1. What is six Sigma?

Six Sigma is a method that provides organizations tools to improve the capability of their
business processes. This increase in performance and decrease in process variation lead to
defect reduction and improvement in profits, employee morale, and quality of products or
services. Six Sigma quality is a term generally used to indicate a process is well controlled
(within process limits ±3s from the center line in a control chart, and requirements/tolerance
limits ±6s from the center line).
Process of six sigma
The process and tools associated with each phase are explained in following sections –
Define
The main objective of this phase is to summarize the project plan. This phase focuses on
clearly specifying the problems; the goals of the process improvement project what is the
scope of the project and identifying the customers (internal and external) along with their
requirements. An input to this phase comes from the voice of customer (VOC), the voice of
business (VOB) and/ or the voice of process (VOP). In addition, sometimes the voice of
employees (VOE) is also effective to lead some six sigma improvement projects. With the
help of these inputs, six sigma projects are identified.

It outlines following essential elements:

Business Case: It helps to understand how the project is linked to the overall business
objectives.

Problem Statement: describes the problem or issue, this project is intended for.

Goal Statement: defines the project goal by considering all elements of SMART. The
acronym stands for Specific, Measurable, Attainable, Relevant & Time-bound.

Project Scope: This considers in and out for this project. It defines the project boundary.

Team & their broad responsibilities: Project team description along with their
responsibilities and roles during the project.

Time plan: Also, known as milestones. It ensures to keep a track on project progress as
scheduled.
Estimated project benefits: Project benefits need to be estimated as a deliverable. Cost-
benefit analysis is conducted & benefits, both tangible & intangible are speculated. This gives
a direction to top management, whether to approve the project.

Measure
The main objective of this phase is to collect the data that is relevant to the scope of the
project. This phase focuses on identifying the parameters that need to be quantified, ways to
measure them, collect necessary data and carry out measurement by different techniques. It
gives common language & understanding of data being collected. Data Collection plan
outlines what data to be collected? When to be collected? Who will collect? Hence, sets
overall direction for data collection.

After data collection, data is analyzed to ascertain its nature through frequency distributions.
The histogram can be used to understand the distribution of data. Depending upon data nature
– Normal or Non – Normal, data - analysis tools are decided. Current Process capability is
also an important aspect to be understood in this phase.

In Measure phase, different tools can be used like Process flowcharts, Benchmarking, Run
charts, Gage R & R and Process capability. Two commonly used measurement techniques are
– Defects Per Million Opportunities (DPMO) and Process Sigma.

Analyze
The main objective of this phase is to find the root cause of business inefficiency. It identifies
the gaps between actual and goal performance, determine its causes and opportunities for its
improvement. Analyze phase follows a drill down approach to reach exact root causes from
various potential causes identified initially.

This phase starts with exploring all possible causes to the main problem. Then, these causes
are verified & validated though hypothesis & statistical tools. The outcome of this phase is
verified root causes – which need to be acted upon to improve the process. Analyze phase
requires due care to identify & verify root causes. Because the effectiveness of process
improvement through six sigma project lies on the correct identification of root causes.

Commonly used tools in Analyze phase are Fishbone Diagram, Brainstorming, Histogram, 5
Whys, Hypothesis testing, Time series plots and Scatterplot.
Improve
This phase improves the process by determining potential solutions, ways to implement them,
test and implement them for improvement. In this phase, process owners are consulted and
improvements are suggested. Action plan for the improvement is circulated to relevant
stakeholders. This action plan specifies – Action to be taken; By when by whom etc. The
improvement plan is designed to mitigate the risk and include customer feedback and
satisfaction. With the formation of improvement action plan, implementation phase starts
simultaneously. During implementation, actions are carried out, tested for effectiveness and
implemented finally.

Tools used to eliminate the defects are Brainstorming, Mistake-proofing Simulation software,
Prototyping, Piloting and Pugh Matrix.

Control
The main objective of this phase is to generate a detailed solution monitoring plan. This plan
ensures that the required performance is maintained. It defines and validates the monitoring
system, develops standards and procedures, verifies benefits and profit growths, and
communicates to business. Hence, the main purpose of Control phase is to ensure – Holding
the gains.

During this phase, post-implementation results are evaluated. Progress is ascertained. And
Changes are incorporated - if any, correction or modification is required. Control phase in
most of the cases is a transition phase. Transition happens from current practices & systems
into new practices.

The most important part of this phase is to provide training on new changes to all relevant
stakeholders. Important tools used in control phase are Process sigma calculation, Control
charts, Cost saving calculations and Control plan.

2. What is benchmarking?
A measurement of the quality of an organization's policies, products, programs, strategies,
etc., and their comparison with standard measurements, or similar measurements of its peers.
Benchmarking is comparing one’s business processes and performance metrics to industry
bests and best practices from other companies.

Process of Benchmarking
Following are the steps involved in benchmarking process:
Planning
Prior to engaging in benchmarking, it is imperative that corporate stakeholders identify the
activities that need to be benchmarked. For instance, the processes that merit such
consideration would generally be core activities that have the potential to give the business in
question a competitive edge.

Such processes would generally command a high cost, volume or value. For the optimal
results of benchmarking to be reaped, the inputs and outputs need to be redefined; the
activities chosen should be measurable and thereby easily comparable, and thus the
benchmarking metrics needs to be arrived at. An honest appraisal of the company's strengths,
weaknesses and problem areas would prove to be of immense use when fine-tuning such a
process.

Collection of Information
Information can be broadly classified under the sub texts of primary data and secondary data.
To clarify further, here, primary data refers to collection of data directly from the
benchmarked company/companies itself, while secondary data refers to information garnered
from the press, publications or websites.

Exploratory research, market research, quantitative research, informal conversations,

interviews and questionnaires, are still, some of the most popular methods of collecting
information.

When engaging in primary research, the company that is due to undertake the benchmarking
process needs to redefine its data collection methodology.

Analysis of Data
Once sufficient data is collected, the proper analysis of such information is of foremost
importance.

Data analysis, data presentation results projection, classifying the performance gaps in
processes, and identifying the root cause that leads to the creation of such gaps need to be
then carried out.

Implementation
This is the stage in the benchmarking process where it becomes mandatory to walk the talk.
This generally means that far-reaching changes need to be made, so that the performance gap
between the ideal and the actual is narrowed and eliminated wherever possible.
A formal action plan that promotes change should ideally be formulated keeping the
organization's culture in mind, so that the resistance that usually accompanies change is
minimized.

Ensuring that the management and staff are fully committed to the process and that sufficient
resources are in place to meet facilitate the necessary improvements would be critical in
making the benchmarking process, a success.

Monitoring
As with most projects, in order to reap the maximum benefits of the benchmarking process, a
systematic evaluation should be carried out on a regular basis.

Assimilating the required information, evaluating the progress made, re-iterating the impact
of the changes and making any necessary adjustments, are all part of the monitoring process.

3. ISO (International Organization for Standardization)

The International Organization for Standardization (ISO) is a global agency that helps to
provide diverse standards for industrial, commercial and public use. Some of these relate to
manufacturing and other physical industries, while others apply to digital technologies and
other aspects of modern IT. The ISO has helped to shape the face of modern technology and
communications.

Some ISO standard

ISO 9001
By far the most popular family is that of ISO 9000. A family of quality management
standards, there are fourteen in total. Of these, ISO 9001:2015 is the only one that can be
certified to. It was first published in 1987, and has since been updated about every 7 years.
The standard details how to put a Quality Management System (QMS) in place to better
prepare your organization to produce quality products and services. It is customer focused,
and places an emphasis on continuous improvement and top management processes that
extended throughout the organization.

ISO 14001
ISO 14000 is a family of standards relating to the environment. It includes multiple standards,
similar to ISO 9000. ISO 14001:2015 is the most popular in the family, and is the only one in
which an organization can be certified.
It establishes requirements for an Environmental Management System (EMS) and is based on
the continuous improvement model PDCA (Plan-Do-Check-Act). It is a voluntary standard,
put in place by companies who want to improve their processes, and is very popular, with
over 300,000 certifications in 171 countries worldwide.

ISO 27000
This family of standards concerns information technology, with the goal of improving
security and protecting company assets. Started in 2005, the two most popular standards are
ISO 27001:2013 and 27002:2013. 27001 is management-based system, whereas 27002 is a
technical document, focused on the individual and putting a code of conduct in place.

ISO 22000
This standard is focused on the development and implementation of a food safety
management system, and can help any organization that works in the food chain. With
multiple standards including 22001 for food and drink, 22002 for food manufacturing, and
more, this family is used in a variety of organizations directly or indirectly involved with
food. These include obvious choices such as restaurants of any kind, and also companies such
as food manufacturers or even food transportation services such as caterers.

ISO 50001
One of the newest standards, the energy standard ISO 50001:2011 is nevertheless becoming
increasingly important. Released in 2011, the standard is meant for companies to put in place
an Energy Management System (EMS) dedicated to improving energy usage and efficiency.
This includes reducing an organization’s energy footprint by reducing greenhouse gas
emissions as well as energy cost.

ISO 16949
One of the older standards, ISO/TS 16949 refers to the automotive industry. TS stands for
Technical Specification. Prior to the standard, suppliers were asked by car manufacturers to
standardize to the regulations of each individual country, which often led to suppliers needing
multiple certifications for the same vehicle.

ISO 13485
The medical equipment standard ISO 13485 is a single document and does not belong to a
family like many of the ISO standards. Published in 2003, with one revision published in
2016. It puts a QMS in place for the production of medical devices and equipment, and is
very specific to the health industry.
ISO 31000
It is very important for an organization in any field to be able to manage risk effectively. ISO
31000:2009 puts in place a risk-management system to do just that. It was created in 2009 as
an attempt to create a universally recognized program to reduce risk, eliminating the need for
the many standards in other industries that include risk. The standard allows a company to
better identify threats before they occur, and effectively allocate and use resources for risk
treatment.

ISO 26000
A relatively new standard, ISO 26000 focuses on social responsibility and was released in
2010. It cannot be certified to, but rather provides guidance on how businesses can operate in
a socially responsible way. It helps clarify what social responsibility is, and helps
organizations put in place the methodology to take effective actions relating to global social
responsibility. The certification is used in over 60 countries.

ISO 20121
ISO 20121 is relevant to all members of an event’s supply chain, from organizers to caterers,
and assists these organizations in reducing their environmental footprint while still being a
financial success. These can be of any size, from music festivals to a school function, even
something on a scale as large as the Olympics.

4. firms inventory strategy

The success of a supply chain business often relies on the effectiveness of its inventory
strategy. Without a strong plan in place, companies may run shortages or end up with surplus
inventory on hand. To increase efficiencies and meet customer demand, these businesses
should educate themselves on which of the different models of inventory strategies available
best meets their needs.

Conventional Manufacturing Strategy

In a traditional, or conventional system, the assembly line works perpetually. When one
department or area completes its work, it delivers the output to the next station regardless of
that station's current situation. This strategy prevents machinery and employees from sitting
idle; however, should bottlenecks in the line occur, workers may end up waiting for materials
or become overloaded with incoming goods.
Just-in-Time
A just-in-time inventory strategy addresses the inconsistencies of the conventional model. In
this type of management system, companies purchase units only as needed to meet customer
demand. Inputs are classified as they pass through three different stages: raw material, work
in progress, finished goods. Materials arrive just prior to production and are assembled just in
time to ship to clients. As of a result of this strategy, businesses experience a substantial
reduction in costs and more efficient operations.

Material Requirements Planning

Materials requirements planning employs computer software applications to manage
inventory. MRP applications break down inventory requirements into planning periods to
keep production running smoothly while maintaining minimum inventory levels. Designed to
answer what is needed, how much is needed and when it is needed, this model works
backward from the planned finished product to determine the components and raw materials
needed to create it. While costly to implement, MRP systems help managers plan for capacity
needs and allocate production times.

Economic Order Quantity

The economic order quantity model assumes that customer demand is constant and that
inventory will deplete at a fixed rate until it reaches zero. Businesses that employ this method
continuously monitor inventory levels and order a fixed quantity of new units each time their
supplies reach a specific quantity remaining. This reorder point is specifically timed so the
company will receive materials right when the company will need them avoiding shortages or
overages of industry.

5. Way of Assessing Business Risks

Business risks come in all shapes and sizes. This means that effective risk assessment must be
adaptable to or uniquely designed for specific dangers. Whenever possible, a firm should
group similar risks into comparable analytic processes.

Ideally, a company should allocate capital based on risk as determined by cost-benefit

analysis. Every risk identification process should lead to effective analysis, and every
analysis should inform corporate governance.

There are two broad forms of risk that may affect a business: internal and external.
Internal risks
Internal risks affect far more specific and controllable processes. Companies use operational
risk assessment for risk of loss from inadequate business decisions. Compliance risk
assessment is crucial, particularly in tightly controlled industries, such as banking or
agriculture.

Internal audit risk must be assessed, particularly for publicly traded companies. It wasn't long
ago that companies simply operated on industry-standard practices. Modern companies,
however, assess internal risks by considering the likelihood and impact on specific objectives.

External risks
External risks are those that originate outside of the firm and include economic trends,
government regulation, competition in the market and consumer taste changes. Internal (firm-
specific) risks include employee performance, procedural failure, and faulty or insufficient
infrastructure.

External risk assessment is almost always data-heavy. Since most external risks are systemic
to an economic system – and therefore outside of the control of the company – forecasts
cannot be adjusted based on different corporate governance decisions.

The external assessment begins by categorizing potential risks. Some scales are nominal, and
some are ordinal. Companies prefer nominal categories because they are easier to manipulate
and compare. Quantitative techniques, such as benchmarking or probabilistic modeling, adapt
to new data as it arrives. Companies can then track relevant indicators and create thresholds
of acceptable risk for a given project.

6. Firms product distribution strategy (factory to end users)

Distribution entails making a product available for purchase by dispersing it through the
market. It involves transportation, packaging, and delivery. Distribution is fundamental to a
company’s sales. A distribution channel refers to the flow of business that occurs between a
manufacturer and a consumer. It is the path that a transaction follows. Distributors are the
intermediaries that deliver and house products for producers to sell to retailers. These
channels can be relatively simple or increasingly complex.

There are direct and indirect channels. In a direct channel, the producer works directly with
the consumer. An indirect channel, on the other hand, incorporates intermediaries into the
sales flow.
Channels of distribution
There are different levels of distribution:
Level Zero: A level zero distribution channel is the simplest. It involves a direct sale from
manufacturers to consumers with no intermediary.

Level One: A level one channel has one intermediary as the middleman between the
producer and consumer. An example is a retailer between manufacturer and consumer.

Level Two: When thinking about levels, associate the number to the number of
intermediaries. In this case, a level two channel involves two intermediaries between
producer and consumer. An example here would be a wholesaler selling to a retailer who then
sells to the consumer.

Level Three: Here’s where an agent or broker comes in. Agents work on behalf of
companies and deal primarily with wholesalers. From here, the wholesalers sell to retailers
who then sell to consumers.

Distributor Profile:
Distributors: A distributor is a wholesaler who assumes extra responsibility. In addition to
fulfilling retailer orders, they actively sell products on behalf of the producers. From
managing orders and returns to acting as a sales representative, they go beyond being the
middleman between retailers and producers. They perform market analysis and are constantly
searching for new opportunities to achieve peak sales performance. A distributor focuses on a
particular area and market which allows them to cultivate strong relationships with
manufacturers. Unlike a wholesaler, they most likely have a stronger affiliation with
particular companies. Distributors have a direct responsibility to making sure products are
flying off retail shelves.

For example, one distributor may work out an agreement with a popular beverage company
who works with them regularly, whereas wholesalers are used on a need-by-need basis. They
have the option to sell to retailers and other sellers, or directly to consumers and businesses.

Wholesalers: A wholesaler fulfills orders of retailers, by reselling goods, often in large

quantities for manufacturers. Wholesalers purchase in bulk, typically, which lowers the price,
from either distributors or manufacturers. This allows wholesalers to make a profit because
they are able to sell the retailers in smaller packages that yield higher prices. Unlike
distributors, wholesalers only deal with the storage and delivery of goods. But, in certain
cases, you have to go through a wholesaler to get to a distributor.

Retailers: Retailers are the outlets where consumers can purchase products. This is your
local grocery store or Walmart down the street. They can sell through storefront locations or
through online channels. Retailers purchase products from distributors or wholesalers.

Brokers and Agents: Make way for agents. They handle the logistics of the sales. Agents
handle contracts, marketing, and pulling together specialized shipments. A part of their job is
customer relationship management. On behalf of manufacturers, they take ownership of
products through the distribution process. They represent the producer in the sales process.

7. Firms raw material strategy