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.
References:
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:
http://www.scdigest.com/ontarget/13-01-30-2.php?cid=6680
Chakravorty, satya (2012), “Where
Process-Improvement Projects Go Wrong”, Wall
Street Journal, June 14 2012, available at: http://online.wsj.com/article/SB10001424052748703298004574457471313938130.html
Six sigma and lean are not be for everybody. Production processes vary from company to company, and there is so set standard as to what a company must do to have a six sigma lean shop. Some production processes may be running at their peak performance and trying to implement a six sigma method will only frustrate workers and complicate the process even more. I agree that some processes are better left alone. But this raises the problem that if a company keeps doing the same things it’s been doing, how will it improve?
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