How to follow Six Sigma?

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task is to create a plan, following the same parameters, which will be the
sample standard that your employees’ submissions should match.

have just been hired as the director of process improvement, a new
position, by the VP of Operations for the ABC Manufacturing Company. ABC has
been plagued by both internal and external vendor issues; the vendor issues
involved repeated late deliveries and poor quality, while internally poor
deliveries to customers resulted from both vendor issues, as well as quality
and scheduling issues. The CEO’s instinct is that the factory could
benefit from some wide-reaching process improvements.

The VP
of Operations has decided that a far greater focus on vendor quality and
internal process improvements must be taken. The VP of Procurement, prior to
your coming on board, had already met with the CEO’s of ABC’s 4 major vendors
and alerted them that he expected them to begin turning around their quality
performance. About a month prior, he had sent each a letter suggesting several
formal overall quality programs that they may embark upon, which
included the following:

  • TQM
  • Juran’s Trilogy
  • Crosby’s program
  • Deming’s
  • Six Sigma


The VP
has already received the following responses from each of the main vendors, and
he asked you, in coming months, to work with each vendor as they implement
their quality initiatives.

  • Company A had
    written back that it was planning to implement the Juran program but had
    not yet begun.
  • Company B had
    written back that it was planning to implement the Crosby program but had
    not yet begun.
  • Company C had
    written back that it was planning to implement the Deming
    program but had not yet begun.
  • Company D had
    written back that it was planning to implement a TQM program but
    had not yet begun.
  • Company E had
    written back that it was planning to implement the Six Sigma
    program but had not yet begun.

all Companies note plans without and current action, your task is to provide
each company clarification of each respective quality initiative in terms of
overall concept, methodology, pros, and cons. You are to consolidate your
findings into a single report for the VP prior to communicating these to each
company individually.


addition, you know that as far as internal processes and overall supply chain
management goes, that there may be opportunities for improvement. Currently,
the following internal opportunities exist for possible process improvement:

  • Supply
    Chain Management

    • The company
      communicates separately with each vendor; usually when a forecast or production
      change is made, not every vendor finds out the same day. This leads to
      confusion, excess inventories, and stock outs.
  • Demand

    • The primary
      method to establish the master production schedule is to use a
      forecast that is created prior to the beginning of the year and updated
      monthly using salesmen’s inputs. Invariably, the company ends up
      producing too much of the wrong items (not demanded) and too few of what
      is in demand (real customer orders).
  • Multistage

    • To create ABC’s
      final finished product requires a multiple-step supply chain, which looks
      something like the following:

      • Raw material
        to vendors factory
      • Vendor
        processes raw materials to make their parts
      • Those parts
        are shipped to ABC’s factory
      • ABC processes
        purchased parts through a succession of departments, each one adding
        more and more vale
      • Finally, all
        finished components are assembled into a finished product.
    • Currently,
      every step in this entire supply chain is scheduled, monitored
      through some kind of MRP system, reported throughout the day, and seems
      to take an inordinate amount of system updating.
  • Transportation

    • ABC continues
      to use its own fleet to deliver finished goods all over the country and
      to have common carriers deliver parts from its vendors, also located all
      over the country.
  • Process Control,
    Performance, and Variability

    • ABC’s own
      internal process seem to all of a sudden go in and out of quality
      specifications; the company always seems to find out too late to avoid
      massive amounts of scrap, rejected parts, or labor costs to rework
  • Negative and
    Positive Cash Flow

    • The company
      goes through frequent swings from positive to negative cash flows as
      inventory purchases for large lots create negative cash flows, but
      then using up these materials occur at a slower rate, and with less
      outgoing, cash flow becomes positive. The CFO really struggles with
      managing these cash flow swings.

you begin to put together a vendor visitation schedule, your boss, the VP of
Procurement, advised you that the CEO expects a comprehensive report, in about
a month, covering the opportunities for improvement on the above topics.

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