Six Sigma Case Study

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Abstract: Logistics is the base of modern business, providing competitive advantages for companies on the market. Six Sigma is a data driven approach that lead to fact-based decisions, a methodology centered on understanding and eliminating the negative effects of variation it the processes. Great positive effects can be reached by applying this concept to the logistics, leading to the satisfaction of the clients, either internal or external, and finally to the financial benefit. This paper proposes the primary method of Six Sigma Logistics- DMAIC (Define-Measure Analyze-Improve-Control). It presents the improvement of internal logistical processes by applying Six Sigma tools. The result is reduction in the number of defects, a reduction of…show more content…
Logistics is about managing inventory, and managing inventory is about managing variance. Safety or “buffer” stocks are inventories needed to hedge against unknowns (i.e., the variation from the norm). Safety stock is maintained because of variation in supplier quality, transportation reliability, manufacturing process capability, and customer demand patterns. If variation in the processes from supplier to customer can be understood and controlled, a reliance on the buffers will be dramatically reduced. Variances in inbound and outbound logistics and variances in production control lead to the production stoppage, losing customer loyalty and losing customers or to reserving the liquidity in inventory. The principal objective of the Six Sigma methodology consist of the reduction of the variability associated with products/processes. It can be implemented either to forward or reverse logistics. 2.LITERATURE REVIEW The Six Sigma concept was first introduced by Motorola Company in the mid 1980s, built on the philosophy of Total Quality Management. Since its inception, thousands of organizations have become ‘Six Sigma companies’ and a number of variants on the original concept have been developed, often combining Six Sigma with ideas from other improvement…show more content…
The monetary aspect was then emphasized by Harry (1998), Hahn et al (1999), Montgomery (2001). The need for a common definition of Six Sigma was first emphasized by Linderman et al (2003).The goal of less than 3.4 defects per million opportunities was suggested, but was not included in the definition because ‘Six Sigma advocates establishing goals based on customer requirements’. A trend of diversification of research topics from primarily manufacturing focused to more general in nature (service-related) included an increasing academic participation and broader focus than solely on manufacturing. Another trend of omitting the statistical texts and theory and simplifying standard statistical methods was presented by Hahn et al (2001). The Six Sigma became more like a practice than a core method, as defined by Sousa and Voss (2002). The literature review indicates emerging trends and issues in Six Sigma. It highlighted new vistas of application, as Six Sigma continues to develop and evolve. It also open up new opportunities to apply Six Sigma in the fields that are not widely explored before (e.g. logistics service). 3. DMAIC

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