Six Sigma Application in Supply Chain Management

Hi Togap,

The opportunities for Six Sigma and Lean application in SCM are numerous. Specifically in warehousing management you may want to look at metrics around fill rates, pick and pack defects and dock-to-stock or dock-to-bench type metrics. Start with Lean and look for opportunities to get the dock-to-stock (time from material unloaded on dock to put away on shelf) cycle times down (this impacts availability rates to the production floor). Take a walk through the warehouse and if you see lots of boxes and pallets sitting around, you know you have opportunities! Once your cycle times are lower, then take a look at defect rates in the other areas of standard warehouse metrics. Let me know if you have some questions - I have extensive experience in this one.

Jeff Book
Director Six Sigma and Lean
Procise Consultancy

Hello Togap,
From our experience the initial steps in Six Sigma Deployment in SCM is Process & Metrics Definition. The core processes like purchasing, receiving, order management, picking and shipping should be clearly mapped out including the definition of the interfaces with suppliers and external service providers.

From there key CTQs should be defined that measure the process performance. These could include CTQs for the internal process performance (Cycle time for order processing, accuracy & completeness of shipments, stock levels, backlog measures in various process steps) as well as supplier’s and logistic service providers’ performance. The whole cycle from a customer point of view (from placing an order to receiving the goods) should be made transparent and measurable. From there Six Sigma project definition and execution can start, working on those issues that have the biggest impact on customer satisfaction.

Hello Togap,

I am not quite sure what exactly you are expecting from an answer, but I will try to give you a flavor of what we are doing. My organization is working in IT distribution on a global scale. We have implemented six sigma for almost 24 months with mixed results.

One of the big drivers (and something new for management) for us next year is that we are going through an exercise of determining the requirments of the business, with emphasis on resellers, vendors and our company and then looking at the process that affect the different requirments. We then look at the metrics that drive the different requriements and look at the gap analysis. This, against our background targets, allows us to focus our efforts and also provide a top level view so that we do not duplicate and watse efforts.

One of the big things is trying to determine what to do with the excess capacity brought about by the economic downturn and see where we can improve efficiencies. Another area is to explore for new opportunities to grow our business. In this latter aspect, we are going to implement DFSS in our organization to help us achieve the new growth.

Bill