Operational Excellence: Using Lean Six Sigma to Translate Customer Value through Global Supply Chains (Series on Resource Management)

662 Pages·2007·13.39 MB·English

by  James William Martin

Operational Excellence
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Series on Resource Management
Rightsizing Inventory ERP: Tools, Techniques, and Applications
by Joseph L. Aiello for Integrating the Supply Chain
ISBN: 0-8493-8515-6 by Carol A. Ptak with Eli Schragenheim
ISBN: 1-57444-358-5
Integral Logistics Management: Operations and
Supply Chain Management in Comprehensive Introduction to e-Supply Chain Management:
Value-Added Networks, Third Edition Engaging Technology to Build
by Paul Schönsleben Market-Winning Business Partnerships
ISBN: 1-4200-5194-6 by David C. Ross
ISBN: 1-57444-324-0
Supply Chain Cost Control Using Activity-
Based Management Supply Chain Networks and
Sameer Kumar and Matthew Zander Business Process Orientation
ISBN: 0-8493-8215-7 by Kevin P. McCormack and
William C. Johnson with William T. Walker
Financial Models and Tools for Managing ISBN: 1-57444-327-5
Lean Manufacturing
Sameer Kumar and David Meade Collaborative Manufacturing: Using
ISBN: 0-8493-9185-7 Real-Time Information to Support the
Supply Chain
RFID in the Supply Chain by Michael McClellan
Judith M. Myerson ISBN: 1-57444-341-0
ISBN: 0-8493-3018-1
The Supply Chain Manager’s Problem-Solver:
Handbook of Supply Chain Management, Maximizing the Value of Collaboration
Second Edition and Technology
by James B. Ayers by Charles C. Poirier
ISBN: 0-8493-3160-9 ISBN: 1-57444-335-6
The Portal to Lean Production: Principles Lean Performance ERP Project Management:
& Practices for Doing More With Less Implementing the Virtual Supply Chain
by John Nicholas and Avi Soni by Brian J. Carroll
ISBN: 0-8493-5031-X ISBN: 1-57444-309-7
Supply Market Intelligence: A Managerial Integrated Learning for ERP Success:
Handbook for Building Sourcing Strategies A Learning Requirements Planning Approach
by Robert Handfield by Karl M. Kapp, with William F. Latham and
ISBN: 0-8493-2789-X Hester N. Ford-Latham
ISBN: 1-57444-296-1
The Small Manufacturer’s Toolkit: A Guide
to Selecting the Techniques and Systems to Basics of Supply Chain Management
Help You Win by Lawrence D. Fredendall and Ed Hill
by Steve Novak ISBN: 1-57444-120-5
ISBN: 0-8493-2883-7
Lean Manufacturing: Tools, Techniques,
Velocity Management in Logistics and and How to Use Them
Distribution: Lessons from the Military by William M. Feld
to Secure the Speed of Business ISBN: 1-57444-297-X
by Joseph L. Walden
ISBN: 0-8493-2859-4 Back to Basics: Your Guide to
Manufacturing Excellence
Supply Chain for Liquids: Out of the Box by Steven A. Melnyk and
Approaches to Liquid Logistics R.T. Chris Christensen
by Wally Klatch ISBN: 1-57444-279-1
ISBN: 0-8493-2853-5
Enterprise Resource Planning and Beyond:
Supply Chain Architecture: A Blueprint Integrating Your Entire Organization
for Networking the Flow of Material, by Gary A. Langenwalter
Information, and Cash ISBN: 1-57444-260-0
by William T. Walker ISBN: 0-8493-8515-6
ISBN: 1-57444-357-7
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Operational Excellence
Using Lean Six Sigma to Translate Customer
Value through Global Supply Chains
James William Martin
New York London
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Auerbach Publications
Taylor & Francis Group
6000 Broken Sound Parkway NW, Suite 300
Boca Raton, FL 33487-2742
© 2008 by Taylor & Francis Group, LLC
Auerbach is an imprint of Taylor & Francis Group, an Informa business
No claim to original U.S. Government works
Printed in the United States of America on acid-free paper
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International Standard Book Number-13: 978-1-4200-6250-2 (Hardcover)
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Library of Congress Cataloging-in-Publication Data
Martin, James W. (James William), 1952-
Operational excellence : using lean six sigma to translate customer value
through global supply chains / James William Martin.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-4200-6250-2 (alk. paper)
1. Business logistics. 2. Production management. 3. Six sigma (Quality control
standard) 4. Customer relations. I. Title.
HD38.5.M375 2008
658.5’03--dc22 2007045043
Visit the Taylor & Francis Web site at
http://www.taylorandfrancis.com
and the Auerbach Web site at
http://www.auerbach-publications.com
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Contents
Foreword .....................................................................................................xiii
Introduction ..................................................................................................xv
About the Author .........................................................................................xxi
Part 1 adaPting StrategieS for global
ComPetitiveneSS
1 Enhancing Global Competitiveness .......................................................3
Overview .....................................................................................................3
Current Trends in Operations Management ................................................4
How the Competitive Environment Transforms Operational Strategy ........5
Developing Adapting Strategies to Enhance Operational Capability .........10
Linking Operational Strategy to Strategic Goals and Objectives ...............12
Global Metrics and Operational Maturity .................................................15
Internal and External Benchmarking .........................................................22
Summary ...................................................................................................25
Suggested Reading .....................................................................................25
2 Organizational Change in a Competitive World..................................27
Overview ...................................................................................................27
What Is Organizational Change? ...............................................................29
Understanding Organizational Values .......................................................30
Building Organizational Capability ...........................................................30
Managing Organizational Change .............................................................32
Integrating Operational Initiatives .............................................................32
Deploying Initiatives across an Organization ........................................33
Building High-Performance Teams .......................................................36
Deploying Continuous Improvement Teams .........................................38
Deploying Lean Systems ......................................................................40
Deploying Six Sigma Quality ...............................................................42
v
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vi n Contents
Integrating and Fine-Tuning Initiatives .................................................45
Deploying Design Excellence ...............................................................46
Deploying Information Technology Excellence .....................................49
Deploying Customer Excellence ............................................................51
Summary ...................................................................................................53
Suggested Reading .....................................................................................55
3 Understanding the Voice of the Customer (VOC) ................................57
Overview ...................................................................................................57
Marketing’s Influence on Internal Operations ...........................................59
Important Marketing Activities .................................................................59
Estimating New Product or Service Demand ............................................61
Using Marketing Information to Estimate Sales ........................................63
Understanding Customer Needs and Value ...............................................69
Market Segmentation.................................................................................71
Measuring the VOC ..................................................................................72
Translating the VOC Using Quality Function Deployment ......................75
Exchanging Value in a Competitive World ...............................................77
Summary ...................................................................................................78
Suggested Readings ...................................................................................80
Part 2 tranSlating CuStomer value
elementS into ProduCtS, ServiCeS,
and WorkfloW SyStemS
4 Designing for Customer Value Using Design for Six Sigma
(DFSS) ..................................................................................................83
Overview ...................................................................................................83
Major Objectives of the Design Process .....................................................88
Concurrent Engineering Methods in Design ............................................90
CE Benefits ................................................................................................93
Ten Key Steps to Implement CE ................................................................93
Applying Design for Manufacturing Methods ...........................................95
Ten Key Steps to Implement DFM ............................................................96
Key Tasks of the Design Process ................................................................97
Concept Phase .......................................................................................98
Design Phase .......................................................................................100
Target Costing ....................................................................................103
Prototype Phase ...................................................................................105
Pilot Phase ...........................................................................................106
Launch Phase ......................................................................................107
How the Product Life Cycle Impacts the Design Process .........................107
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Contents n vii
Risk Assessment .......................................................................................107
Design for Six Sigma (DFSS) ...................................................................110
Overview of the Five DFSS Phases ......................................................111
Identify ...........................................................................................113
Design ............................................................................................113
Optimize ........................................................................................117
Validate...........................................................................................120
Incorporate .....................................................................................121
Design Standards for Global Competitiveness .........................................121
Impact of Mass Customization on Design ...............................................123
Outsourcing Design Workflows ...............................................................124
Summary .................................................................................................125
Suggested Reading ...................................................................................126
5 Using Lean Methods to Design for Process Excellence ......................127
Overview .................................................................................................127
Designing Process Workflows ..................................................................136
Workflow Modeling .................................................................................138
Simulation ...............................................................................................141
Queuing Analysis.....................................................................................146
Linear Programming................................................................................153
Process Failure-Mode-and-Effects-Analysis (PFMEA) .............................157
How to Improve the Work Environment .................................................157
How to Develop High-Performance Work Teams ...................................159
How to Simplify and Standardize Work ..................................................161
How to Develop an Effective Training Program ......................................164
Summary .................................................................................................165
Suggested Reading ...................................................................................166
6 Making Value Flow through a Process ...............................................167
Overview .................................................................................................167
What Is a Lean System? ...........................................................................169
Mapping and Analyzing Customer Value ................................................172
Balancing Flow through the System .........................................................174
Improving Operational Efficiency ............................................................177
Summary .................................................................................................187
Suggested Reading ...................................................................................190
7 Measuring and Improving Productivity .............................................191
Overview .................................................................................................191
Creating Shareholder Value......................................................................194
Aligning Performance Metrics with Strategic Objectives .........................196
How to Improve Productivity ..................................................................198
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viii n Contents
Aligning Operational Improvements with Strategy ..................................209
Summary .................................................................................................216
Suggested Reading ...................................................................................217
Part 3 oPerationS Planning, management,
and Control
8 Capturing Customer Demand ............................................................221
Overview .................................................................................................221
What Is Demand Management? ..............................................................225
How to Build Quantitative Forecasting Models .......................................236
Time Series Models ..................................................................................237
Trend Plot ................................................................................................241
Decomposition Models ............................................................................242
Moving Average Models ..........................................................................245
Simple Exponential Smoothing................................................................245
Double Exponential Smoothing (Holt’s Method) ....................................247
Triple Exponential Smoothing (Winter’s Method) ...................................247
Autoregressive Integrated Moving Average (ARIMA) Models, or
Box-Jenkins Methodology........................................................................248
Regression Models ...................................................................................253
Summary .................................................................................................267
Suggested Reading ..................................................................................268
9 Expanding Global Capacity ...............................................................269
Overview .................................................................................................269
How to Plan Capacity Based on System Forecasts ...................................277
Creating Virtual Capacity ........................................................................278
How to Improve Capacity Utilization ......................................................282
Managing Capacity with Insourcing and Outsourcing ...........................284
Summary .................................................................................................290
Suggested Reading ...................................................................................291
10 Using Hybrid Decentralization to Increase Productivity...................293
Overview .................................................................................................293
Applying Hybrid Decentralization to Facility Location ...........................295
How to Locate Facilities across the World................................................296
Facility Location Using Simple Rating Methods ......................................298
Facility Location Using Linear Programming .........................................300
Facility Location Using Regression Models..............................................303
Managing Facility Location Risk ............................................................306
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Contents n ix
How to Manage Facilities to Ensure Availability ....................................308
Summary .................................................................................................309
Suggested Reading ...................................................................................310
11 Integrating Demand and Supply through Sales and Operations
Planning .............................................................................................311
Overview .................................................................................................311
How the S&OP Team Integrates Strategy with Operations .....................313
Key Success Characteristics of a Successful S&OP Process ......................314
Key Activities of the S&OP Team ...........................................................318
Summary .................................................................................................323
Suggested Reading ...................................................................................324
12 Lean Scheduling Methods ..................................................................325
Overview .................................................................................................325
Operations Scheduling.............................................................................327
Scheduling Algorithms ............................................................................332
Using Pull Scheduling to Increase Flow ...................................................339
Summary .................................................................................................345
Suggested Reading ..................................................................................346
13 Dynamic MRPII ................................................................................347
Overview .................................................................................................347
MRPII and Bill-of-Material (BOM) Relationship ...................................351
How an MRPII System Functions ...........................................................353
Creating a Pull System Using Hybrid MRPII and Kanban ......................357
Quick Response Methods to Support Hybrid MRPII .............................360
Summary .................................................................................................361
Suggested Reading ...................................................................................362
14 Strategic Inventory Management .......................................................363
Overview .................................................................................................363
Measuring Inventory Value .....................................................................366
Why Is Inventory Useful? ........................................................................367
Developing Models to Systematically Reduce Inventory ..........................369
Cycle-Counting Systems ..........................................................................378
Excess and Obsolete Inventory Management ...........................................382
Unnecessary Product and Component Proliferation ................................386
Summary .................................................................................................388
Suggested Reading ...................................................................................389
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