How can Six Sigma and Lean help you improve your business?
Six Sigma and Lean are the two most commonly used business transformation methodologies. Despite their different philosophies, these business management strategies strive to improve the quality of process outputs by identifying and removing the causes of defects.
What are the benefits of using Six Sigma and Lean?
Andrew Spence (AS): Both Lean and Six Sigma are philosophies of reducing waste and doing things that add value to the customer. Each methodology provides you with a set of tools to achieve this.
Six Sigma has a structure which is called DMAIC (Define, Measure, Analyze, Improve, and Control). The idea of this is to ensure that inside your organization you are doing lots of activities to improve the business. It is important to make sure that these activities are carried out in a way that is structured. You should constantly be asking the question - is this going to improve the performance of the organization in terms of adding value to the customer?
How can these business management strategies help companies improve quality and productivity?
AS: Six Sigma and Lean are methodologies for continuously improving business processes. What most companies are doing now is Lean Six Sigma. Six Sigma is more data rich than Lean, which focuses around process mapping things and continuous improvement activities. However, the philosophies are ultimately striving to achieve the same thing.
Six Sigma and Lean analyze processes. Instead of looking at an individual part of a process and concentrating on making it as efficient as possible, you would look at the process from end to end. This allows you to look at each stage of the process and try to remove any defects where possible.
The idea of Six Sigma is really to understand the root cause of a defect for a particular process and then try to eliminate that defect. This is a great way of eliminating cost and ensuring that it doesn’t come back again in six or eight months’ time.
What measures need to be taken to ensure the successful implementation of Six Sigma within the supply chain, from top to bottom?
AS: Six Sigma and Lean are activities that need to be led from the top. They are business strategies. They are activities that should be led from the CEO down and they should be aligned with the goals of the business. It is not something that you can do in one department and expect to change the organization. Fundamentally, both of them are trying to change the culture of organizations and that only works from a top down process.
How can Six Sigma be managed once it has been successfully integrated into the supply chain process?
AS: Part of the process of leading from the top is setting in place some form of measurement system, which is usually something like a dashboard or a balanced score card to understand what the strategy of the organization is. This keeps everyone in the loop with what looks good in terms of the company’s key performance metrics, how to measure success, and what the company goals are.
It also gives employees something to work towards. This could be a whole range of things, including profitability, customer service and employee satisfaction. Once this has been established, it is important to put in place a measurement system to ensure that you can measure progress on a regular basis. This will show you how successful your Lean and Six Sigma activities are in adding value.
The other thing to do is to reward good behavior. It could be simple things like promoting people in the organization that show the type of characteristics that you would expect of good planning, leadership and organization versus promoting people that are good fire fighters. The idea of Six Sigma is to fix root causes. You are not putting out fires, you are trying to fundamentally stop those fires from lighting in the first place.
One way of reinforcing that and the culture is promoting people who think and act like that. Finally, it is trying to make the Lean Six Sigma philosophy part of the culture of the organization. The way you can measure whether you have done that is when you stop calling it Lean and Six Sigma and you just say, “This is the way that our organization works”.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”