Why does supply chain performance matter? It’s because businesses thrive on having a competitive edge. Every market leader is highly aware of the activities of competitors in any industry. Organizations are increasingly focusing on quality management in supply chain management, the perfect recipe for managing inventory. Efficiency is the lifeblood of supply chain performance.
Supply Chain Fundamentals and Supply Chain Performance
Producing and distributing any commodity involves steps that aggregate into what experts have called a supply chain.
We must now understand the essential elements in managing and measuring the performance of a supply chain. Supply chain management concentrates on making quality enhancements to the various steps across the supply regime. These steps include:
- Control, and
- Monitoring of all the supply chain activities.
The fundamental links that make up the supply chain include Manufacturing and Operations, Transportation, Warehouse and Distribution Centers, and Purchasing. The organizational departments that ensure a kink-free supply chain include customer service, engineering, finance, IT, marketing, and quality assurance.
Supply Chain Performance Measurements
An efficient and effective supply chain results from a dozen key performance measurements, including:
* Average Pay Period
* Cash-to-Cash Cycle Time
* Customer Order Cycle Time
* Days Sale Outstanding
* Fill Rate
* Freight Bill Accuracy
* Freight Cost per Unit
* Inventory Turnover
* Inventory Days of Supply
* Perfect Order Measurement
* On-Time Shipping Rate
* Supply Chain Cycle Time
Why Six Sigma is Inevitable for Improving Supply Chain
Of the several methods that companies have employed to improve supply chain performance, Six Sigma has stood the test of time. It’s nearly the same for its close cousin, Lean Six Sigma. Six Sigma is still highly relevant even after two decades of the twenty-first century.
As long as a company implements a full program, in terms of finance and commitment, the more effective the results will be in the long haul.
The ideas and tools available in Six Sigma apply to any process or job function requiring dynamic solutions to real problems. Six Sigma provides a basis for quality service delivery across the supply chain. But, in what specific ways can Six Sigma hand your organization an unfair competitive advantage via improving supply chain performance?
#1 – Six Sigma will improve productivity
How can Six Sigma improve supply chain performance by enhancing productivity? An illustration would be enough here: let’s suspend time for a moment and make you the manager of a paper service or warehouse chain. First, with Six Sigma techniques, you can investigate inefficiencies and defects in the process.
You’ll also be able to identify training issues, factors responsible for picking errors, and process hiccups even if they seem negligible.
Six Sigma doesn’t simply detect flaws. It allows you to systematically make the necessary corrections in each warehouse under your watch.
#2 – Six Sigma will make your operations more cost-effective
You’ve probably never heard of DMAIC, or have you?
DMAIC is short for Define, Measure, Analyze, Implement, and Control. It’s the Six Sigma framework for process improvement. Please don’t simply take my word for it; countless companies continue to count on Six Sigma for process improvement that contributes to superior supply chain
Reducing defects helps to minimize operational costs, and this is an area where Six Sigma has thrived. By eliminating the origins of process defects, Six Sigma ensures your organization will operate more cost-effectively.
#3 – Six Sigma provides a stream of capable talent and personnel
Korean Industrial giant, Samsung, is a household name in the electronic components, financial and services industries. You can see how complex the group’s global supply chain is. Yet, they adopted the Six Sigma model to greatly minimize the short supply of talent necessary for effective supply
chain management at scale.
Upon studying the GE model and adapting accordingly, the Samsung Group, offered full-time training for four weeks spread evenly over four months. Finishing three similar projects qualifies prospective employees to receive a supply chain management Black Belt full certification.
A lack of capable talent is a significant roadblock in achieving better supply chain management. It can even improve supply chain management function as there’s a greater understanding of the discrete systems involved.
#4 – Six Sigma breathes fresh air into your customer service operations
Regardless of the organization, waste is inefficient. The principles of Six Sigma incline heavily towards pruning off the “fatty” elements of your operation. It’s akin to the lean methodology, which emphasizes using less to achieve more. Indeed, Lean Six Sigma is an evolution of Six Sigma that
focuses on lean ethos.
But Six Sigma itself diverges slightly from the lean methodology in its focus on the customer perspective towards value. It accelerates towards eliminating steps and processes of questionable value for the customer. It’s obvious this can optimize order fulfillment for assignment help UK, restaurant, and courier delivery services.
One implicit benefit of Six Sigma for your customer service is raising the efficiency and upping operations to enhance customer satisfaction.
#5 – Six Sigma will provide overall consistency across your company
Six Sigma relies on statistics for continuous process improvement. The core idea behind this is that variation eventually harms the business. Consistency and predictability are vital in a supply chain or manufacturing process.
With enough consistency, you’ll thrive on doing what’s most useful for your customers. Consistency implies that the process is under control, and you can tweak it as you need to. It also means that the products will more likely meet customer expectation. Consistent processes ensure a higher level of quality for products.
#6 – Six Sigma will improve commercial performance
As your organization grows in productivity, runs on minimal cost, and bolsters customer satisfaction, your bottom line will also see an uptick. Six Sigma is effective in improving revenues and solidifying relationships with customers.
These elements must operate on efficient terms to lead to superior returns on investment.
It’s clear how Six Sigma will improve any organization, regardless of its primary business. However, it’ll only be effective if there’s the will to invest generously in it and sustain it. The same applies to all continuous improvement philosophies.
Expect things to slow down after an initial period of acceleration and a blitz of quick wins. But, if you stay the course, Six Sigma will eventually enable you to trim off gross inefficiencies in your supply chain, promote the performance of your operations, and sustain your commercial growth for a long time.