Key Success Factors of Implementing Six Sigma or Lean Manufacturing - Case Study Example

Key Success Factors of Implementing Six Sigma or Lean Manufacturing Purpose: To investigate and identify the key success factors of Six Sigma or lean manufacturing within SMEs in the electronics industry in France. Methodology: The study carries out investigations based on literature review to find out the success factors for six sigma or lean, by survey questions. Findings: Lean manufacturing and Six Sigma contribute significantly to organizational performance because they help in reducing wastes and variations, hence improving quality and customer satisfaction. Factors such as top management involvement and leadership, among others are crucial factors for a successful implementation of Six Sigma or Lean manufacturing. Key Words: Lean, Six sigma, Key success factors, Small and Medium Enterprises (SMEs) Introduction The methodology of Six Sigma aims at identifying and eliminating sources of variability. Lean manufacturing involves techniques of finding out and excluding any wastes to improve quality (Corner 21). The aforementioned methodologies are crucial in efficiency improvement of a company. Most organizations that have not implemented lean manufacture, theory of constraints, TQM and Six Sigma, among others, have not achieved efficient manufacturing processes (Taninecz). Demand for products and services increases when they are of high quality. This has motivated many firms to implement lean or Six Sigma or both because these methodologies are very successful in improving performance reducing costs, improving productivity and reducing cycle time of an organization. Lean manufacturing promotes efficiency; given that it originated from the automobile industry to improve process flow by eliminating waste while Six Sigma, which originated from the electronics industry, promotes effectiveness by improving quality and accuracy via reduction of variations. Lean and Six Sigma methodologies have become famous in the world because since many industries have achieved significant benefits by implementing lean and Six sigma. Consequently, most small and medium enterprises find it imperative to adopt lean or Six Sigma or lean six sigma methodologies. Small and Medium Enterprises hold 99.8% of the total number of enterprises, 66.5% of employment and contribute 57.6% of the total value added to the EU (Gagliardi, Muller, Glossop, Caliandro, Fritsch, Brtkova, Bohn, Klitou, Avigdor, Marzocchi and Ramlogan 14). According to the European Commission, a SME is an organization that has two hundred and fifty employees or less, with a turnover of fifty million or less and a balance sheet total of not more than forty three million (Gagliardi, Muller, Glossop, Caliandro, Fritsch, Brtkova, Bohn, Klitou, Avigdor, Marzocchi and Ramlogan 31). SMEs in France are similar to other small and medium enterprises in Europe; the only difference is that French micro companies exhibit high productivity (European Commission 1). Estimates from the methodologies installed in French organizations indicate that 70% of the organizations utilize lean methodology, while 20% of them use Six Sigma while 10% have theory of constraints (Hohmann 1). SMEs in France contribute more than large organizations, economically, in terms of employment provision and value added. In France, the number of SMEs exceeds that of large organizations. Therefore, it is imperative for SMEs in France to be conversant with the key success factors of implementing either Six Sigma or lean manufacturing so that appropriate plans can be made for the implementation of lean or Six Sigma, in consideration of these key success factors. In this survey, the main factors that may lead to successful Six Sigma or lean manufacturing are investigated. The aim of this study is to identify the key success factors of implementing lean or Six Sigma within SMEs in the electronics industry, through survey. The study also seeks to find out which of the methodologies, Lean, Six Sigma or Lean Six Sigma (a combination of Lean and Six Sigma) has implemented by electronics industry SMEs. The study seeks to establish which of the two methodologies that SMEs in the electronics industry have implement and whether such organizations implement both lean and Six Sigma simultaneously, with the reasons for doing so. The study also tries to find out the benefits that are associated with the implementation of the preferred methodology by SMEs in the electronics industry. In addition, the tools and practices that are relevant to the implementation of lean or Six Sigma in SMEs are investigated. Finally, the success levels of implementation of either lean, Six Sigma or both are investigated. Literature Review William Smith, an engineering scientist at Motorola developed the concept of Six Sigma during the 1980s, who was the first engineer to develop the concept. Together with other pioneering scientists and engineers, Smith sought to develop the Six Sigma concept to reduce variation, maximize productivity and improve quality (Taghizadegan). Six Sigma aids in the identification few but vital factors, which can reduce wastes and defects, and at the same time increase speculated results, profits customer satisfaction and shareholder value. It also seeks to reduce production or service variations. Organizations apply Six Sigma to design new processes and solve problems (BREYFOGLE III, F.W). Lean manufacturing originated from the Toyota Motor Company. The aim of adopting lean manufacturing in Toyota Company was to reduce wastes in the process of manufacturing and, raw materials, and waiting times before the product was delivered to the customer. This was to make the Toyota Motor Company in the automobile industry more competitive by increasing efficiency, effectiveness, and quality (Duque and Cadavid). Through lean manufacturing, attempts to exclude the seven categories of wastes are made, in a bid to minimize costs. This involves all organizational aspects including over-production, motion, transportation, waiting, inventory surplus, and defects and over-processing. All-round value takes preference in lean manufacturing. The main objective is to reduce costs, improve quality, and achieve appropriate delivery time by total elimination of waste (Wilson). Table 1: Differences between Lean and Six Sigma Issue Six sigma Lean Focus on customer value stream No Yes Focus on creating a visual workplace No Yes Creation of a standard work sheet No Yes Attack on WIP-Inventory No Yes Focus in good housing keeping No Yes Process control and monitoring Yes No Focus on reduction of variation and achieving uniform process output Yes No Detailed focus on the application of statistical tools and techniques Yes No Employment of a structured, rigorous and well planned problem-solving methodology Yes No Attack on 7 wastes No Yes Source: Adopted from (Antony 2003) Implementation of lean manufacturing without adopting Six Sigma limits the expected improvement. Lean cannot allow organizations to choose the right project and this may lead to sub-optimization of the system. In addition, such companies do not seek to adopt the use of Six Sigma Tools such as Design of the Experiments (DOE) (BREYFOGLE III, F.W). In addition, lean manufacturing does not put a process under statistical control (George). On the other hand, Six Sigma does not make a process rapid. Therefore, firms that have implemented Six Sigma alone do not make improvements in their lead-time, but they make only diffident improvements in Work In Progress (George). Lean manufacturing needs to be integrated with Six Sigma, and at the same time, Six Sigma needs to be integrated with lean manufacturing as explained in Table 2, so that it can be possible to identify non-value added waste, improve processing speed and cycle time, as well as, leading to rapid action. This means that Six Sigma work greatly when there is waste elimination. Table 2: Importance of Lean Manufacturing to Each Other Lean Manufacturing is Important to Six Sigma because; Six Sigma is Important to Lean Manufacturing because; Through lean manufacturing, wastes that are on no value addition are identified. Lean has tools that help to increase processing speed to improve cycle time such as 7 Muda, TPM, 5S etc. Lean embraces Kaizen, which is a method for rapid action. Lean enables Six Sigma to work efficiently by eliminating waste. Discrepancies can be minimized through the tools of Six Sigma. Six Sigma has tools that identify critical aspects to quality such as capturing data through VOC and DMAIC. Six Sigma expresses, in details the culture and infrastructure system that is needed to achieve a sustainable result. Source: Adopted from (George 2003) Combining lean and Six Sigma leads to elimination of waste as the perfection mentality of Six Sigma is put into practice (Salah, Rahim and Carretero 145). Therefore, it is imperative that Six Sigma is integrated with lean because Six Sigma enhances the reduction of variation, increases a process’s capability of identifying critical factors of quality so that data can be captured through VOC. Six Sigma also deals with culture and infrastructure that is required by a system to achieve and sustain a better result. However, Six Sigma and lean manufacturing seem to be complement and both are important in improving shareholder value. Application of Six Sigma is more common in cases that require reduction of variation. The two methodologies enable an organization achieve maximum improvement by addressing the root causes of poor process performance (Snee 15). According to BREYFOGLE III, F.W, there should be simulteneous implementation of lean manufacturing and Six Sigma. Others suggest that both Six Sigma and lean manufacturing should be implemented simultaneously in SME (Khurshid, Kumar, and Waddell 1274). According to George, rapid and dramatic improvements are achieved when a firm applies both lean manufacturing and Six Sigma at the same time. When lean and Six Sigma are integrated, the result is a new way of working which is a more effective than any of the two methodologies implemented singly. In integrating lean with Six Sigma, some firms are unclear on implementation because they put either methodology on top of the other. This is because the structures and packages of lean and Six Sigma are too different to make this approach practicable. Methodologies and techniques should be integrated with each other while there organizational stakeholders should demonstrate great competence in the two concepts (Sorqvist). Separately, though there are few SMEs that have implemented lean with sigma in the U.K, integration of lean with six sigma is not widespread in that country (Antony). Most SMEs have not implemented lean manufacturing and Six Sigma simultaneously because these two methodologies are not widely used among such organizations, though there is proof that SMEs have implemented Six Sigma and lean manufacturing successfully (Kumar, J. and Twaari). Lean-Six-Sigma is the combination of lean manufacturing and Six Sigma, and it seeks to increase shareholder value by ensuring high quality, speed and customer satisfaction is beneficial for SMEs. Such organizations adopt both six-sigma and lean manufacturing simultaneously. All organizations seek to adopt new standards for products to meet client needs and specifications, using both lean and Six Sigma (Pamfiliea, Draghici and Mihai Draghicic 189). Success Factors for Six Sigma 1. Top management involvement and commitment: According to Ho, Chang and Wang (266), among the the key success factors of Six Sigma is top management involvement and commitment, and it is a factor of high priority. Therefore, the management team of an organization should be involved in learning and understanding principles of Six Sigma. 2. Linking six sigma to suppliers: Companies should extend Six Sigma to include suppliers, for instance, by involving suppliers who offer direct provision of a company’s raw materials in the company’s Six Sigma. Traditionally, companies engage different suppliers to reduce costs, but Six Sigma requires companies to have few suppliers with Six Sigma performance level so as to reduce variability (Coronado and Antony). 3. Cultural change: Organization culture also contributes to successful implementation of Six Sigma (Na¨slund 280). Therefore, employees and management should have the right attitude and awareness to emphasize on the reduction of variations. 4. Monitoring the progress: It is important that the implementation of Six Sigma should be reviewed periodically. This will make it possible to evaluate the program’s progress and understanding of Six Sigma tools and techniques (Kwaka and Anbari 712). 5. Leadership : Leaders should be committed to ensuring successful implementation of Six Sigma. There should be distinct leadership in the implementation of Six Sigma (Sorqvist 4). There has to be appropriate leadership, if adoption of Six Sigma is to be a success in an organization. 6. Organizational infrastructure It is very important to consider organizational infrastructure as a success factor for Six Sigma. Organizational infrastructure involves training of employees to work effectively, especially, statistical training. Companies that apply six sigma should train their staff on the four classifications; champion, master black belt, black belt and green belt because the green belt system helps an organization to achieve success (Kwaka and Anbari 712). 7. Linking six sigma to business strategy Six Sigma should be linked to the business strategy because Six Sigma cannot succeed as a program on its own (Zailani). Since the business strategy incorporates stakeholders such as customers, employees and others, there should be a clear explanation on how Six Sigma activities are linked to other processes and activities of the organization. Linking Six Sigma to business strategy is third in importance as a success factor for Six Sigma (Brun 163). 8. Linking six sigma to customers During the process of adopting Six Sigma, customers have to be included because they are significant role players. There should be an understanding of the organization in terms of how it is interrelated to various business activities, including those that affect customer needs satisfaction (Zailani 128). Based on customer requirements, Six Sigma should be inclusive to ensure accomplishment. 9. Linking six sigma to human resources Among the significant elements of value to Six Sigma are human resources. Implementation of Six Sigma should be linked to human resources because human resources determine the results of implementation of Six Sigma through their actions and behavior. It is imperative to link human resources to Six Sigma, with an aim of attaining a reputable and expected behavior among them (Zailani). 10. Understanding tools and techniques within six sigma Organizational leaders or management team, as well as, employees should understand fully, the Six Sigma tools and techniques that ought to be implemented to facilitate or enhance proper management and evaluation (Kwaka and Anbari 712). Having a clear understanding about Six Sigma tools and techniques is vital (Brun 163). 11. Project Management skills The team that is responsible for the implementation of Six Sigma should be equipped with project management skills because Six Sigma is a project that requires proper management through continuous evaluation during the course of the project (Zailani). Project members should have project management skills (Zailani 128). 12. Education and training It is important to train both leaders and employees while implementing Six Sigma because it enables people to have a clear sense in understanding the fundamentals, techniques, and tools of Six Sigma (Kwaka and Anbari 713). Training is crucial in implementing Six Sigma, and there are those who can be categorized as champions because they are fully trained business leaders who promote the six-sigma deployment while master black belts are fully trained quality leaders who are responsible for six sigma strategy, by training and mentoring. Black belts are fully trained experts who work with improvement teams across the business while green belts are trained individuals who support six sigma projects (Zailani 128). 13. Skills and expertise Skill and expertise is an important success factor for Six Sigma. Organizations should seek to offer training and education so that the project team gains the required skills. They should also utilize top talents among employees while seeking to implement Six Sigma (Snee 21). 14. Reward system It is important to rewards employees to succeed in implementing Six Sigma. Rewarding employees motivates them and contributes to successful implementation of Six Sigma. When people make a difference by doing something worthwhile and they are rewarded, this makes them motivated and energized to work hard always to make a difference (George). 15. Communication It is important to have good communication when implementing Six Sigma because it is essential in the implementation of Six Sigma and it contributes significantly towards its success. Communication is essential in educating employees to accept change, in preparation for implementation of Six Sigma. Success of Six Sigma also becomes successful if there is communication between management, team members, and employees. 16. Consultant participation SMEs should allow consultants to participate in implementation of Six Sigma successfully. This is because consultants can be invited to support implementation of an organization’s production methods (Axelson 74). Organizations can outsource training to external consultants (Brun 163). Success Factors for Lean 1. Top management involvement and commitment It is important to involve top management in implementing lean manufacturing (Mohd, Rose, Mohd and Rahman 3). Senior management commitment enables employees to understand the new project of lean implementation (Scherrer-Rathje, Boyle and Deflorin 82). Therefore, there has to be total employee involvement, through a clear vision and mission, which should be highlighted by top management. 2. Education and Training: It is important to train workers about the principles of lean to facilitate successful implementation of lean (Sakhardande 52). Training and education is considered as one of the success factors for lean (Na¨slund). 3. Linking lean to suppliers Lean manufacturing is susceptible both to variability of internal sources and external resources. Suppliers are vital stakeholders of lean manufacturing. In addition, various researchers have given suppliers detailed attention. Therefore, it is imperative for companies to encourage suppliers to develop JIT production capabilities and JIT delivery to have long-term competitiveness (Wong). There has to be a common objective between manufacturers and suppliers, for companies to adopt successful lean manufacturing, which will lead to minimized wastes and costs. 4. Skills and expertise Human skills and expertise such as problem solving, communication and teamwork are very important for the success of lean manufacturing (Bhasin and Burcher 65). Therefore, leaders and the management team of an organization should posses the required skills and expertise to ensure successful implementation of the program. 5. Monitoring the progress Being a long-term project, there should be continuous evaluation of performance of the lean manufacturing project that an organization implements (Axelson). Advantages of lean manufacturing should be identified and a pleasant future state map should be developed to enhance evaluation or monitoring of the project (AR and al-Ashraf 1733). 6. Reward system Among the factors that may contribute significantly to successful implementation of lean manufacturing is motivation. This can be achieved by rewarding employees, stakeholders and team members who exhibit exceptional performance by applying lean tools efficiently. According to Duque and Cadavid, there should be preparation and motivation of people through intense communication and clarification of expectations, as well as, informing workers what is ahead. 7. Leadership Leadership tops in the factors that lead to triumphant lean manufacturing (Axelson 67). Effective leadership development programs produce good leaders, who play a role of educating other staff members the requirements and basic concepts of lean manufacturing. Therefore, successful implementation of lean manufacturing requires leaders to embrace it because they have a significant influence on other employees’ attitudes. 8. Communication Intensive communication is very important in implementing lean production successfully (Duque and Cadavid 73 ). Therefore, in implementing lean manufacturing within an organization, there has to be good communication. Information has to flow between management, team members, and stakeholders of the project to attain the desired success. 9. Cultural change A successful lean implementation requires employees’ and management’s right attitude and awareness to emphasize on the reduction of waste in terms of time and material (Mano, Akoten and Yoshino 1). 10. Consultant participation Successful implementation lean manufacturing should involve consultants because they help by providing external validation and offering corrective action throughout the process of implementation (Scherrer-Rathje, Boyle and Deflorin 87). 11. Linking lean method to the business strategy It is important to link lean manufacturing to business strategy because organizational processes, human resource objectives and other stakeholder objectives such as shareholder value, as well as suppliers and society and economy when integrated in the lean concept, they ensure success. A good example is a company called Machinery Incorporated. The aforementioned company put into practice a lean manufacturing project. This project was inclusive of the company’s various employees, as well as, a strategy, a schedule for the implementation process and a vision for the project (Scherrer-Rathje, Boyle and Deflorin). 12. Kaizen Team For a successful implementation of lean manufacturing, there has to be a Kaizen team that should seek to offer improvement of lean projects rapidly within an organization. Kaizen methodology is important because it offers a company an opportunity to improve the quality of its products and services to satisfy their clients, employees, and suppliers (Radharamanan, Godoy and Watanahe 474). 13. Understanding the tools and techniques within lean Small and Medium Enterprises should make it a priority to ensure that the tools and techniques of lean manufacturing are well understood to achieve a flourishing adoption of lean. Leadership is the most critical success factor for successful implementation of lean in SMEs (Mohd, Rose, Mohd and Rahman). Organizational leaders have to offer training pertaining to the doctrines of lean manufacturing to other employees. Many publications have been made by former researchers pertaining to successful implementation of manufacturing in large organizations. However, there is no much documented evidence about successful implementation of lean manufacturing or Six Sigma in smaller firms. This study investigates the key success factors of implementing either lean manufacturing or Six Sigma by SMEs in the French electronics industry. Methodology This study uses survey as a data collection method. Case studies of SMEs in the electronic industry have been taken into consideration while collecting information for this study. By using survey, it means that data is will be collected from informants who represent a significant portion of a certain population, whereby survey forms will be distributed for the respondents to fill their feedback. In a survey, present practices or opinions of a specified population are normally sought using survey questions (Thomas, Nelson and Silverman 273). Survey on the factors that lead to successful implementation of either Six Sigma or lean in SMEs from the electronic industry is carried out to gather information for this study. Normally, interviewing has to be used in any survey (Walden 151). In the survey, the age of the organization, number of, employees, ISO or EN900 accreditation, the training category of the organization and the method that the organization has implemented are investigated. Also the number of years for which either lean, Six Sigma or both have been implemented, whether lean and Six Sigma are implemented simultaneously and the reasons for implementing both methodologies are investigated. The survey also seeks to find out how both lean and Six Sigma are implemented, as well as, the relevant practices for the firms. Benefits accruing from the methodology that has been adopted by a company, level of success and factors that lead to achievement or success of adoption of both lean and Six Sigma are investigated. Since some success factors are common in lean and six sigma, the study seeks to find out whether there are significant differences between success factors that apply both in six sigma and lean. Also, the study seeks to find whether there is a difference between the importance of common success factors for lean and six-sigma. The study also seeks to find out whether there is a difference in priority, pertaining common success factors for six sigma and lean. The results of the survey that is underway will be used to provide details on the success factors of Six Sigma or lean management implementation within SMEs in the electronic industry in France. Works Cited Antony, J., Escamilla, J.L. and Caine, P. (2003)."Lean Sigma." Journal of Manufacturing Engineer, 40-42. Antony, Kumar J and Labib A M. (2008). "Gearing Six Sigma into UK Manufacturing SMEs: Results from a Pilot Study." Journal of the Operational Research Society, 482-493. AR, Rahani and Muhammad al-Ashraf. (2012). "Production Flow Analysis through Value Stream Mapping: A Lean Manufacturing Process Case Study." Procedia Engineering, 1727– 1734. Axelson, Jens von. (2007). 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