LASSIB    INDUSTRY RESEARCH ON LEAN AND SIX SIGMASOCIETY   IMPLEMENTATION IN LOGISTICS INDUSTRY
Table of Contents1 .0     ABSTRACT ..........................................................................................
1.0 ABSTRACTThe purpose behind creating this research report is to showcase the Return on Investments(ROI) and benefits of...
3.0 STRATEGIC CHALLENGES BEING FACED BY LOGISTICS INDUSTRY4.0 OPERATIONAL CHALLENG ES BEING FACED BY LOGISTICS INDUSTRYLAS...
5.0 ROLE OF LEAN SIX SIGMA TO OVERCOME T HESE CHAL LENGESLASSIB Society | Industry Research on Lean and Six Sigma Implemen...
5.1 STRATEGIC BENEFITSLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage   ...
5.2 OPERATIONAL BENEFITSLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage ...
6.0 SAMPLE ORGANIZATIONS IMPLEMENTING SIX SIGMA IN THE FRIEGHT    FORWARDING INDUSTRYNOTE: All logos are trademarks of res...
7.0 CASE STUDIES OF LEAN SIX SIGMA IMPLEMENTATION IN LOGISTICS INDUSTRY       7.1 CATERPILLAR       7.2 LEADING GLOBAL CON...
7.3 DEFENCE LOGISTICS FO R UNITED STATES DEFENCE FORCES       7.4 LOGISTICS ARM OF SAUDI ARAMCO IN KINGDOM OF SAUDI ARABIA...
7.5 LARGE PACKAGING FIRMS IN UNITED STATES       7.6 ONE OF THE LARGEST AIRLINE PARTS MANUFACTURER IN UNITED STATESLASSIB ...
7.7 SIX SIGMA IMPLEMENTA TION IN PRIMER PACKAGING       7.8 DEPARTMENT OF DEFENS E, UNITED STATES OF A MERICALASSIB Societ...
8.0 WHAT IS LEAN?Lean is a philosophy and a set of management techniques focused on continuous“eliminating waste” so that ...
Waste in the office processing        Waste in the manufacturing processesWaste equates to dollars lost, opportunities los...
Most people excuse their messy sites and offices by saying they don’t have time to clean.But dealing with the consequences...
in-house branded name for a Business Improvement Methodology, ie., beyond purelydefect reduction, in Motorola Inc.In a lit...
John Gillett, Ross Fink, Nick Bevington. (2010). How Caterpilla r Uses Six Sigma to execute strategy. United            St...
14.0 CONTRIBUTORS TO THE RESEARC H REPOR TRole             Full Name                     Designation                      ...
organizations which cannot afford                                                                             to pay yet.P...
Headquarter Address:#5-62/9/22-B, V. V. Nagar, Street No. 8, Habsiguda, Hyderabad, Andhra Pradesh, India. PIN: 500007Offic...
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Industry research on lean and six sigma implementation in logistics industry - preview

  1. 1. LASSIB INDUSTRY RESEARCH ON LEAN AND SIX SIGMASOCIETY IMPLEMENTATION IN LOGISTICS INDUSTRY
  2. 2. Table of Contents1 .0 ABSTRACT ...............................................................................................................................32 .0 PRESEN T DAY CHALL EN GES FACED BY LOGISTIC S IN DUSTRY .....................................................33 .0 STRATEGIC CHAL L EN GES BEIN G FACED BY L OGIS TICS IN DUSTRY ..............................................44 .0 OPERATION AL CHALL EN GES BEIN G FACED BY LO GISTICS IN DUSTRY .........................................45 .0 ROL E OF L EAN SIX SIGMA TO OVERCOME THESE CHALL EN GES .................................................5 5 .1 STRATEGIC BEN EFITS ...........................................................................................................6 5 .2 OPERATION AL BEN EFITS......................................................................................................76 .0 SAMPL E ORGAN IZATION S IMPL EMEN TIN G SIX SIGMA IN THE FRIEGHT FO RWARDIN G IN DUSTRY ..............................................................................................................................87 .0 CASE STUDIES OF L EAN SIX SIGMA IMPL EMEN TA TION IN L OGISTICS IN DUSTRY ........................9 7 .1 CATERPIL LAR ......................................................................................................................9 7 .2 L EADIN G GL OBAL CON SUMER PRODUCTS MAN UFAC TURER .................................................9 7 .3 DEFEN CE LOGISTICS FO R UN ITED STATES DEFEN CE FORCES................................................1 0 7 .4 L OGISTICS ARM OF SAUDI ARAMCO IN KIN GDOM OF SAUDI ARABIA..................................1 0 7 .5 L ARGE PACKAGIN G FIRMS IN UN ITED STATES ....................................................................1 1 7 .6 ON E OF THE LARGEST A IRL IN E PARTS MAN UFAC TURER IN UN ITED STATES ........................1 1 7 .7 SIX SIGMA IMPL EMEN TA TION IN PRIMER PACKA GIN G .......................................................1 2 7 .8 DEPARTMEN T OF DEFEN S E, UN ITED STATES OF AMERICA ..................................................1 28 .0 WHAT IS L EAN ? .....................................................................................................................1 39 .0 WHAT IS SIX SIGMA? .............................................................................................................1 51 0 .0 CON CL USION ........................................................................................................................1 61 1 .0 WORKS CITED .......................................................................................................................1 61 2 .0 ABOUT L ASSIB.......................................................................................................................1 71 3 .0 ABOUT L ASSIB RESEARCH REPORTS .......................................................................................1 71 4 .0 CON TRIBUTORS TO THE RESEARCH REPORT ...........................................................................1 81 5 .0 HOW YOU CAN L EVERAGE AN D SUPPORT L ASSIB S OCIETY .....................................................1 8LASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage |2
  3. 3. 1.0 ABSTRACTThe purpose behind creating this research report is to showcase the Return on Investments(ROI) and benefits of using Lean Six Sigma techniques in Logistics Industries.The challenges currently being faced in this industry can be largely broken into twocategories – Strategic Challenges Operational ChallengesOrganizations need to focus initiatives at both these levels in order to sustain and grow. Thisreport looks at tools and techniques of Lean and Six Sigma, and how these can helporganizations address these requirements. The report includes overview of both Lean andSix Sigma coupled with case studies on how these techniques have helped Logisticscompanies manage and grow their business.The report draws in experience of Logistics experts, primary as well as secondary researchsources. Please refer to the list of references at the end of the report for a complete list ofsources used to build this report.2.0 PRESENT DAY CHALLENG ES FACED BY LOGISTICS INDUSTRYLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage |3
  4. 4. 3.0 STRATEGIC CHALLENGES BEING FACED BY LOGISTICS INDUSTRY4.0 OPERATIONAL CHALLENG ES BEING FACED BY LOGISTICS INDUSTRYLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage |4
  5. 5. 5.0 ROLE OF LEAN SIX SIGMA TO OVERCOME T HESE CHAL LENGESLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage |5
  6. 6. 5.1 STRATEGIC BENEFITSLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage |6
  7. 7. 5.2 OPERATIONAL BENEFITSLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage |7
  8. 8. 6.0 SAMPLE ORGANIZATIONS IMPLEMENTING SIX SIGMA IN THE FRIEGHT FORWARDING INDUSTRYNOTE: All logos are trademarks of respective companiesLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage |8
  9. 9. 7.0 CASE STUDIES OF LEAN SIX SIGMA IMPLEMENTATION IN LOGISTICS INDUSTRY 7.1 CATERPILLAR 7.2 LEADING GLOBAL CONSUMER PRODUCTS MANUFAC TURERLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage |9
  10. 10. 7.3 DEFENCE LOGISTICS FO R UNITED STATES DEFENCE FORCES 7.4 LOGISTICS ARM OF SAUDI ARAMCO IN KINGDOM OF SAUDI ARABIALASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 10
  11. 11. 7.5 LARGE PACKAGING FIRMS IN UNITED STATES 7.6 ONE OF THE LARGEST AIRLINE PARTS MANUFACTURER IN UNITED STATESLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 11
  12. 12. 7.7 SIX SIGMA IMPLEMENTA TION IN PRIMER PACKAGING 7.8 DEPARTMENT OF DEFENS E, UNITED STATES OF A MERICALASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 12
  13. 13. 8.0 WHAT IS LEAN?Lean is a philosophy and a set of management techniques focused on continuous“eliminating waste” so that every process, task or work action is made “value adding” (thereal output customer pays for!!) as viewed from customer perspective. Lean “wasteelimination” targets the “Eight Wastes” namely:• Overproduction – Making more than what is needed by customer / market demand• Over-processing - Doing more to a product / service (but not perceived as value by customer or business)• Waiting – For material, information, people, equipment, procedures, approvals and more• Transportation – Movement of products / items during or after production• Defects – Errors, mistakes, non- complying products, services, documents, transactions• Rework and Scrap – Products, transactions or outputs not meeting specifications and have to be fixed, redone, rectified, marked down or scrapped / unusable• Motion – Mainly people, document movement, searching etc.• Inventory – Buffer stocks or resources (Raw, Work in process, Finished Goods, Bench staff etc.,)• Unused Creativity – People knowledge and skills that are not utilized by the companyWastes make the organization slow, inefficient and uncompetitive. Lean methods help toremove / reduce waste and contributes to driving “business agility” (velocity) throughsmooth work flow across the organization resulting in rapid fulfillment of customer needs inan optimum manner. (ExampleCG)Lean tools and techniques are designed to eliminate waste, and every organization issubject to generating waste. Waste in the supply chain Waste in the technical specifications Waste in the staff support functionsLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 13
  14. 14. Waste in the office processing Waste in the manufacturing processesWaste equates to dollars lost, opportunities lost, and loss of human motivation. Each ofthese three criteria can have a positive and / or negative impact on the organizationsbottom line. And the bottom line can be the difference between profit and loss to anorganization, or the difference between just barely making a marginal profit and becoming a“cash cow” enterprise.Waste equates to dollars lostEvery organization has an intrinsic proclivity to generate waste in the way they run theirbusiness. Waste is the difference between the way things are now and the way things couldbe if everything were perfect - no errors, troubles, problems or complexities.The Lean Enterprise process can be simplified by first, “find the waste;” secondly, to “get ridof the waste;” and thirdly, “prevent its return-forever." The Lean process looks everywherefor waste and reviews every activity to evaluate whether it adds value from the externalcustomer’s viewpoint.Waste equates to opportunities lostImplementing lean tools and techniques will enable your organization, no matter how largeor small, to meet your customers’ demand for a quality product or service, at the time theyneed it, and for a price that is competitive.A lean system also creates a business and manufacturing process that is agile and efficient,and that will help your company manage its total costs and provide a fair ROI.Waste equates to loss of human motivationFor cost management to be successful, everyone in your organization must contribute tothe effort. They must feel a part of the improvement process, and be empowered to committime and intellectual resources to the effort.And because lean systems are customer focused and driven, a lean enterprise’s productsand services are created and delivered in the right amounts, to the right location, at theright time, and in the right condition.Did you know that in American offices, an average of 6 weeks per year or 13% of a workdayare wasted simply by searching for items? Taking a workday of 7 hours per day and 232working days a year, would result in wastage of 211 hours per person per year. Ultimately,assuming an average hourly rate of $60 per hour per person would result in a total of$12,600 per year in wasted time per person!These figures are immense and show that many companies can not only increase theirproductivity by optimizing their business processes but often also have a high potential ofimproving performance in their sites and offices.LASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 14
  15. 15. Most people excuse their messy sites and offices by saying they don’t have time to clean.But dealing with the consequences of a chaotic workspace takes far more time than simplycleaning. If a clean office increases your productivity by only 20%, that can convert intoapproximately $40,000 to $50,000 in value over the next 10 years. A clean site and officealso pays off in reduced stress and anguish, not to forget about improved safety.9.0 WHAT IS SIX SIGMA? 1995: Jack 2000: GE Saves 1986: Motorola Welch Initiates ~>$2 Billion Starts Six Sigma Six Sigma in GE Annually Initiative 1986: Motorola 1998: Allied Saves ~$16 Signal Starts Billion Saveing ~$1.2 Cumulatively Billion per YearSix Sigma is a business management strategy, originally developed by Motorola in 1986. SixSigma became well known after Jack Welch made it a central focus of his business strategyat General Electric in 1995, and today it is widely used in many sectors of industry.Six Sigma seeks to help prioritize and define business strategies that help achieve: Sustained Competitive Advantage Improved Cash Flows Improved Profitability Improve Revenue Growth Growth in Market ShareSix Sigma also helps improve the quality of Business Process outputs by identifying andremoving the causes of defects (errors) and minimizing variability inmanufacturing and business processes. It uses a set of Business Management methods, and creates a special infrastructure ofpeople within the organization ("Black Belts", "Green Belts", etc.) who are experts in thesemethods. Each Six Sigma project carried out within an organization follows a definedsequence of steps and has quantified financial targets (e.g. cost reduction and / or profitincrease).In the late-1980s following the success of the initiative, Motorola extended the Six Sigmamethods to its critical business processes, and significantly Six Sigma became a formalisedLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 15
  16. 16. in-house branded name for a Business Improvement Methodology, ie., beyond purelydefect reduction, in Motorola Inc.In a little over ten years, Six Sigma quickly became not only a hugely popular methodologyused by many corporations for quality and process improvement. Six Sigma also became thesubject of many and various training and consultancy products and services around whichdeveloped very many Six Sigma support organizations.The tools, techniques and framework of Six Sigma have helped organizations like GE,Honeywell, Allied Signal save more than $2 Billion dollars annually. In addition to costreduction, organizations have used Six Sigma to define their strategy, identify and meetcustomer requirements and overall achieve Organization excellence.10.0 CONCLUSION Lean Six Sigma has been at the forefront of the quality movement in recent years. On the way to get more and more importance, Lean Six Sigma has conquered many areas by improving the performance of several processes. Lean Six Sigma thinking gives the potential to refine current approaches to Logistics improvement. In addition to elimination of waste, it offers benefits by delivering reduced variation. However, in order for this approach to be successful, it needs strong linkages to strategy, a clear collaborative framework and a combination of tools for addressing the twin goals of waste and variation reduction. The benefits for a company by application of Lean Six Sigma can be manifold. These benefits, for example, can be increase in customer satisfaction, increase in revenues, reduction in cycle times and higher flexibility to capitalize on present-day market demands.11.0 WORKS CITEDBy Frank J. Esposto. (n.d.). Less Overfill Can Mean Mo re Proofit. USC Consulting Group.Department Of Defense. (2011). Lean Six Sigma Project - Defense Logistics Agency/Hon eywell. United States: Department Of Defense.Department of Defense. (2011). Lean Six Sigma Project - One-Pass Pricing for Sole-Source Spare Pa rts . United States: Department of Defense.ExampleCG. (n.d.). Lean Six Sigma an Overview. Lean Six Sigma an Overview, 5.Freight Transport Association in association with PwC. (2011). The Logistics Repo rt 2011. United Kingdom: Freight Transport Association in association with PwC.Freight Transport Association in association with PwC. (2011). The Logistics Repo rt 2011. United Kingdom: Freight Transport Association in association with PwC.James D. Tarr. (n.d.). Seven ways to reduce your inventory. Seven Ways To Reduce Your Invento ry, pp. 1-2.LASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 16
  17. 17. John Gillett, Ross Fink, Nick Bevington. (2010). How Caterpilla r Uses Six Sigma to execute strategy. United States: Caterpillar.kjn. (lkj). j. ikj.Menlo. (2008-2012). About Menlo: Lean Logistics. About Menlo: Lean Logistics .Mohammed Al-Zain. (2007). Transforming Saudi Aramco Supply Chain. Kingdom of Saudi Arabia: Saudi Aramco.Prima Ditahardiyani, Ratnayani, M. Angwar. (2008). THE QUALITY IMPROVEMENT OF PRIMER PACKAGING PROCESS. Indonesian Institute of Sciences.Ranawat, M. (2007). Six Sigma in Logistics. Munich: GRIN Publishing GmbH.Steven Bonacorsi. (n.d.). Six Sigma in Action: Shipping Cost Reduction . United States: GE Capital.Vikram Dahiya. (2012). Shipping Logistics. United States.12.0 ABOUT LASSIBLASSIB Society is a not-for-profit organization pioneering and spreading the knowledge of OrganizationalExcellence to the worldwide community. Based on the principles on Gandhian Engineering, we deliver cuttingedge industry research and enhanced value. LASSIBs vision is to create and provide the world s most usefulOrganizational Excellence resource centre and certification programs, available for the users at the lowestcost.LASSIB Society organizes multiple events both through physical locations and virtual mediums to promote itsvision.13.0 ABOUT LASSIB RESEARCH REPORTSIn conjunction with the Knowledge Base LASSIB Society publishes , LASSIB Society also releases a host ofresearch reports through primary and secondary research. These research reports get wide audience acrossthe industry and are sought after by International Journals as well.Some of the research reports published by LASSIB Society around the world include: Framework for Implementation of Lean Tools in Indian MSME Sector Lean Six Sigma for Graduates and Post Graduates Return on Investment after Implementation of 5SThese Research Reports are a valuable resource for the industry at large, and serve to provide key insights thatcan be used by industry leaders to shape the strategy for their organizations.Please refer to http://www.lassib.org/ for details of all events of LASSIB Society.LASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 17
  18. 18. 14.0 CONTRIBUTORS TO THE RESEARC H REPOR TRole Full Name Designation OrganizationAuthor Mr. Varun Khare Coordinator LASSIB SocietyCo - Author Mr. Vinay Kumar Maurya Intern, M. Tech in Industrial Indian School of Mines Engineering and ManagementCo - Author Ms. Shilpa Roy Kota Secretary LASSIB SocietyReviewer Mr. Pavan Kota Executive President LASSIB Society15.0 HOW YOU CAN LEVERAGE AND SUPPORT LASSIB SOCIETYAlthough LASSIB is a not for profit organization, it does not believe in raising funds through charitable means,without providing direct value to the contributor. There are many different ways in which organizations,institutions, governments and individuals across the globe are working with LASSIB to deliver value tothemselves and their customers. LASSIB is proud to be associated with all of them in developing and deliveringcutting edge solutions that have not only delivered quantified business value to them but also added thoughtleadership to the industry at large. Below are some ways in which you can leverage and support LASSIB.Leverage LASSIB for Benefits to you Support to LASSIByour initiativesBecome an Access complete knowledge base including Funds collected throughIndividual or training materials, best practices, case studies, membership fees are used toOrganization videos and webinars from LASSIB Society maintain and grow LASSIBMember of LASSIB. Network, learn and contribute to the fastest knowledge base. growing community of specialist, seniorVisit leaders from the industryhttps://lassib.org/ind Get latest updates, insights and research fromex.php/membership the industry delivered to your Inboxto know more aboutLASSIB membershipoptions.Leverage Training Get trained from the leading experts from the Training and certification feesand Certification in industry who bring together years of charged by LASSIB Society are thethemes of experience and best in class training skills, lowest in the Industry in order to tools and technologiesOrganization ensure these key components are Acquire not only knowledge but skills toExcellence. available within reach to masses. implement the knowledge in real life scenarios Attain internationally respected certifications The fees charged helps cover the thereby adding value to your organization and cost incurred by LASSIB Society for yourself hiring trainers and issuing Join the growing panel of Accredited Training certificates. Providers (ATP) and Accredited Test Centers (ATC) of LASSIB Society to deliver value within your organization.Consult with LASSIB Solve organization problems, create strategy, Consulting fees derived by LASSIBexperts to deliver deliver customer value through proven tools and Society aids LASSIB to fundbusiness and techniques of Lean and Six Sigma research, host events and providecustomer value free consulting services toLASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 18
  19. 19. organizations which cannot afford to pay yet.Participate in LASSIB Network, brainstorm, and learn from industry Sponsorship costs and delegateEvents leaders, face to face, over exciting discussions fees assist LASSIB in conducting these events and spreading the awareness within the community.Participate and Understand the trends in the industry By participating in building theseleverage Industry Identify common challenges and best practices reports, you provide theResearch Hear from exper ts on future forecasts opportunity to LASSIB to share your knowledge with the r est of the industry. Please refer to http://www.lassib.org for details on LASSIB or Send a note to contact@lassib.org to get connected to a LASSIB consultant or Call +91-9246185187 (India) to speak to a LASSIB consultant directly.LASSIB Society | Industry Research on Lean and Six Sigma Implementation in Logistics IndustryPage | 19
  20. 20. Headquarter Address:#5-62/9/22-B, V. V. Nagar, Street No. 8, Habsiguda, Hyderabad, Andhra Pradesh, India. PIN: 500007Office: +91-40-40045614 | India Fax: +91-40-40045615 | Toll Free Number: 1-800-425-1388Email: contact@lassib.org | Website: http://www.lassib.org/

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