Lean six sigma for supply chain management : the 10-step solution process

430 Pages·2007·6.97 MB·English

by  James W Martin

Lean Six Sigma
for Supply Chain
Management
The 10-Step Solution
Process
About the Author
James W. Martin is president of Six Sigma Integration, Inc., a Lean
Six Sigma consulting firm, located south of Boston. He has served as
an instructor at the Providence College Graduate School of Business
since 1988. He instructs courses in operations research, operations
management, and economic forecasting, as well as related quantitative
subjects, and counsels MBA candidates from government organizations
and leading corporations. As a Six Sigma consultant and master black
belt for eight years, Mr. Martin has worked with organizations in retail
sales, residential and commercial service, banking, insurance, financial
services, measurement systems, aerospace component manufacturing,
electronic manufacturing, controls, building products, industrial equip-
ment, and consumer products. He has trained and mentored more than
1,500 black belts, executives, deployment champions, and green belts
in Lean Six Sigma methods including supply chain applications. He
holds a M.S. Mechanical Engineering, Northeastern University; M.B.A.,
Providence College; and B.S. Industrial Engineering, University of Rhode
Island. He also holds several patents and has written numerous articles
on quality and process improvement. He is a member of the Association
for Operations Management (APICS) and has certifications in production
and inventory management (CPIM) and integrated resource management
(CIRM). He is a member of American Society for Quality (ASQ) and is a
certified quality engineer (CQE).
Lean Six Sigma
for Supply Chain
Management
The 10-Step Solution
Process
James W. Martin
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ISBN: 978-0-07-163148-8
MHID: 0-07-163148-8
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Contents
Foreword vii
Introduction ix
Chapter 1. Using Lean Six Sigma Methods to Identify
and Manage Supply Chain Projects 1
Chapter 2. Deploying Lean Six Sigma Projects
Using Lean Tools 45
Chapter 3. Demand Management Impact
on Lean Six Sigma Projects 73
Chapter 4. Lead-Time Impact on Lean Six Sigma Projects 111
Chapter 5. Lean Six Sigma Applications
to Materials Requirements Planning (MRPII) 135
Chapter 6. Identifying Lean Six Sigma Projects
Using Inventory Models 157
Chapter 7. Lean Supply Chains and Third-Party Logistics 181
Chapter 8. Root Cause Analysis Using Six Sigma Tools
(With Operations Research Methods) 219
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vi Lean Six Sigma for Supply Chain Management
Chapter 9. Lean Six Sigma Improvement and Control 277
Chapter 10. Applying the 10-Step Solution Process 299
Appendix I. Important Supply Chain Metrics 347
Appendix II. Key Lean Six Sigma Concepts 359
Conclusion 367
Glossary 381
Index 395
Foreword
T
welve years ago I began my Lean Six Sigma career as a black belt
(BB), then later became a master black belt (MBB) at Honeywell
(at that time it was AlliedSignal). My project assignments were
in the areas of finance, sales, marketing purchasing, materials planning,
and logistics. Then, as I began my second career as an independent
consultant, I found the majority of the Lean Six Sigma applications were
within the supply chain. But the Lean Six Sigma training was always
conducted by generalists from a manufacturing perspective. To this
day, basic supply chain theory and methods remain on the “outside”
of Lean Six Sigma training. The training focus continues to be from a
manufacturing viewpoint, although Lean topics are often thrown into
the training to cover some of the supply chain applications. In addition,
few master black belt (MBB) instructors are certified by The Association
for Operations Management (APICS) or have an understanding of how
supply chain systems actually function. I wrote this book to help these
MBBs and other “belts,” champions, and team members to understand
Lean Six Sigma supply chain concepts and applications.
I must thank Ken McCombs, my McGraw-Hill senior editor, for
encouraging me to publish this book, as well as the reviewers of the
book, who made constructive comments that changed the direction of
the book to a more practical and hands-on approach. Along this line
of thought, the book has been expanded to include many practical
tips for the identification and analysis of Lean Six Sigma projects to
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viii Lean Six Sigma for Supply Chain Management
improve supply chain performance. In fact, the entire focus of the book
is to allow someone with little knowledge of supply chain concepts to
quickly “come up to speed” on Lean Six Sigma supply chain concepts.
Finally, I want to thank my family and my wife Marsha in particular, cli-
ents, and Providence College faculty and graduate students, who have
provided the inspiration for this book.
Introduction
T
his book is the culmination of several years of successful Lean
Six Sigma consulting and training focused on improving sup-
ply chain performance. This consulting work was performed
as a series of graduate classes as well as on-site corporate seminars
and operational assessments of major work streams within diverse
supply chains. In this work, cross-functional business unit teams were
brought together to analyze key supply chain metrics and implement
process improvements using a 10-Step Solution Process based on Lean
Six Sigma, operations management, and operations research tools and
methods. These improvement efforts demonstrated the need for a book
showing Lean Six Sigma “belts” how to analyze supply chain work
streams, and inventory systems in particular, to identify and implement
Lean Six Sigma improvement projects. This book brings together the
specific tools, methods and techniques that are relevant to supply chain
analysis and optimization together into an organized format in one place
for the first time to improve supply chain operational performance.
The goals of this book are to help the reader understand how the
major work streams within their supply chain work and make process
improvements within the context of Lean and Six Sigma methods as
described in the 10-Step Solution Process. However, bringing diverse top-
ics and metrics together to understand their inter-relationships and impact
on supply chain performance requires quantitative tools and methods not
found in Lean and Six Sigma training. Some of these required tools and
methods are considered basic in supply chain analysis and can be found
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