Supply Chain Vector: Methods for Linking the Execution of Global Business Models With Financial Performance

Chapter 9: Six Sigma Tools for Supply Chain Management

Overview

The power of Six Sigma lies in its ability to apply proven techniques to a problem or opportunity within a comprehensive project management framework. Because of the variation inherent to international operations, this methodology is ideal for companies operating a global business model.

Six Sigma is different than other continuous improvement methodologies for a variety of reasons. First, the discipline insists on creating what is known as "operational definition." Carried out in the early stages of a project, operational definition takes what are oftentimes qualitative client requirements and translates them into quantitative characteristics known as critical-to-quality characteristics. Recognizing that the voice of the client speaks the loudest, the sigma tool set contains techniques that allow team members to put a measurable value on abstract customer needs. Once operational definition and critical-to-quality characteristics are established, it is from this point that variance from a predetermined standard can be measured.

Apart from its comprehensive methodology and vast problem-solving tool set, the greatest contribution of Six Sigma is its capacity to link the cost of poor quality to variations found in processes and products. Thus, as variation is reduced and the quality of products and processes improves, team members enjoy the dual benefit of watching customer satisfaction improve and cost of poor quality go down. It is the ability to first identify critical-to-quality characteristics and then measure the costs of not complying with those requirements that makes the Six Sigma methodology so appealing.

Ideally, the Six Sigma methodology should be applied in...

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