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Publisher: Rout ledge I nforma Lt d Regist ered in England and Wales Regist ered Number: 1072954 Regist ered office: Mort imer House, 37- 41 Mort imer St reet , London W1T 3JH, UK Tot al Qual i t y Management & Busi ness Excel l ence Publ i cat i on det ai l s, i ncl udi ng i nst r uct i ons f or aut hor s and subscr i pt i on i nf or mat i on: ht t p: / / www. t andf onl i ne. com/ l oi / ct qm20 Usi ng t he si x-si gma met ri c t o measure and i mprove t he perf ormance of a suppl y chai n Ti r t hankar Dasgupt a a a Indi an St at i st i cal Inst i t ut e, Bar oda, Indi a Avai l abl e onl i ne: 25 Aug 2010 To ci t e t hi s art i cl e: Ti r t hankar Dasgupt a ( 2003) : Usi ng t he si x- si gma met r i c t o measur e and i mpr ove t he per f or mance of a suppl y chai n, Tot al Qual i t y Management & Busi ness Excel l ence, 14: 3, 355- 366 To l i nk t o t hi s art i cl e: ht t p: / / dx. doi . or g/ 10. 1080/ 1478336032000046652 PLEASE SCROLL DOWN FOR ARTI CLE Full t erms and condit ions of use: ht t p: / / www. t andfonline. com/ page/ t erms- and- condit ions This art icle may be used for research, t eaching, and privat e st udy purposes. Any subst ant ial or syst emat ic reproduct ion, redist ribut ion, reselling, loan, sub- licensing, syst emat ic supply, or dist ribut ion in any form t o anyone is expressly forbidden. The publisher does not give any warrant y express or implied or make any represent at ion t hat t he cont ent s will be complet e or accurat e or up t o dat e. The accuracy of any inst ruct ions, formulae, and drug doses should be independent ly verified wit h primary sources. The publisher shall not be liable for any loss, act ions, claims, proceedings, demand, or cost s or damages what soever or howsoever caused arising direct ly or indirect ly in connect ion wit h or arising out of t he use of t his mat erial. TOTAL QUALITY MANAGEMENT, VOL. 14, NO. 3, 2003, 355366 Using the six-sigma metric to measure and improve the performance of a supply chain Tin1naNkan Dascci1a Indian Statistical Institute, Baroda, India ans1nac1 The need for a comprehensive, exible and adoptable framework for evaluating the performance of a supply chain and its entities has long been felt. It is also recognized that such a framework is more eective if the performances of various processes and entities can be measured on a common scale and benchmarked against world-class standards. In this paper, it is shown how the six-sigma metrics, immensely popular across the globe today, can help an organization in this regard. The motivation behind the integration of the two concepts comes from the versatility of the six-sigma metrics in performance measurement, certain similarities in the two approaches and research results establishing that supply chain management can be enriched through application of quality management principles. A structured methodology, with which the performance of a supply chain and its entities can be eectively measured, monitored and improved with the help of the six-sigma metrics is presented. The method is also illustrated with a case example. Introduction Performance evaluation is one of the key issues in any management philosophy. As pointed out by Lambert et al. (1998), one of the pertinent issues in the context of supply chain management (SCM) is to derive the right metrics to evaluate the performance of the entire supply chain, individual members or subsets of members. It is now well established that traditional performance measures based on accounting gures such as sales turnover, prot, debt and ROI do not match entirely with the competencies and skills companies require to face todays challenging business environment. Many experts have also pointed out that operational measures are the drivers of future nancial performance, and nancial success is the logical consequence of doing the fundamentals well. It is thus necessary for any organization to consider performance measurement of the entire supply chain and all of its entities as a strategic issue. A few strategic criteria that can be used are identied in the supply-chain process reference (SCOR) model (Hakanson, 1999) as delivery performance, order fullment performance, cycle time, order fullment lead time, total supply-chain management cost, inventory levels, etc. Although these metrics are useful and important, most of them satisfying the attributes of good metrics as discussed by Rose (1995), it is dicult to dene a framework for performance measurement solely with their help. According to Kanji (2001), to measure business excellence, organizations need a framework that is Correspondence: T. Dasgupta, SQC & OR Unit, Indian Statistical Institute, 98 Sampatrao Colony, Baroda 390007, Gujarat, India. E-mail: dumptydasgupta@hotmail.com ISSN1478-3363 print/ISSN1478-3371 online/03/030355-12 2003 Taylor & Francis Ltd DOI: 10.1080/1478336032000046652 D o w n l o a d e d
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356 T. DASGUPTA comprehensive, exible, and easy to adopt. One has to remember that the basic purpose of measuring is to identify weak areas, take corrective actions and improve continuously. From this perspective, there is today an increased demand for common metrics measures that can evaluate every process related to the entire supply chain and its components on the same scale. This is where the six-sigma methodology can very successfully be used to measure the performance of a supply chain and its entities. According to Harry (1997), The six-sigma method allows us to reduce things to a common denominatordefects per unit and sigma. In turn, this provides us with a common language and the ability to benchmark ourselves against like products, processes and practices. Six-sigma is now the buzzword in the eld of quality. Introduced by Motorola in 1987 and adopted by GE to achieve remarkable benets, six-sigma is dened by Harry (1997) as a philosophy, a strategy, a goal, a benchmark and also a metric. Although the six-sigma strategy is based on the four-stage principle of measure-analyse-improve-control (M-A-I-C), its uniqueness may be primarily attributed to the measure stage. The six-sigma metrics have the primary advantage of being able to compare the performances of any two processes, irrespective of their nature, on the same scale and benchmark them against world-class performance. The common six-sigma metrics are dpo (defects per opportunity), dpu (defects per unit), z-value or the sigma value, throughput yield, rolled throughput yield, etc. A six- sigma level of performance is equivalent to producing 3.4 defects per million opportunities, whereas a three-sigma level is equivalent to 66 809 ppm defects. In this paper, we discuss the utility and eectiveness of the six-sigma metrics in evaluating performances of the entire supply chain and its entities. In the next section, we discuss the already available links between SCM and quality management principles and the motivation behind this work. In Section 3, the usefulness and versatility of the six-sigma metric in measuring performances of various kinds of processes is demonstrated through a literature review. The six-sigma metric and its computation are discussed in Section 4. In Section 5, we create a framework in which the six-sigma methodology can be conveniently used in a supply chain. An application of the framework is illustrated through a case example presented in Section 6. Section 7 contains a few concluding remarks where we also discuss some strengths and limitations of the approach. Enrichment of SCM concepts through applications of quality principles The idea of using quality measures in logistics and SCM is not new. In fact, quality measures in logistics are a major area covered by the literature. Topics include continuous improvement measures (Fortuin, 1988), quality control systems (Hillman et al., 1990), process controls (Novack, 1989) and quality programs in logistics (Read & Miller, 1991). The strongest link between supply chain management and quality management principles have been established by Kanji & Wong (1999). They propose a structured model for supply chain management utilizing Kanjis (1998) business excellence model based on total quality management (TQM) principles. The model demonstrates measurement of supply chain performance through an opinion survey of managers on six key performance indicators leadership, customer focus, cooperative relationship, management by fact, continuous improvement and business excellence. The validity of the model was established through an actual survey. The framework proposed in this paper, while drawing motivation from the above works, attempts to make use of the powerful six-sigma metrics to derive a more objective measure of supply-chain performance. Pande et al. (2000, Part I, chapter 3) points out some relative advantages of the six-sigma approach as compared with the TQM approach, and they argue D o w n l o a d e d
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USING THE SIX-SIGMA METRIC 357 that goals expressed in terms of six-sigma measures (yield, dpmo or sigma-level) are better perceived by people as people can equate the goals to dollar impact. Further motivation behind the integration of six-sigma and SCM follows from the fact that both have been strongly recognized as process approaches. With the six-sigma essentially being a process- oriented approach (Harry, 1997, Pande et al., 2000), a six-sigma metric actually measures how well the underlying process is performing. This process approach is also a feature of supply chain management. Lambert et al. (1998) propose that all functions within a supply chain should be reorganized as key processes. The fact that supply chain management is a set of management processes has been recognized by many other researchers, such as La Londe (1997) and Ross (1998). Versatility of six-sigma metrics in performance measurement The usefulness of six-sigma metrics in measuring performances of various kinds of processes and functions has been strongly established through numerous applications, case studies and research papers published in recent years. Fontenot et al. (1994) discuss, with the help of a case example from Texas Instruments Defense Systems and Electronics Group (DSEG), how six-sigma metrics can be used to measure customer satisfaction. Chaudhuri & Acharya (2000) have developed a framework for measuring the eectiveness and suitability of ISO 9000 quality systems with the help of six-sigma metrics. Applications of the six-sigma methodology in human resources and research and development are discussed by Wyper & Harrison (2000) and Johnson (2002) respectively. In recent times, six-sigma metrics are being extensively used for performance measurement in the health sector (Crago, 2000). Thus, it is evident that six-sigma metrics are fast emerging as a set of widely appreciated, versatile and robust performance indicators. The six-sigma metrics and their computation There is a substantial volume of literature available on descriptions of the six-sigma metrics and their computations. Apart from Harry (1997), they have been discussed in detail by many authors, e.g. Pande et al. (2000), Blakeslee (1999), Gnibus (2000), Pyzdek (2000). Here we try briey to explain these measures and emphasize, with a few examples, the key benet of using these metrics. Consider a manufacturing process in which the task is to manufacture a chemical with a minimum purity of L (e.g. 99%). Corresponding to n batches of the chemical produced in a week, let x 1 , x 2 , . . ., x n denote the purity values. Let m and s denote respectively the mean and standard deviation of x 1 , x 2 , . . ., x n . Then the z-value or sigma value of the manufacturing process with respect to purity is dened as z(mL)/s. If the data pertain to a short period, this z value is termed short-term sigma and is denoted by z st . The long-term sigma is computed as z lt z st 1.5, considering a probable 1.5 s shift in the process setting in the long run. The probability of manufacturing a batch with purity less than the specied value can be obtained as the area to the left of 99% in the normal curve. This may be called defects per opportunity (dpo) if the manufacture of each batch is considered as an opportunity of getting a defect, or defects per unit (dpu) if each batch is considered as a unit. If we consider the task of lling a purchase order, each entry may be considered as an opportunity for a defect. Suppose there are n entries to be made in each purchase order, and during a week k such purchase orders are lled. An inspection reveals that the total number of defective entries is d. Then, the total number of opportunities is kn and the defects per opportunity is given by dpod/kn. The yield, i.e. the probability of lling a purchase order D o w n l o a d e d
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358 T. DASGUPTA Figure 1. A sequential chain of entities. free of defects, is given by (1dpo) n . For large n, using the Poisson distribution, this may be approximated by e dpu where dpud/k, which denotes the defects per unit. Using the table for the standard normal distribution, the z-value or sigma-value corresponding to the yield (i.e. the value on the standard normal scale, the area to the right of which is 1e dpu ) can be obtained. Thus, the beauty of the six-sigma measurement method is that one can compare a chemical manufacturing process (from the point of view of output quality) and a purchasing process on the same scale. In the context of the former, a sigma level of 3 would mean producing 66 807 defect batches per million, whereas, in the latter case, the same level would mean 66 807 mistakes per million entries made while lling purchase orders. The concept of rolled throughput yield is also a very useful one in the context of supply chain management. Pyzdek (2000) dened rolled throughput yield as the probability of being able to pass a unit of product or service through the entire process (or chain) defect free. Thus, if we consider a sequential chain of n entities as shown in Fig. 1, the rolled throughput yield is given by RTY%Y i , i.e. the product of the yields Y 1 , Y 2 , . . ., Y n for the n individual entities (given by e dpu for each). The rolled throughput yield is much better correlated with other business success measures, compared with the conventional notion of yield, since it unearths the hidden factory in terms of in-process losses, rework, increased cycle time etc. Graves (2001) states that for n parallel entities (Fig. 2) the product of individual yields is also a useful index of process quality without an interpretation as a percentage of some obvious count of defects. Since a supply chain is essentially a combination of sequential and parallel structures, the notion of rolled throughput yield is extremely relevant in its context. A framework for using six-sigma metrics in a supply chain Lambert et al. (1998) have discussed elaborately the major steps involved in mapping a supply chain. The broad steps suggested are (a) identication of the entities of the supply Figure 2. A parallel chain of entities. D o w n l o a d e d
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USING THE SIX-SIGMA METRIC 359 chain, which according to them need not be a trivial issue; (b) identication of key business processes; (c) dening the network structure for each business process, since it is not necessary that the same network structure would be applicable for all processes. For example, the network structure for the product realization process need not be the same as that for demand management processes or order fullment processes. The network structure would depend on the type of business process links, which can be of four categories, namely managed, monitored, not-managed and non-member. The output of the exercise for each business process would look like Fig. 3. To illustrate how the six-sigma metric can be applied to this model, let us consider a supply chain for the product realization process. The two major issues related to the goodness of the chain with respect to this process are defect-free production and timely delivery at each stage. Thus, (i) the ability to produce defect free products and (ii) the ability to meet delivery deadlines may be considered as critical characteristics. First, let us try to obtain a measure of yield of the entire chain with respect to the ability to produce defect free products. Let there be k tiers (including that of the focal company) in the supply chain prior to the last tier of customers, i.e. k(number of tiers of suppliers)1(number of tiers of customers1). Let n i be the number of entities in the i th tier that has a managed process link. For example, in Fig. 3, k21(21)4, n 1 2, n 2 3, n 3 1, n 4 1. We shall calculate the dpu and throughput yield for each of these &n i entities. The dpu corresponding to the j th entity of the i th tier can be obtained as dpu ij d ij /S ij , where d ij is the number of defects found in a sample of size s ij from manufactured lot(s). The throughput yield for that entity will be given by Y ij exp[dpu ij ]. The rolled throughput Figure 3. An illustration of a supply chain showing managed process links. D o w n l o a d e d
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360 T. DASGUPTA yield for the entire supply chain with respect to product quality will be computed by multiplying all individual throughput yields, i.e. RTY % i % j Y ij This RTY can then be transformed to dpu as ln(RTY) and consequently to the z-scale. One very important thing to be kept in mind is that the computations of dpu for individual entities will be meaningful only if the samples of products used to compute the index are taken from corresponding populations in the supply chain. To understand this issue, let us consider the case of an automobile industry, which has two suppliers that manufacture tyres and seats respectively. In computing dpu for the tyre manufacturing process and the seat manufacturing process, we should consider a population of tyres and a population of seats that are assembled to manufacture the same population of cars. The dpu for the car assembly process should also be based on the same population of cars. In the context of delivery performance, a defect can be dened as delayed delivery, but in that case the performance of individual units may not satisfy the assumption of independence. A better measure could be something like cycle time from receipt of goods to dispatch if proper cut-o values or norms can be assigned. The rest of the computations will be exactly the same. We are now in a position to create a framework for evaluating the performance of the entire supply chain. The following steps will be required for this purpose. For each business process, Step 1. Draw the supply chain network as shown in Fig. 3. Step 2. Identify the critical characteristics relevant to the particular business process. Step 3. For each entity in the chain that has at least one managed link, set norms on the criticised characteristics identied in step 2. Step 4. For each characteristic (i) Dene a suitable time frame and identify a population of units for each entity that corresponds to similar populations for other entities. (ii) Obtain sample data and estimate dpu and yield for each entity. (iii) Compute the rolled throughput yield for the entire supply chain by multiply- ing all individual yields. (iv) Convert this to dpu and sigma scale. The nal output of this exercise can be presented as shown in Table 1. It is clear that a lot of innovative thinking is required to choose the right characteristics and their specication limits; and thus to dene a defect meaningfully in the context of the concerned process. The unit in computing dpu should also be carefully chosen. For example, for the second characteristic under the product realization process, each lot produced may be considered to be a unit; whereas for the rst characteristic under the demand management process, it may be a suitable time frame, such as a week. Interpretation of Table 1 is pretty simple and straightforward. It may seem astonishing that despite having a yield of 99.88% with respect to the acceptance of orders, the sigma level is only 3. And considering this level of underestimation of demand, out of 1 million orders, 66 807 may not be taken up. The method, apart from identifying the weak business processes, will also help in pinpointing the major problem areas, since the yield gures will be available for each entity in the chain. D o w n l o a d e d
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USING THE SIX-SIGMA METRIC 361 Table 1. Performance evaluation of a supply chain (an illustration) No. of entities with Rolled managed throughput Business process links Characteristics yield dpu Sigma level Product 10 Percentage of cases where realization product requirements are met 90% 0.1054 1.2 Percentage of cases where processing could be completed within stipulated time 98.7% 0.0131 2.2 Demand 15 Percentage of cases (e.g. weeks) management where the inventory level in nished good warehouse does not exceed specied limits 99.7% 0.0035 2.7 Percentage of orders which could be supplied 99.88% 0.0050 3.0 . . . . . . . . . . . . . . . . . . Note: Figures in the table are hypothetical. It may apparently seem that one of the limitations of the method is that, unless the proper unit, the right characteristic and the right specication are chosen, the sigma rating may not be meaningful. Thus, two entities of a supply chain or two dierent supply chains may not really be comparable on the sigma scale. This aspect is, in general, a feature of the six-sigma measurement method where the sigma level of a process or the sigma rating depends on the quality characteristics and the defect denitions. However, in a competitive business environment it is rather unlikely that a company or a process owner would dene his targets in a lenient manner to achieve a high sigma level, as the objective of the exercise is neither to achieve a certicate nor pat ones own back, but to stretch goals and nd improvement opportunities on a continuous basis. To illustrate this with an example, let us assume that company A denes its standard for response time to customer calls as a maximum 4 hours, i.e. taking more than 4 hours to answer a call will be considered a defect. They nd that, with respect to this standard, they are at three-sigma level. Their competitor company B denes its standard for the same characteristic as 365 days to declare itself as a six-sigma company. They may feel elated due to this achievement but it is very likely that they will have to shut down their business soon owing to lack of customers. Harry (1997) provides some guidelines for the systematic selection of critical to quality (CTQ) characteristics. It is indeed true that in any application of six-sigma methodology, one should really give a lot of importance to the judicious selection of opportunities, units, characteristics and defects. In a competitive business environment, companies are denitely going to set benchmarks for one another in this regard. A case example of a market research industry This section illustrates the application of the proposed framework through a case example of a market research company. This company provides a wonderful opportunity of testing SCM concepts since, on its own, it is a miniature model of a supply chain, as will be apparent from the description of its processes. We demonstrate through this case example how, for each D o w n l o a d e d
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362 T. DASGUPTA entity and sub-entity of a supply chain, performance characteristics can be identied, defects dened, sigma ratings calculated and how the overall rolled throughput yield can be computed and used to track the performance of the supply chain. The scope of this study was limited to the tracking division of a market research organization. In the context of market research, tracking studies are syndicated studies that provide market information on a periodic basis. There are various types of tracking services, each of which is called an audit. The retail audit services generate information from sampled and empanelled retail outlets on the purchase and stock of several categories of products all over the country, analyse the data, generate fortnightly/monthly reports and distribute them to client organizations. The organization can be viewed as a combination of three broad entities, namely (a) eld, operating at 80 locations across the country and collecting raw data from retail outlets; (b) processing unit (which can again be split up into several sub-entities), where the data is analysed; (c) branch oces or service centres who interact with clients, generate business and provide after sales service (primarily resolving queries). The external components in the supply chain are the retail outlets who provide the data, organizations from which products or services are procured (data entry vendors, suppliers of papers for report printing, suppliers of oppies/CDs, companies given annual maintenance contracts for hardware/software/ photocopying machines, courier services used for dispatch of reports, etc) and, of course, the subscribing companies. For simplicity, we presently conne ourselves to the tier-1 suppliers as the intra-company supply chain itself is pretty complicated. It may be noted that there are no tier-2 external customers, as the data acquired by subscribing companies are not passed on anywhere further. An interesting feature as far as this supply chain is concerned is that the role of the sampled retail outlets, which are the sources of information, is dicult to dene. Although they are the basic suppliers of information, in the strict sense, this information is not purchased by the focal company, although some gifts are distributed to these outlets from time to time as a token of their support. Further, they do not have any pro-active role in the entire audit process, save supplying purchase and stock information to the eld ocers when they ask for it. But they do have a signicant role in the entire supply chain, because if they refuse to cooperate, the entire chain breaks down. A schematic diagram containing only managed process links of the supply chain for the product realization process is shown in Fig. 4. It may be noted that this supply chain refers to a specic product, namely the consumer products and food products (CP/FP) audit. This particular audit is conducted every month. The 80 eld oces spread over the country are supposed to collect information during the 1530th of every month and dispatch all data sheets to the processing unit by the 3rd of the following month. The total number of delayed dispatches divided by the total number of dispatches (around 8000 every month) gives the over all dpu for the eld. The zone-wise, state-wise and eld oce-wise dpu is also computed. The processing unit begins its task in the rst week of this month by passing on these data to data entry vendors in batches. Each vendor is supposed to complete this exercise (entry of a batch of data) within a day. The dpu for each vendor is calculated on the basis of this criterion. The data are then scrutinized, analysed and reports are prepared for various categories of items. Upon completion of each report, the required number of copies are made and dispatched to the branch oces. For each category of report, there is a cut-o date. The total number of delayed dispatches divided by the total number of categories (around 108) gives the dpu for the entire processing unit. D o w n l o a d e d
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USING THE SIX-SIGMA METRIC 363 Figure 4. Schematic diagram for the supply chain (with managed links only). The branch oces, upon receipt of the reports are supposed to send them to their respective client organizations within stipulated dates, which form the criteria for calculation of dpu for the branch oces. The dpu for each courier service engaged for dispatch of reports is calculated in the same manner, considering their ability to deliver packets within the promised time. For other suppliers, a similar method is adopted. For example, a supplier of paper had supplied ten lots of papers for printing reports during the current month, out of which one was supplied after the stipulated date. His dpu thus becomes 0.1. Those cases where the total number of units or opportunities per month is very few are not considered as, in such cases, the estimate of dpu may change drastically even with plus or minus one defect. Each dpu value is converted to yield using the relation yield e dpu . The rolled throughput yield is computed by multiplying all individual yield values. Similarly, RTY values are obtained for other characteristics of the product realization process (percentage errors at each stage) and other processes. The RTY/sigma values for the entire supply chain for each business process are charted every month and their trends are carefully monitored by the management. Yield values for individual entities, sub-entities and sub-sub-entities are also monitored, and weak areas are identied on a continuous basis. Corrective actions are discussed in the management review meeting and implemented. Appropriate feedback is given to external suppliers whenever their performances show a downward trend. An example of the computations using actual company data for a particular month is provided in Table 2. It is interesting to note that, although all the ve macro entities of the supply chain exhibit a yield of more than 98%, the rolled throughput yield is 96.04%, which D o w n l o a d e d
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364 T. DASGUPTA Table 2. Illustration of six-sigma computation with actual data from a market research industry Process: Production realization Characteristic: Delivery time Month: May 2002 Entity Denition No. of No. of Sub-process responsible Unit of a defect units defects dpu Yield % Data collection Field oces Each data Any unit dispatched 10 817 63 0.0058 99.42 (45 nos) collection sheet after 28th day of the month Data entry Data entry Each batch of Taking more than 56 1 0.0179 98.23 operators datasheets (one one day to return a (3 nos) batch may batch after comple- contain 50500 tion of data entry datasheets) Data analysis Processing unit Each category Failing to complete 148 2 0.0135 98.66 and report of report the preparation and perparation inspection of a particular category of report within its stipulated date (there is a cut-o date for each category) Dispatch of Courier services Each parcel of Parcel not reaching 16 0 0 100 reports from (3 nos) reports the branch oce on production dispatched to or before scheduled centre to branch oces date branches Distribution Branch Oces Each report Report not reaching 950 3 0.0032 99.68 of reports to (8 Nos) sent to client the client on time clients from branch oces Overall (rolled throughput yield) 96.04 corresponds to a sigma level of only 1.75. The dpu, yield and sigma ratings can also be calculated for each of the sub-entities (e.g. each of the 45 eld oces, each of the three data entry operators, each of the eight branch oces) to pinpoint the exact source of problems. The eort, although recently initiated, has already shown indications of strong perfor- mance improvements. Concluding remarks It is expected that the suggested approach will help companies create a framework for eective measuring and monitoring of supply chain performance. The method will provide the management with clear-cut knowledge regarding the strength and weaknesses of the supply chain. For example, if the sigma level of the order fullment process is 4.5, whereas that of the customer relationship management process is 3.2, it is a clear indication that there is ample scope for improvement in the latter process. Under such circumstances, one would D o w n l o a d e d
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USING THE SIX-SIGMA METRIC 365 look at the yield levels of the individual entities, try to localize the problem and identify improvement projects that can be solved by a team-oriented approach. There are, of course, a few important issues that should be kept in mind while implementing such a measurement system. First, the physical interpretation of the rolled throughput yield may not be trivial, as the supply chain would often be a complex combination of sequential and parallel processes. Secondly, the assumption of independence of processes, which permits the multiplication of individual yield values, may not always be a valid one. There may be situations where we can avoid dependence by a clever choice of the underlying characteristic, as exemplied in the case of measuring delivery performance (Section 5). Thirdly, the system shall necessarily require a sound database. This becomes even more important in the context of identifying corresponding populations. Next, the proposed framework does not have a provision for measuring human attributes such as leadership, relationship, etc, which, as pointed out by Kanji & Wong (1999), should also be considered as important performance dimensions of the supply chain. Opinion surveys are probably the best method of measuring such attributes, as done by Kanji & Wong. Future research opportunities in this eld may include the exploration of the possibility of integrating such surveys with the six-sigma methodology to obtain a more comprehensive performance measurement framework. Finally, one should keep in mind the warning issued by Sanders & Hild (200201) in the context of using six sigma metrics indiscriminately. According to them, a disadvantage of using measures such as dpu, sigma level, rolled throughput yield, etc, is in transporting the notion of six-sigma processes from a management philosophy to numerical targets for individual processes. This contradicts Demings (1993) philosophy eliminate slogans, targets and numerical goals. It is up to the top management to disseminate the knowledge of six- sigma in an organization in the right perspective and to ensure that measures are viewed as something that identies opportunities for improvement and not as hardcore targets and numerical goals. If preached and practised with purpose, the sheer motivational aspect of being a six-sigma company should be strong enough to pave the way for improvement. Acknowledgement The author is grateful to a referee whose suggestions helped in improving the quality of this paper signicantly. References BLakcsLcc, J.A. (1999) Implementing the six-sigma solution, Quality Progress, September. Cnacbncni, A.K. & Acnanva, U.K. (2000) Measuring eectiveness and suitability of a quality system, Total Quality Management, 11, pp. 149153. Cnaco, M.G. (2000) Patient safety, six sigma & ISO 9000 quality management, Quality Digest, November. Dc:iNc, W.E. (1993) Out of the Crisis (Cambridge University Press). FoN1cNo1, G., Bcnana, R. & Gncsna:, A. (1994) Six sigma in customer satisfaction, Quality Progress, December. Fon1ciN, L. (1988) Performance indicatorswhy, where and how?, European Journal of Operational Research, 34(1), pp. 19. GNincs, R.J. (2000) Six sigmas missing link, Quality Progress, November. Gnavcs, S.B. (2001) Six sigma rolled throughput yield. Paper in 2001 Quality and Productivity Research Conference, Austin, Texas, organized by international SEMATECH. HakaNsoN, B. (1999) SCOR can help analyze your supply-chain operation, Logistics Quarterly, 5. Hannv, M. (1997) The Vision of Six SigmaA Roadmap for Breakthrough (Tri Star Publishing). D o w n l o a d e d
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366 T. DASGUPTA HiLL:aN, W.T., Ma1ncws, M. & Hcs1oN, R.C. (1990) Assessing guyer/planner performance in the supply network, International Journal of Physical Distribution and Logistics Management, 20(2), pp. 1621. JonNsoN, A. (2002) Six sigma in R&D, ResearchTechnology Management, 45(2), p. 12. KaNi, G.K. (1998) Measurement of business excellence, Total Quality Management, 9, pp. 633643. KaNi, G.K. (2001) Forces of excellence in Kanjis business excellence model, Total Quality Management, 12, pp. 259272. KaNi, G.K. & WoNc, A. (1999) Business excellence model for supply chain management, Total Quality Management, 10, pp. 11471168. KaNi, G.K. (1998) Measurement of business excellence, Total Quality Management, 9, pp. 633643. La LoNbc, B.J. (1997) Supply chain management: myth or reality, Supply Chain Management Review, I (Spring), pp. 67. La:ncn1, D.M., Cooicn, M.C. & Pacn, J.D. (1998) Supply chain management: implementation issues and research opportunities, The International Journal of Logistics Management, 9. La:ncn1, D.M., S1ock, J.R. & ELLna:, L.M. (1998) Fundamentals of Logistics Management (Boston, Irwin/ McGraw-Hill). Novack, R.A. (1989) Quality and control in logistics: a process model, International Journal of Physical Distribution and Logistics Management, 19(11), pp. 144. PaNbc, P.S., Ncc:aN, R.P. & CavaNacn, R.R. (2000) The Six Sigma Way (McGraw-Hill). Pvzbck, T. (2000) Yield the right way, Quality Digest, March. Rcab, W.F. & MiLLcn, M.S. (1991) The state of quality in logistics, International Journal of Physical Distribution and Logistics Management, 20(2), pp. 1621. Rosc, K.H. (1995) A performance measurement model, Quality Progress, February. Ross, D.F. (1998) Competing Through Supply Chain Management (New York, Chapman & Hall). SaNbcns, D. & HiLb, C.R. (200001) Common myths about six sigma, Quality Engineering, 13(2), pp. 269 276. Wvicn, B. & HannisoN, A. (2000) Deployment of six sigma methodology in human resource function: a case study, Total Quality Management, 11, pp. 720727. D o w n l o a d e d