Quality and Process Improvement: Lean Manufacturing and Six Sigma

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This document covers the early history of lean manufacturing and six sigma, their transition from manufacturing industries to retail and services (e.g. healthcare, finance, etc.) industries; and similarly, six sigma's transition from manufacturing processes to service industries.The similarities and differences between the two methodologies and their tools and techniques, the compatibility of both. The expected shelf life of lean manufacturing and six sigma as improvement techniques, their applications, processes, and case studies. Reference list is also included.Please cite this document accordingly. The document has previously been submitted to Newcastle University's Turnitin program. To avoid plagiarism, please cite accordingly.

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<p>IntroductionCompanies are pressured to remain competitive, as globalisation, rapid technological changes, innovation and product variety proliferation all have increased and intensified competition in many industries and business sectors world-wide. This trend pushes companies to constantly improve and implement best management principles strategies and practices (Carpinetti and Martins, 2001). Therefore, the importance of processes and quality management strategies, such as lean manufacturing, six sigma and quality circles, have been recognised to play a crucial, complementary role in the creation of sustainable competitive advantage (Russell and Taylor, 2009). The following will discuss two of the many business management and continuous improvement strategies; Lean Manufacturing and Six Sigma.</p> <p>Lean ManufacturingLean manufacturing is a philosophy which strives for simplicity and emphasizes continuous improvements through the elimination of waste (i.e. non-value adding activities), to ultimately achieve defect-free operations (Hicks, 2012). Lean principles originated from the manufacturing operations as a set of tools and practices to eliminate waste and inefficiencies in production towards cost reduction, quality and reliability improvements, and quicker cycle-times (Corbett, 2007).The concept was pioneered by the Toyota Production Systems in the late 1980s which focused on waste reduction and low cost automation. It arose from the pressure for efficiency after the World War II where Japanese manufacturers were faced with material, financial, and human resources shortages (Abdulmalek and Rajgopal, 2007) and could not afford mass production facilities used by its American rivals (Hicks, 2012). Gradually, Lean has evolved from manufacturing organisations to include those in the service sector such as insurance companies, hospitals, retailing, and banking (Corbett, 2007; Russell and Taylor, 2009).This approach aims to meet demand instantaneously, with perfect quality and no waste (Slack et al., 2010). Thus the flow of products and services in Lean will deliver exactly what customers want, in the right quantities, at the right place and time, at the lowest possible cost. Consequently, lean produces a synchronised flow of products and services through processes, operations and supply networks (Slack et al., 2010). It emphasises on customer-centricity, education and training, internal and external customer-supplier relationships, perfection, synchronised flow, reduction in variation, inclusion of all people, and waste elimination (Slack et al., 2010). Lean manufacturing identifies seven common types of wastes, these are overproduction, transportation, waiting, unnecessary processes, unnecessary inventory, motion and defects (Ohno, 1988; Womack and Jones, 1996; MacInnes, 2002; George, 2002). McAdam and Donegan (2003) identified the eighth form of waste as unused human resources. Later, service operations researchers (e.g. Bicheno and Holweg, 2009; Maleyeff, 2006) redefined the manufacturing wastes for service operations. Table 1 lists these types of wastes. </p> <p>Table 1: Types of Wastes in LeanManufacturing WasteService Waste</p> <p>OverproductionDelay</p> <p>WaitingDuplication</p> <p>TransportationUnnecessary movement</p> <p>Unnecessary processesUnclear communication</p> <p>Unnecessary inventoryProcess inefficiencies</p> <p>MotionLost opportunity to retain or win customers</p> <p>DefectsTransaction errors</p> <p>Unutilised human resourcesResources inefficiencies</p> <p>According to ORourke (2005), the identification of these wastes is uncovered through the recognition of what the customer values. In identifying wastes, customer values are determined through a lean initiative called the value stream mapping (VSM) (ORourke, 2005). A value stream is all the activities and processes involved in creating and delivering the final product (Abdulmalek and Rajgopal, 2007). Accordingly, VSM is a lean technique which aims to identify and eliminate all types of waste in the value stream (Rother and Shook, 1999). Other important value-identification tools are market research and Quality Function Deployment.</p> <p>Implementation: Principles, Tools &amp; TechniquesThere are five fundamental principles of lean. These are represented as a five-step process for guiding the implementation of lean (Womack and Jones, 1996; Womack, 2002):1. Identify and specify the value desired by the customer,2. Identify and map the value stream and eliminate processes that do not add-value,3. Ensure product or service flow continuously,4. Introduce pull-system between all steps in the value streamDesign and provide what the customer wants only when the customer wants it.5. Pursue perfectionSystematically and continuously eliminates the root cause of waste, to achieve the ultimate goal of zero defects.</p> <p>Lean Manufacturing and Six Sigma2013To effectively implement the lean principles, a number of interconnected elements must be in place (Russell and Taylor, 2009; Hicks, 2012); these are listed in Table 2.</p> <p>20Atiqah Ismail</p> <p>Table 2: Elements of LeanFundamental elements for the implementation of Lean</p> <p>1. Workplace management (i.e. Gemba Kanri)7. Quick set-ups (i.e. set-up time reduction)</p> <p>2. Flexible resources8. Uniform production levels</p> <p>3. Cellular layout (or cellular manufacturing)9. Quality at the source (i.e. getting it right the first time)</p> <p>4. Pull systems10. Total preventative maintenance</p> <p>5. Kanbans11. Supplier networks</p> <p>6. Small lot sizes (i.e. small machine concept)</p> <p>Source: Russell and Taylor (2009), Slack et al. (2010), Hicks (2012)</p> <p>Lean is a commitment to achieve totally waste-free operations. Therefore, to implement and achieve lean, the firm must depart from traditional thinking, and first implement change amongst the shop-floor workers and the entire organisation workforce through their positive and active support.Workplace management is the foundation and the most fundamental element of lean before any of the remaining ten elements can be successfully implemented (Hicks, 2012). It is concerned with managing people, resources and machines to increase efficiency on the shop floor and to standardise management practices. It also involves increasing flexibility of resources towards multi-functional workforce and general-purpose machines. Essentially, it is the management of working environment through techniques and practices such as standardising operations, education, training and skill control, visual management, and measuring and controlling output and performance to enable kaizen.For example, visual management (VM) involves the 5S methodology to workplace organisation through, sorting, setting order, systematic, standardising processes, and sustaining the practice. VM also involves visual control, such as; kanbans, standard operation sheets, andons, process control charts, and tool boards. Essentially, workplace management incorporates quality attitude amongst people, machines and materials. The eleven elements of lean (Slack et al, 2010; Russell and Taylor, 2009) can roughly be categorised into three phases in achieving lean goals (see Table 3). Table 3 also shows the different lean principles, tools and techniques used in different phases of lean.Essentially, lean is achieved through the systematic elimination of waste in four fundamental areas of the value stream; product design, process design, human resources, and organisational elements (Vollman et al., 1989; in Hicks, 2012).For instance, in manufacturing, flexible resources encourage the implementation of cellular layouts. Cellular layout groups dissimilar machines together to produce a family of parts, thus requires flexible, multi-functional workforce on general-purpose machines. These flexible resources and cellular layout remove wastes of underutilised resources and space, while adding value in more efficient layout, shop-floor movement and product flow between machines, and increased speed by balancing takt-time within the cell. Altogether, this promotes streamlined workflow and flexibility.The pull systems use the concept of kanbans. A kanban is a signal to produce. It pulls customer demand, so Products will only be produced when there is actual demand. Thus, production only makes what is required, eliminating wastes of over-production and unnecessary inventory.</p> <p>Table 3: Lean Objectives, phases, elements, tools and techniquesLean Objectives and PhasesKey Elements/Concepts of leanSupporting Tools and TechniquesEliminate WasteIncrease FlexibilityFlexible resourcesCellular layoutSmooth the FlowPull systemsKanbansSmall lot sizesQuick set-upsUniform production levelsContinuous ImprovementQuality at the sourceTotal preventive maintenanceSupplier Networks</p> <p>GoalEliminate WasteValue stream mappingCause and Effect (Fishbone) Diagram</p> <p>FoundationWorkplace ManagementTotal Quality Management (TQM)Strike zoneMotion studyVisual managementKaizen5SPoka-Yoke (fail-proofing)</p> <p>Phase 1Increase FlexibilityFlexible resourcesCellular layoutSmall machines</p> <p>Phase 2Smooth production flowPull systemKanbansSmall lot sizesQuick set-upsUniform production levelsAndonSMED (Set-up time reduction)</p> <p>Phase 3Continuous ImprovementQuality at the sourceTotal preventative maintenanceSupplier networksStatistical Process Control Chart (PCC)The Deming Cycle</p> <p>Lean is sustained by continuous improvements. A technique used in this phase is total preventive maintenance (TPM) defined as a system of periodic inspection and maintenance designed to keep a machine in operation by preventing a breakdown from occurring (Russell and Taylor, 2009). Another concept is the role of supplier support in Leans success, where supplier reliability is crucial to ensure that their production and services are synchronised with the lean customer. Lean supplier networks can be achieved through precise delivery schedules, and mixed orders and frequent deliveries (Russell and Taylor, 2009; Slack et al., 2010).</p> <p>Six Sigma (6)Six sigma is a business improvement strategy which seeks to identify and eliminate causes of defects (errors) and minimise variability in business processes by focusing on outputs that add-value to customers (Snee, 1999; in Antony, 2004). This strategy employs statistical tools and techniques to remove variability in processes (Coronado and Antony, 2002). A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be defect-free. Thus, the ultimate goal of Six Sigma is to reduce the number of defects to as low as 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications, while an opportunity is the total quantity of chances for a defect.Generally, most businesses still operate at 3 to 4 level (i.e. 66,810 to 6,210 defects per million) (Henderson and Evans, 2000; Heckl et al., 2010). Meanwhile, nuclear power, healthcare and aerospace industries all demand much higher sigma levels in pursuit of exceptional quality to prevent catastrophic loss of human life (Arnheiter and Maleyeff, 2005). While, most service processes operate at less than 3.5 level (i.e. a defect rate of 22,700 parts per million) (Heckl et al., 2010). Table 4 shows the corresponding defects per million and sigma levels.</p> <p>Table 4: Defects per million and sigma levelsNumber of defects per million opportunitiesAssociated sigma level</p> <p>66, 81022, 7506, 2101, 350233323.43.03.54.04.55.05.56.0</p> <p>Source: Behara et al. (1995)</p> <p>The focus of Six Sigma is to control all process at the source (Murdock 1998; in Henderson and Evans, 2000). It is a comprehensive data-driven and statistics-based approach which demands the effective use of data through rigorous data collection and statistical analysis to identify sources of errors and to find ways to eliminate them (Paul, 1999; Henderson and Evans, 2000). Six Sigma was originally defined by its application to, and focus on, manufacturing processes at Motorola, who pioneered the formal Six Sigma methodologies in the 1980s (Henderson and Evans, 2000). Later, other companies such as General Electric (GE), Allied Signal and Eastman Kodak followed suit. Six Sigma has then evolved over time, to also include the service sectors and other business functions like, distribution, marketing, and customer order-processing functions in pursuit of Six Sigma quality standards (Smith, 1993; in Henderson and Evans, 2000).This strategy is a measurement-based strategy, which emphasises on customer-driven objectives, use of evidence, structured improvement cycle, process capability and control, process design, and structured training and organisation of improvement (Slack et al., 2010). It emphasises on the achievement of measurable and quantifiable financial returns. According to Antony (2004), a Six Sigma project will not be approved unless a clear measurable and quantifiable financial impact is identified.Furthermore, Murphy (1998; in Henderson and Evans, 2000) adds that Six Sigma strives to eliminate defects by forcing an organisation to quantify its quality. The prerequisite of Six Sigma to quantify quality enables improvement to be charted on a factual basis. The benefits and objectivity of Six Sigma attract many organisations towards its implementation. Other reasons organisations implement Six Sigma are, to improve product and service performance by reducing defects, and to improve financial performance and business profitability. Six Sigma can be a powerful tool for companies competing on the basis of product quality (Henderson and Evans, 2000).</p> <p>Implementation: Fundamental ConceptsMany Six Sigma practitioners and researches agree that the most critical success factor in Six Sigma success is top management involvement (Minahan, 1997; Paul, 1999; Henderson and Evans, 2000; Coronado and Antony, 2002; Antony, 2004; Kwak and Anbari, 2006). For example at GE, top management support has significantly influenced and enabled organisational restructuring and cultural changes of individual employees towards quality its Six Sigma implementation (Hendericks and Kelbaugh, 1998). Another critical factor is organisational infrastructure. Implementing Six Sigma relies on total commitment and active participation of every department and employee (Henderson and Evans, 2000). Successful deployment and implementation is achieved through a structured and disciplined team-based project approach based on the Martial Arts analogy (Antony, 2004; Slack et al., 2010). The team typically consists of five distinct roles and expertise: Executive Leadership, Champions, Master Black Belts, Black Belts, and Green Belts. This is outlined in Table 5.</p> <p>Table 5: Six Sigma Project RolesTitleImplementation Roles</p> <p>Executive leaderMembers of top management (e.g. CEO) involved in advocating organisational culture-attitude change, and committed in dedicating time, money and resources for the successful implementation and progress of Six Sigma projects.</p> <p>ChampionsIntens...</p>

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