Tuesday, February 5, 2013
Are Six Sigma and Lean Thinking for everybody?
It is a common phenomenon to observe the rapid and wide-spread adoption of in-vogue approaches to enduring problems in many professional fields. We witnessed “cluster fever” in the early 1990s in the field of local and regional economic development and the conditional cash transfer wave in the international development arena in the early 2000s. In the supply chain world Six Sigma and Lean Manufacturing are the next big thing. But are they ready for mass implementation?
An article from the Wall Street Journal indicates that 60% of all corporate Six Sigma manufacturing and supply chain initiatives fail to yield the desired results. In many of the cases the problem had less to do with the methodology in itself and more with the capabilities of the organization and the resilience of its employees; sustaining a process of continuous innovation is a task that few companies can cope with. Related to this lack of capability is the extensive dependence on consulting companies and Six Sigma experts to provide the knowhow. Once the implementation yields the first results, many of the experts depart without building employee capabilities to maintain and monitor the new processes in place.
The lack of results is not exclusive for six sigma approaches. The Supply Chain Digest claims that only 2% of Lean initiatives advanced to the point where they can be linked to financial improvements. As with the case of Six Sigma, the situation that led to this underachievement of results is correlated with lack of capabilities within the firms: misconception of Lean supply chain as a cost reduction hatchet rather than a method to serve customers and remove waste; lack of broad organizational engagement; conflicts with other initiatives; and lack of coordination within an organization, etc.
The failure to produce results may also have to do with the fact that some business models are not easily standardized to increase efficiency and due to differences in the power of firms to affect the market structure. For example a company like Dell, a champion of Lean supply chain processes, is capable of imposing not-so-favorable terms of competition to its providers, thus increasing its maneuver margin to be constantly pleased but never satisfied; a perception that probably very few of its providers will share.
At the end of the day the most innovative approaches in supply chain management seem to be deeply reliant on other factors such as organizational culture, capabilities and market power of the firm. In this world of hyper competence small and medium enterprises may have to come up with their own “next big trend”. This should not be regarded as a natural disadvantage, the race for innovation has often produced great advancements in many fields; after all the champions of lean supply chain and six sigma are part of radical innovators who often challenge themselves above their own expectations.
Breen, Bill (2004) “Living in Dell Time”, Fast Company Magazine, December 2004.
Supply Chain Digest (2013), “Supply Chain News: What are the Barriers to Lean Success?”, January 30 2013, available at:
Chakravorty, satya (2012), “Where Process-Improvement Projects Go Wrong”, Wall Street Journal, June 14 2012, available at: http://online.wsj.com/article/SB10001424052748703298004574457471313938130.html