Using the two paragraphs shown below as a starting point, write an essay that demonstrates how both Benchmarking and Lean Six Sigma can be used by organisations to facilitate change in their business processes to enhance and sustain their competitive advantage.
In your essay you need to discuss the following:
a. What are Benchmarking and Lean Six Sigma?
b. How can both be applied to business process change?
c. How have organisations actually used one or both to improve their processes? (Case Studies)
d. How could you apply Benchmarking and/or Lean Six Sigma to your current organisation or to an organisation you know well to identify business process change improvements?
Benchmarking in an organization plays an important role for improving the competitive aspects of an organization. The organizations use this tool to determine customer service, cost, quality, flexibility and delivery of services. Benchmarking acts as a platform for comparing a set of companies with the best in class companies for achieving superior utilization of the resources and excel in terms of performance. It can be used as a reliable tool for a gradual and continuous measure for improvement. It acts an important educational base which provided the organization with the chance to learn from past mistakes and aim for a sustainable growth (Brue 2015).
The conceptualization of six sigma technique was first introduced by Motorola in the year 1987 in order to improve the quality aspect of their service. The concept of lean six- sigma incorporates combination of the six sigma outcomes with the lean speed of a value chain. The fundamental principle of six- sigma is to focus on both the quality and speed of service delivered by any manufacturing organization. The purpose of this study is to show the extensive possibilities in terms of improvements in business process change by combination of both benchmarking and lean six- sigma techniques. The studies also show the application of the stated research methodology in various organizations and learn about their business transformation process. The process of change in a business is implied as a result of change in tools and techniques, research and development tactics adopted by the managers (Rigby and Bilodeau 2015).
According to Meybodi (2013), Benchmarking is a practice which when applied to a business results in significant improvement in the performance of a company. The best application of this is mainly seen in organization which deals with operations and sales. The main basis of criteria is to relate the performance of best organizations in a specific sector of the industry and learning about the various process related to that particular organization, the organizations then work on their operations to improve it according to the needs of the selected one. (Augusto Cauchick Miguel 2014).
According to Zhu (2014), it needs to be understood that benchmarking is not a result of imitating the various strategies implemented by the best organizations but it is process of continuous improvement as a result of quantitative techniques and various innovation strategies which are untapped in the current practices. The methodology of the benchmarking involves from selection of the primary product or service of the company, identification of the important parameters of performance metrics, selection of companies, gathering of information on the performance and practices of the selected organization, analyses of the gathered information to know about the potential opportunities for continuous improvement in the business process, and implementation of the various strategies which are being followed by the best in class. The uses of the benchmarking techniques include improvement in the operational efficiency, a better understanding of the opportunities and relative cost position of the company, obtaining a strategic advantage and facilitating information sharing within the organization (Rolstadas 2013).
According to Cucoranu (2014), the concept of lean six -sigma is a combination of tools and methods which is used by the present organizations in gaining a competitive advantage. The basic principle focus is on a faster and cost effective means of delivering service to the customers. Six -sigma assists in fixing to defects in the manufacturing process thereby reducing the amount of wastage. It is a powerful toolkit in order to increase the efficiency of a production system. The application of the six sigma technique can be related to any sector of an activity. It may be applied to both products and services (Neufeld et al. 2013).
The implementation of this technique begins with understanding of the concept of Criticals to Quality (CTQ). The process also involves DMAIC technique such as define, measure, analyze, improve and control. It is the initial stage for application of six-sigma. The next step is DMADV technique which defines the various phases of defines, measure, analyze, define and verify. This stage is also known as design for six- sigma or DFSS. The final stage of this technique is related to designing and implementation of the observed analysis, (DEMDI). The lean six-sigma is a result oriented approach which focuses on the quality and productivity thereby by increasing the profits (Wei et al. 2012).
The error level is identified on the basis of level of significance of the various key constraints, with every increasing level of significance the quality level of service increases. The sixth level of analysis ensures a 99.9996% defects free service or products manufactured. The main objective of six sigma is 3.4 defect free parts per million. The six Apart from improvements in the manufacturing sector, the application of this technique would significantly improve the quality in service industries such as tax returns, baggage handling in airports and various other areas such as driving (accidents per million kilometer driven), and in hospitality sector to reduce the number of deaths per million admitted every year (Newton 2014).
According to (Harmon 2014), Business process change by application of lean six-sigma and benchmarking is mainly focused on two areas namely the core business and operations. The primary objective of both the methods results in Total Quality management (TQM). Managers of the big manufacturing concerns have stated that identifying the effective performance measurements aspects is the key to a success of an organization. The benchmarking process in itself is only related to identification the various key components or the opportunities for improvement, whereas lean six-sigma deals with the quantitative treatment and solutions for the various areas identified in the process of benchmarking. The amalgamation of both the measures can redefine the business process and organizations can compete in a better way (Goetsch and Davis 2014).
The software engineering institute (SEI) has taken several measures for bringing about improvement in the business process through capability maturity model (CMM). The CMM has guidelines for improving the business process through a five stage evolution model for understanding the maturity levels of the business activities. The level 1 is the initial process which is characterized with various set of activities. The second level is repeatable. In the second level the predetermined project costs are evaluated to track the various cost components. The third level is applicable for both management and engineering tasks and the standards are defined as per the standards of maintaining the software. The level 4 is related to detailed measures of the various process of the software and quantitative understanding of the same. This particular stage is often related to the application of the lean six-sigma technique. The controlling of the activities is done through benchmarking of the various sectors of operation and significance level of various operations is measured by six- sigma (English et al. 2014).
The theorists of Business Process Reengineering have paid more importance to the success factors which tend to give return on implementation. In this way companies include only that item which has more value for the business chain and sustainability of the organization.
According to Tønnessen (2014), the implementation process of single or both the aforementioned techniques have helped the organization to gain a radical shift in the quality of the services offered. Automobile giant such as Toyota has been implementing both benchmarking and six sigma to achieve continuous improvement. In order to the six sigma procedures Toyota has identified the waste components in their production cycle. The key issues include waiting time, unnecessary motion, defects, over production, inappropriate processing of inventory and excess transportation. The value stream mapping of the various process provide a common ground for application of the quantitative techniques. The application the six sigma implementation ensured that the company is able to reduce its necessary waste components. The result was an overall improvement in the scientific improvement of the various paradigms. The lean six sigma applications have further improved the supply chain operations through improved communication procedure which has led to strategic alliance of the business processes. Bank one has followed the process of continuous improve by application of lean six sigma. The neo division of the bank has been able to implement path finder approach for overall quality improvement and determining the priorities within the business units. Motorola implemented six- sigma in the beginning of 1987 by engineer Bill Smith and the significance mechanism was formulated to reduce the no. of defects PPM. The success of this implementation made the use of quantitative technique popular to incorporate innovation and optimal usage of the available resources.
According to Vinayak and Kodali (2013), in a similar way the process of benchmarking was first introduced in Xerox in United Sates, it resulted in showing clear benefits in terms of improvement in the performance in the operations. The implementation of the benchmarking models enabled the organization to facilitate learning process to maintain top quality standards in terms of customer service, improvement in the order of the inventory and an overall improvement in the process. The American Airlines incorporated benchmarking techniques in their business to gain a significant advantage in terms of customer services. The benchmarking process involved performance analysis of customer service of other airlines in the same route, and by including various added facilities in the route such as pre selection of seats, added feature in the purchase of business class ticket and additional luggage on booking of both economy class and business class tickets ensured that the flight is able to deliver compete with other airlines in the industry (Barkham and Saxon 2015).
The selected organization of the implementation of lean six- sigma technique and benchmarking has been observed with General Electric (GE) headquartered in Fairfield, Connecticut in the United States. The sigma value of the process involves K times the standard deviation of the selected process the equation is further represented by the equation
K* process standard deviation = half tolerance of the specification
The application the lean six – sigma in general electric resulted in .002 defects per million produced. In order to implement the process six-sigma model the customers were given the top priority for assessment. The goal of this objective was to determine the specific requirements of the customers. The main objective behind implementation the methodology was to bring an improvement in the product and the service level of in the manufacturing plant operations of the company. Third objective was to improve the overall financial status of the company. The initiation process involved five phases, the first phase being prioritizing or defining the customer needs (D), the second phase involved measurement of the performance (M), which focuses on how the various processes within the organization is measured. The phase included the analysis of the important reasons for the defects and identification the key variables related to the same (A). (Atmaca and Girenes 2013).
According to Dubey et al. (2014), the fourth phase was related to identifying the key variables by the process of benchmarking and quantifying their implications on the CTQs. This stage is related to continuous improvement (I). The fifth phase is related to controlling to ensure that the modified process of the various key variables selected from the benchmarking process remained within the acceptable ranges over the time (C). In this way we can observe how the company implemented DMAIC into the process of lean six-sigma model. The engineers involve in the implementation process were provided with 13 days of training at GE which was later reduced to ten days and often referred as Green belt training. In the training process the employees were told about various ways of process mapping, risk management skills and leadership skills required for the analysis. The statistical procedures involved one sample test which was used to compare the mean to the target, two sample test which compared two means, box and whisker plot to find the differences in the distribution of the data in the graphical representation, chi –square test which compared the number of products in a batch or group and a graphical comparison of the same The various testing procedures also involved homogeneity of variance, normal probability distribution charts and finally evaluating the theory with scatter plot (Augusto Cauchick Miguel and Monteiro de Carvalho 2014).
Conclusion
The exploratory descriptive research finding of this study shows that due to improvement in Total quality management factor (TQM) many companies adopt this technique of six sigma and benchmarking. The various adaptation of lean six- sigma is associated to training professionals who registered under IASSC Certified Lean Six Sigma Black Belt (ICBB) or green belt program. The professionals are well versed with methodology and they lead the companies in implementation of lean six-sigma technique. While implementing benchmarking technique its is crucial for the organizations to consider the element of competitiveness which is necessary to examine the deficiencies in the conventional system of alignment of the strategies (Lawrence and Miller 2015).
Reference List
Atmaca, E. & Girenes, S.S. 2013, “Lean Six Sigma methodology and application”, Quality & Quantity, vol. 47, no. 4, pp. 2107-2127
Augusto Cauchick Miguel, P. and Monteiro de Carvalho, M., 2014. Benchmarking Six Sigma implementation in services companies operating in an emerging economy. Benchmarking: An International Journal, 21(1), pp.62-76.
Barkham, M. and Saxon, D., 2015. Benchmarking Studies of Psychotherapy. The Encyclopedia of Clinical Psychology.
Brue, G., 2015. Six Sigma for Managers, (Briefcase Books Series). McGraw Hill Professional.
Cucoranu, I.C., Parwani, A.V. and Pantanowitz, L., 2014. Lean Six Sigma. In Practical Informatics for Cytopathology (pp. 113-119). Springer New York.
Dubey, R., Singh, T., Samar Ali, S., Venkatesh, V.G. and K. Gupta, O., 2014. Exploring dimensions of firm competencies and their impact on performance: Some exploratory empirical results. Benchmarking: An International Journal, 21(6), pp.1003-1022.
English, T.R., Moeller, D. & Mills, F. 2015, “Benchmarking the US Healthcare Ventilation Standard with the UK Healthcare Ventilation Standard”, ASHRAE Transactions, vol. 121, pp. 1T.
Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. pearson.
Harmon, P., 2014. Business process change. Morgan Kaufmann.
Lawrence, H. and Miller, M.R., 2015. The ATMAE Lean Six Sigma Certification Exam: Why it Matters to You?. Journal of Technology, Management & Applied Engineering, 31(3).
Meybodi, M.Z. 2013, “Alignment of strategic benchmarking performance measures: a lean manufacturing perspective”, Advances in Competitiveness Research, vol. 21, no. 1-2, pp. 14.
Neufeld, N.J., Hoyer, E.H., González-Fernández, M., Mehta, M., Walker, N.C., Powers, R.L. and Mayer, R.S., 2013. A lean six sigma quality improvement project to increase discharge paperwork completeness for admission to a comprehensive integrated inpatient rehabilitation program. American Journal of Medical Quality, p.1062860612470486.
Newton, I., 2014. Minitab Cookbook. Packt Publishing Ltd.
Rigby, D. and Bilodeau, B., 2015. Management Tools & Trends 2015. London, Bain & Company.
Rolstadas, A. ed., 2013. Benchmarking—theory and practice. Springer.
Tønnessen, T., 2014. Business Process Reengineering. In Managing Process Innovation through Exploitation and Exploration (pp. 27-33). Springer Fachmedien Wiesbaden.
Vinayak, K. and Kodali, R., 2013. Benchmarking the quality function deployment models. Benchmarking: An International Journal, 20(6), pp.825-854.
Wei, Y., Zhen, H. and Wen-meng, T., 2012. Research on Identification of Critical-to-Quality Characteristics for Complex Products [J]. Industrial Engineering Journal, 3(15), pp.75-79.
Zhu, J., 2014. Quantitative models for performance evaluation and benchmarking: data envelopment analysis with spreadsheets (Vol. 213). Springer.
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