LOGISTIC AND SUPPLY CHAIN MANAGEMENT

LEAN SIX SIGMA LOGISTICS AND ITS APPLICATIONS

A.

Introduction
Increasingly competitive environment turn on the heat to increase importance of efficiency and
effectiveness for organization of production and services in last three decades. Six sigma which
many World-wide leading corporations apply, has supported to increase their profit and expand
by making their all process such as; marketing, personnel management, finance and
manufacturing. Six sigma focuses on quality of production or services.
Six-Sigma is main focuses in total quality management which is a process to measure quality of
process and tries to improve this process. It does analyse and measure all work process in logistic
company. Six-sigma helps to avoid any mistakes in every steps of logistic process between order
to manufacturing in logistic company. Only six-sigma cant expedite any process by only itself.
SIX-SIGMA PRINCIPLES
The customer drives quality
Senior management must lead through active engagement
Solve problems using facts and data
Manage processes end-to-end
Do it right first time every time
All work is part of a process
Educate and involve everyone
Manage for performance
Measure what is critical to clients, shareholders and employees
Improve continuously
Six Sigma Benefits

The value of adopting the Six Sigma approach to process management has dramatic impacts in
all areas of your business.
Satisfying customer requirements
Returning higher yields to shareholders
Building an organisation that employees are proud to be a part of
Improving cost to income ratios on all of our processes
SIX SIGMA ROLES
Success of six-sigma process is directly connected with roles of anyone which is human power
side of the project. Everyone has different responsibilities and character regarding their education
they got. This team is very important to chosen before the project kick-off.
Their responsibilities are just like below:
Sponsor

Senior executive who sponsors the overall Six Sigma initiative.

Leader

Senior-level executive who is responsible for implementing Six Sigma within

the business.
Champion

Middle- or senior-level executive who sponsors a specific Six Sigma project,

ensuring that resources are available and cross-functional issues are resolved.
Black Belt

Full-time professional who acts as a team leader on Six Sigma projects.

Typically has four to five weeks of classroom training in methods, statistical tools and sometimes
team skills.
Master Black BeltHighly experienced and successful Black Belt who has managed several
projects

and

is

an

expert

in

Six

Sigma

methods/tools.

Responsible

for

coaching/mentoring/training Black Belts and for helping the Six Sigma leader and Champions
keep the initiative on track.
Green Belt

Part-time professional who participates on a Black Belt project team or leads

smaller projects. Typically has two weeks of classroom training in methods and basic statistical
tools.
Team Member

Professional who has general awareness of Six Sigma (through no formal

training) and who brings relevant experience or expertise to a particular project.

Process Owner

Professional responsible for the business process that is the target of a Six

Sigma project.

SIX-SIGMA STRATEGIES
Six-sigma projects have mostly two strategies these are DMAIC and DMADV. DMAIC is used
for the projects which goaled at improving any existing business process which is able to use in
Logistician way. DMADV is used for projects which goaled at creating new product or process
designs.
DMAIC project methodology has five phases are:
Define which is for defining problem, the voice of customer and the project aims.
Measure is key aspect of the current process and collect data
Analyse the data to investigate and verify cause and effect relationship
Improve or optimize to solutions for the new routes and to solve why questions and review them.
Control improves and make them perpetuate and review the results, find better solutions to
perpetuate to way which is relevant.
LEAN SIX SIGMA & LITERATURE SURVEY
Lean six-sigma logistics can be defined as:
The elimination of wastes through disciplined efforts to understand and reduce variation, while
increasing speed and flow in the supply chain. Three elements of lean six-sigma logistic are;
a.

Logistic is about managing inventory

b.

Lean is about speed, flow and the elimination of waste

c.

Six-sigma is about understanding and reducing variation.

Three main principles of Lean six-sigma logistic is, Logistic flow, Logistic capability and
logistic discipline.

CASE STUDY 1) KUEHNE+NAGEL PEOPLE POWER

Picture the scene. You work in a warehouse for Kuehne + Nagel, one of the worlds largest
logistics companies, with 900 offices in 100 countries. One of Kuehne + Nagels biggest clients
is a leading grocery retailer, and each day you remove the customers waste cardboard from a
baling machine and stack it neatly on the warehouse floor ready to be loaded onto lorries and
disposed of. Then it hits you. Wouldnt it be more efficient to load the cardboard straight from
the baler onto the lorry? (See case study to find out more.) Its a simple idea, but the best ones
often are. Small process improvements such as these have delivered a 15% improvement in
productivity for Kuehne + Nagel, stacking up to significant levels of savings in its UK projects
alone. Many of these projects originate from suggestions put forward, and then implemented, by
staff working on the shop floor. I think were fairly unique in our approach to continuous
improvement, says Dean Harrison, who runs Kuehne + Nagels Continuous Improvement
Programme for North West Europe. The focus is very much at the operational level, which we
feel delivers the greatest benefit. After all, business improvement specialists know the tools very
well, but nobody knows the daily realities of the business as well as the staff do. I was formerly
an Operations Manager in a number of our distribution centres, so I also approach this from a
very practical perspective.
Kuehne + Nagel joined the BQF in 2008 and launched the Kuehne + Nagel Production System
(KNPS) the following year. Drawn from Lean and Six Sigma, KNPS adopts the principles of
proactive performance, perfection and passionate people to deliver excellent, cost-effective
service and consistent global operations. Kuehne + Nagel started by splitting its operations into
nine global regions, and tasked a network of Regional Managers with driving the programme
forward in their area. Phase 1 of KNPS focused on providing each site with performance
information, and helping them to identify areas for improvement. Phase 2, which launched in the
spring of 2010, involves a significant training programme to support staff at all levels in
delivering some 174 improvement projects in the UK alone.
In line with the Six Sigma model, staff are trained to green belt and black belt level green
belts being staff who run improvement projects on top of their day job, and black belts being
full-time KNPS managers. To date, 126 green belts and 21 black belts have completed the

course, and 163 senior managers have attended one-day awareness courses. This investment in
training and development is key to the success of the programme, according to Dean: Most of
our projects involve the workforce both in concept and delivery, and that has really helped to
engage people in what were trying to achieve. The whole idea of Lean and Six Sigma is very
new to some people, but when we give them the opportunity to get involved, to receive training
and develop into fully -rounded junior managers, it gives them such a sense of pride and
achievement. It also delivers the best results the people who are closest to the action really
understand the process, and so they are best qualified to improve things.
Raising the bar
Kuehne + Nagel sees continuous improvement as a crucial means of safeguarding its future. One
of the most important drivers is the need to maintain consistency across its international
operations. Kuehne + Nagel has exploded in scale over the past decade. Were now one of the
largest contract logistics companies in the world, and the worlds largest sea freight forwarder,
says Dean. Im proud to say that were bucking the recession trend by delivering growth in all
areas, and weve achieved that through very strict financial and operational controls. Working
across seafreight, airfreight, rail, road, contract and lead logistics, its crucial that we maintain
that sense of discipline in every area, and keep the various parts of the business working
effectively together. Among the key challenges are different business cultures globally. Many of
our multinational clients work with us over various continents, and we want them to experience
Kuehne + Nagel as one company, with the same standard of service, business language and
values. Far from being an add-on to its client offering, Kuehne + Nagel have found that
continuous improvement is fast becoming a standard requirement for potential suppliers. Clients
are consistently challenging companies to be better than their competitors, and our Continuous
Improvement Programme enables us to keep raising the bar, says Dean. As a business, if you
have done something the same way for years, you often dont question whats in front of you.
The great thing about Lean is that it teaches you to see opportunities for change and
improvement whether thats about finding a new way of managing a process, or simply
removing unnecessary activity to streamline your operations. The more efficient and stable we
are as a business, the better the service we can offer our clients, and they in turn pass that benefit

on to consumers. Our programme is still in its infancy but ultimately, our long-term ambition is
to make improvement part of our culture, and challenge the status quo on a daily basis.
Looking ahead
When it comes to focusing on the long term, Dean finds BQF membership invaluable. Weve
benefited greatly by visiting other members such as Siemens and Ricoh through the BQF. Those
companies are operating at the level we aspire to reach in five to 10 years time. Taking senior
managers with you to see that process and the benefits it brings really helps to focus the mind,
even if it just reminds you how far you still have to go! Currently, Kuehne + Nagels
improvement activities have focused on contract logistics, but in the years ahead the aim is to
roll out to air, sea, road, rail and supporting functions such as HR and IT. In the meantime, 2012
will see the even greater expansion of the KNPS programme. We want to train more green belts
to cover all the sites, and support the existing green belts to become certified, says Dean. Its
no small task trainees need to produce three improvement projects each and pass a final test,
which all takes about a year. However its absolutely worth the effort, both for the business and
for our employees. The most satisfying part of my job is listening to colleagues presenting their
projects and seeing their sheer enthusiasm. Anyone who sees that as a soft, fluffy benefit is
greatly underestimating the very tangible impact it can have on operational improvement,
productivity and retention. You create a passionate workforce by engaging people and giving
them the opportunity to improve their own working lives. In turn, you have a healthier business.