Enhancing Supply Chain Efficiency and Effectiveness With Lean Six Sigma Approach

Enhancing Supply Chain Efficiency and Effectiveness With Lean Six Sigma Approach

Pankaj M. Madhani (ICFAI Business School, Ahmedabad, India)
DOI: 10.4018/IJPMPA.2020010103

Abstract

Lean Six Sigma (LSS) enables supply chains to become more efficient and effective in sustaining continuous improvement. The speed, service quality, and the cost of operations impact the supply chain performance. One most popular approach for providing faster responses, improving quality and reducing cost in SCM, is LSS as it combines strengths of both Lean and Six Sigma. LSS is not just about doing things better, it is a way of doing better things. Research establishes complementary relationship of Lean and Six Sigma; summarizes benefits of LSS in SCM and develops various frameworks such as S-V framework and O-T-S framework to emphasize the role of LSS in enhancing efficiency and effectiveness of SCM processes. As a strategic management tool, LSS deployment in SCM is considered to be an important management philosophy, supporting organizations in their efforts to enhance efficiency and effectiveness of operations, satisfy customers and enhance competitive advantages.
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Introduction

There is a huge opportunity cost to any organization that continues to support inefficient and ineffective business processes in a highly competitive world. To combat these inefficiencies, organizations have begun to make investments in process improvement methodologies such as Total Quality Management (TQM), reengineering, benchmarking, Lean, Six Sigma and Lean Six Sigma etc., to enhance service quality. Competitive pressure forces companies to improve their core as well as support functions for better performances. Supply chain as an integrated function is the lifeline of an organization as a streamlined supply chain management (SCM) can enhance business performance by providing better value to customers. SCM helps increasing organizational effectiveness and profitability by promoting the integration between firms and their suppliers through the development of supplier partnerships and strategic alliances. In present day business environment, supply chains that compete with each other, not companies (Christopher & Towill, 2001), and the success or failure of supply chains is ultimately determined in the marketplace by the consumer.

An effective SCM is crucial to business continuity (Cabral et al., 2012) as well as survival in a market that is increasingly volatile, turbulent and competitive. SCM enhances competitiveness of a firm if appropriate supply chain strategy is chosen (Soni & Kodali, 2012). In a globally competitive market, organizations face challenges to improve customer service while simultaneously reducing costs and shortening product lifecycles. Dependable service leads to satisfied customers, which gives organizations more pricing power, higher revenues and enhanced enterprise value. In response to these challenges many organizations have adopted Lean Six Sigma (LSS) approach for efficient and effective SCM practices.

Lean and Six Sigma are developments in continuous improvement (CI) methodology. Lean Six Sigma (LSS) is an approach that combines Lean and Six Sigma tools and philosophies to focus on improving quality, reducing process variation, and eliminating non-value added (NVA) activities. Its goal is to improve quality by first identifying waste within the organization; systematically eliminate this waste, and then reduce process variation. A quality programme for the entire organization is created, by combining the two methodologies (i.e. Lean and Six Sigma), as each builds upon the other’s strengths (Salah et al., 2010a). Deployment of LSS can help cut waste and make SCM processes more effective.

This research is unique in that it sheds lights on the both dimensions of supply chain performance i.e. efficiency and effectiveness of supply chain; focuses on LSS deployment in supply chain and provides various frameworks for synthesizing and determining value creation processes. Research also provides various successful illustrations of LSS implementation in SCM practices of various organizations to emphasize business value creation.

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