How Six Sigma can help
Six Sigma is a set of approaches, tools and techniques for process improvement and seeks to improve the quality of process outputs by identifying and removing the cause of defects, errors and minimizing variability. The concept was developed by Motorola during the 80s and famously adopted as the means by which Jack Welsh, CEO of General Electric, used to transform the business (Tennant, 2001). Six Sigma originated as concept to improve manufacturing using statistical modelling of manufacturing processes (a six sigma process being one free where 99.9999998 per cent of products being manufactured are statistically expected to be from defects) and whilst the concept may not be entirely relevant to supplier improvements and developments, some of the tools used and indeed the knowledge of Six Sigma champions is relevant and can help us.
It seems Lean and Six Sigma sometimes seem to compete as improvement philosophies; however, the more enlightened companies see them as partners. Combining Lean with Six Sigma means we can consider improvement in terms of the removal of waste and reduction of variation, two of the main themes that W Edward Deming pursued during his career (Bicheno and Holweg, 2009). Within Lean we can simplify processes, eliminate waste and increase speed. Within Six Sigma we can reduce variation, eliminate defects and sustain the gain.
Six Sigma makes sense when you see what happens in organizations and supply chains as a series of processes that flow across departmental and contractual boundaries and the entire methodology is structured around meeting the requirements of the customer. GE's version of Six Sigma is built upon six guiding principles (Bicheno and Holweg, 2009). These are:
• Critical to quality - everything must be driven from what the customer needs and wants and so the starting point is to understand this.
• Defect - anything that doesn't deliver customer needs and wants.
• Process capability - processes must be designed so they have the necessary capability to deliver customer needs and wants.
• Variation - as experienced by the customer.
• Stable operations - to ensure consistent, predictable and reliable processes to deliver customer needs and wants.
• Design for Six Sigma - design must meet customer needs, wants and process capability.
Six Sigma can help be effective at driving supplier improvement and once again we are reminded how essential understanding customer requirements are and the role good business and relationship requirements play in the improvement process.
Hearing the Voice of the Customer (VOC)
A major 'customer value' focus within Lean Six Sigma is that of understanding customer requirements through Voice of the Customer (VOC) where improvement initiatives consider the impact of the project in terms of its eventual solution on the external customer. VOC is also found in marketing, market research and IT and can use a variety of tools, methods, techniques and approaches to capture and understand customer expectations, preferences and aversions and analyse overall customer needs and how customers value those needs. One of the biggest challenges with VOC is that of truly understanding the customer as it is easy to inadvertently substitute our voice for theirs.
Within SRM and specifically supplier improvement VOC is highly important as our improvement interventions need to respond directly to VOC. Here our customers are those in the firm who have an interest in what our suppliers do and how our supply chain operates as well as our customer and the ultimate end customer. Within SRM VOC is articulated through the business and relationship requirements, therefore providing these are robust, have been well developed with thorough research and consultation and are regularly reviewed then it follows that our KPIs and supplier improvement intervention will be aligned with VOC.