“What are the some of the best ways to drive cost savings in my operation without having to invest a truck load of money into complicated software and expensive equipment?”

Often times, the best answers are the things you have probably already learned from various trade publications, professional organizations, or direct experience.  If certain concepts have staying power and never seem to go away quietly, they have most likely proven themselves to be successful and deserve our attention.  However, the simplest ideas can be muddied with industry jargon and complex rhetoric.

One of the most common examples of tools that have been unnecessarily complicated is the Six Sigma continuous improvement methodology.  Entire courses of study can be devoted to some of the underlying concepts in Six Sigma, but most of the improvement methods are quite accessible and straight forward.  With a little effort and education, you can have the most powerful improvement methods in use today for your own organization.

Overview – What is Six Sigma?

Six Sigma is a methodology, originally implemented by Motorola, which seeks to improve manufacturing or business processes by removing the causes of errors and reducing the variability in each step of a process.  The strategy employs many methods such as statistical analysis and quality management (quality control, assurance, improvement) to improve processes and focus on reducing defects to practically nothing.

Six Sigma = 3.4 defects per 1 million opportunities…..some might say a lofty goal indeed!

Statistical Analysis – The Basis for All Root Cause Determination

Six Sigma tools are rooted in statistical analysis.  Statistical analysis can be simple or complex depending on the problem.  It can be used to examine data and resulting visual representations show the frequency and impact of errors.  Graphs are commonly used to depict the errors and help prioritize root cause efforts.

For example, let’s say you have a warehouse picking operation that frequently has 20 errors per day out of 1000 picks.  One simple step toward reducing errors would be to record the type of error and count the frequency within a given data set (1000 picks).  The data can then be visually represented to show the results of the measurements and be used to make high level decisions for prioritizing root cause analysis efforts.  A basic bar chart can reveal a lot of information:
Picking Errors Graph
The obvious problem is to resolve is ‘Picked Wrong Item’.  Further investigation as to how these issues impact the overall financial performance of the company, along with other business critical considerations, will lead you to fix problems that have the greatest impact on the bottom line!

Coming Next Month – “Root Cause & Corrective Action”

Once you have identified and prioritized the errors, the next steps are to perform root-cause and then implement corrective actions.  DMAIC is a basic approach that will help you build the road map for continuous improvement in your organization…..but more on that in our next newsletter!

IF YOU NEED HELP NOW….then….

Learn the basics of using Six Sigma tools in your organization.  KEOGH Consulting CAN help you get started with training, support, analysis, and implementation.  If you are looking for experts with the ability to help implement Six Sigma tools and SAVE YOU MONEY then…..

Contact KEOGH Consulting Today!

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KEOGH Consulting is a professional Supply Chain Logistics consulting firm offering a full range of facility planning, design, and management consulting services for companies involved in manufacturing, warehousing, and distribution.  KEOGH specializes in offering integrated supply chain solutions, focusing on logistics network and supply chain strategy, operations planning and assessments, along with software selection / integration / configuration / implementation.  You can learn more about KEOGH Consulting by clicking here.