma Logistics (LSSL) Model
The LSSL model conforms of four pillars:
1. Strategy. Whatever the strategy to be implemented should have as main objective
the alignment of the supply chain to improve customer service and reduce costs.
The alignment will be achieved if there is a ow reliable of information with
regard to the demand of the customer and to the processes within the company.
2. Elements of approach. This is where we must focus to carry out our methodology.
According to the authors are four important aspects:
Customers. All actions made by the company should focus on the comfort
of the client, with an improvement in the logistic processes can be increased
sales, retain and attract customers, etc.
Processes. The goal is to reduce the number of possible activities to speed
up the process ow and information to reduce errors and defects.
Facts and data. The goal is to have reliable information in real time to not
rely on assumptions or erroneous data that prevent improve the process.
Suppliers. Partnering with reliable suppliers can contribute to the reduction
of the times, volumes and inventory costs, and increase in the quality of the
products.
3. Elements of development. This is where Lean manufacturing and Six-Sigma tech-
niques are implemented in logistics activities following the DMAIC methodology.
4. Elements result. Once the LSSL methodology is applied, the results to be ob-
tained are: Reducing the variability of the processes and defects. Eliminating
waste. Increase the speed of the process (workow and the response to the client).
Increase of the value.
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3. Methodology
As mentioned above, the LSSL model is based on the implementation of a metho-
dology DMAIC, which consists of dierent phases which help to diagnose the problems
of the company, measure the current status of the key processes, analyze the causes
of the problems, designing the desired improvements and control the processes already
improved.
3.1. Dene
The purpose of the denition phase is to rene the understanding that has the
company of the problem to be treated, is used to know who are the customers and
dene their needs and expectations, in addition to the company knows its results in the
logistics performance (from the internal perspective of cost indicators and operational)
and analyze their competitive position in the market (through a benchmarking) to set
real objectives in the improvement of the company.
To learn about expectations and requirements of the client in the logistic area are
recommended tools such as: Voice of the Customer (VOC), Critical to Quality requi-
rements (CTQ) and Kano analysis, in addition, in order to be able to interpret these
requirements can use the XY matrix and the Quality Function Deployment (QFD).
Once getting the above information it is time to develop ideas and to make proposals
to solve the problems, constraints or opportunities for improvement that were found.
Taking a set of proposals is necessary to make an assessment of each one to estimate
the costs and economic benets that would generate to select the logistics project and
its objectives that add greater value to the company. After choosing the project is
performed a Project Charter where set the number of people linked, the description of
the goals and the nancial measure of the project.
3.2. Measure
In this phase gathers the information and data that allow describing what the
current status of the process we want to improve, the nature of the problem and the
opportunities for improvement to achieve the objectives of the project selected.
The measurement can be made using a value stream mapping (VSM) that enables
display detailed levels of the process, highlight the waste, the bottlenecks, the ow of the
product, information and value. Accompanying the VSM must be maps of processes
(process owcharts) to clearly illustrate the sequences of operations. Then must be
performed a collection of data in certain critical points of the areas or processes of
the project through observation, sampling, tally sheets, etc. to expedite subsequent
analysis.
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3.3. Analyze
The main objective is to determine the root causes of the problems or opportuni-
ties for improvement in the critical points selected in the measurement phase. For the
detection of the causes of variability, the problems of waste and defects, the authors
recommend 9 tools: Pareto Chart, Hypothesis Testing, Analysis of Variance (ANOVA),
Regression Analysis, Failure Mode and Eects Analysis (FMEA), Control Charts, Fish-
bone Diagram, Queuing Theory and Desing of Experiments (DOE). Its important to
clarify that it isnt necessary to use all the tools in all the projects, the tools must be
chosen depending on the requirements of each project.
3.4. Improve
In this step is where are formulate the proposals to improve or counteract the
root causes of the initial problems. Proposals should make a positive impact on the
objectives of the project, the logistical objectives and the strategy of the supply chain.
The authors recommend using the following tools to propose the solutions: Simulation
Software, Total Productive Maintenance (TPM), 5 Ss, Mistake Proong (Poka Yoke),
FMEA, Optimization Models, Milk Run Systems and maintain level and reduce the
inventory.
On the other hand, for the implementation of the proposed solution the authors
dene two very important tools:
Project Engineering: provides a clear structure for the denition, management
and control of the project.
Training: Its important that before the implementation, the sta must be infor-
med and trained for the upcoming changes that will be generated in the company
during the project.
3.5. Control
In the step control, pretend keep changes made in the previous phase to ensure
lasting results and also continuous improvement of the company. To maintain the
improvement it is recommended that:
Validate the results: Before to formalizing the results of the implementation, its
necessary to make a validation study to conrm that these results are as expected,
and not need to make any adjustment or modication.
Documentation and standardization: is used to standardize all results and pro-
cedures, also facilitate the administration and control of the project.
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Institutionalization: Once documented and standardized procedures, these should
be implemented permanently throughout the company as a philosophy, guide,
tool and / or permanent work methodology.
4. Conclusion
If the proposed methodology is implemented in the right way, its easy to obtain the
objectives of reducing variability and defects to add greater value, the increase in ow
velocity and the elimination of waste, plus get many other secondary benets thanks
to the structuring and the elements of the LSSL methodology.
We must remember that the strategy should focus on maintaining a continuing
attention on the customer, the suppliers, the process, facts and data for a best ow
of the project and achieve the desired logistical objectives. Not correctly applying
or complete the process, failing to provide sucient resources, the lack of training of
workers and lack of commitment from leaders of the organization can lead to the model
doesnt produce the desired results.
References
[1] Melton, T. (2005). The benets of lean manufacturing: What lean thinking has to
oer the process industries. Chemical Engineering Research and Design, 83(A6),
662673.
[2] Goldsby, T.; Martichenko, R. (2005) Lean Six Sigma logistics, USA: J. Ross Pu-
blishing, Inc.
[3] Taj, S.; Berro, L. (2006). Application of constrained management and lean ma-
nufacturing in developing best practices for productivity improvement in auto-
assembly plant., International Journal of Productivity and Performance Manage-
ment, 332345.
[4] Jahnukainen, J.; Lathi, M. (1999). Ecient purchasing in Make-to-order supply
chains. International journal of production economics, 103111.
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