While many manufacturing companies are implementing Six Sigma for continuous process improvement, it may not be the most practical solution for every company.
Smaller manufacturers can benefit from applying many of the tools found in the Six Sigma methodology, but on a more manageable scale for daily process improvement.
While far from a complete list, the following six practical tools may be used by smaller companies who are motivated to continually streamline production and improve productivity:
Key performance indicators
Most manufacturers have financial goals (such as sales volume and profitability) and operational goals (such as on-time delivery and quality). These high-priority goals should translate into a series of detailed KPIs to measure items such as process cycle times and setup times. There is an art in balancing KPIs. For instance, solely measuring on-time delivery can have unfavorable quality consequences.
Each product has different sales volumes, depending on its product life-cycle phase. In early phases, sale volumes may be low but growing at a rapid pace. As a product matures, the sales growth may taper (usually as a result of competition), and product costs become more important. While the initial selection of tooling, production equipment and assembly processes is important, it is equally important to re-examine these selections as a product matures. Initially, as a new product is trying to find a market, engineers (together with the customer) might decide that a manual assembly process is appropriate. As sales grow, they may change to a semiautomated process and, as sales explode, upgrade to a fully automated process.
Corrective action, preventive action
Having a robust CAPA program might be the most important process improvement tool for manufacturing companies. At least the Food & Drug Administration tends to think so. Known as CAPA+1, an FDA audit will commonly focus on a med ical device company's CAPA system, plus one other element of its quality system. As its name suggests, a CAPA program is designed to correct current issues and prevent future issues by determining root causes of problems that have been identified by returned products, customer complaints or internal quality reviews.
Compared to other line items on an income statement, the freight-out expense category is a relatively small dollar amount. Yet, the details of this expense category can help identify problem areas in delivery. It is industry practice for customers to pay for transportation expense. Yet, when a manufacturer is late in its delivery of critical parts, it is common for the manufacturer to pay freight charges (usually fees for expedited delivery). While the freight-out expense category contains other items, it provides a summary of late shipments of "critical parts" to your customers and quantifies the direct costs of being late.
As commodity costs continue to rise, tracking scrap has become increasingly important. Keeping track of scrap also helps focus management's attention on areas that need improvement. For instance, a mold press generating scrapped parts might indicate a processing issue or tooling issue that needs to be corrected.
Process flow charting
During college, I was an intern at the Colorado Department of Revenue. If an intern had a question, our supervisor, Sylvia, had the answer (or made it up). Sylvia's instant answers became rules- standard operating procedures that probably remain in effect today. One effective technique to uncover detrimental "Sylvia's rules" within your company is to flow-chart the processes. This technique involves reviewing the flow of materials and paperwork, and interviewing employees who perform these processes and their immediate supervisors. Generally, front-line employees are eager to tell management when a process fails to make sense.
In sum, while not all companies are eager to adopt Six Sigma (and its associated costs), there are many practical tools to help your company improve processes and boost its bottom line.
Berry is the CFO and general counsel of Aircom Manufacturing Inc. Views expressed here are the writer's.