Adding to the confusion is the need for creating a more stable set of quality management, audit and compliance systems and processes that can scale with the company over time. This latter point is why the use of Six Sigma, lean manufacturing, the adoption of an ERP system and the development of entirely new workflows for NC/CA and CAPA are taking place. The need for compliance and also the alleviation of potential tariffs when entering new global markets is a concern. Shaw Industries is investing heavily in quality management as a means to continually reduce operating expenses over time, in addition to significantly increasing yield optimization of their assets and production processes. The company also has the objective of reducing costs more through quality management contributing to lean manufacturing than the savings of having to close a plant. Strategically Shaw Industries has chosen to pursue investments in making their quality management, lean manufacturing, and information systems as efficient as possible to alleviate the need of reducing the plants they operate or product lines produced.
The combining of Six Sigma, lean manufacturing, and quality management to attain greater yield optimization is commonplace in process-based and mill-based production industries (Abdulmalek, Rajgopal, 2007). Yield optimization is a lean manufacturing strategy that seeks to minimize wasted raw materials used in the production process while at the same time ensuring the highest quality of production is attained (Mukhopadhyay, Ray, 2006). Six Sigma is used in the context of creating an aggregate score of yield optimization based on process efficiency (Searcy, 2009). Those companies competing in process-based and mill-based production industries are challenged to enlist their support of their suppliers and own the yield optimization problem as well. This is not easily accomplished, as many suppliers openly compete with one another. Yet for any process-based and mill-based manufacturer to attain the financial outcomes possible from combining Six Sigma, lean manufacturing, and quality management needs to have extensive system and process integration in place with suppliers (Zakuan, Saman, 2009). The results of Figure 1: Financial Outcomes of Combining Six Sigma, Lean Manufacturing, and Quality Management quantifies the contributions to cost reduction, increased sales and improvement of overall company performance. For process-based and mill-based production manufacturers, the tighter the integration of Six Sigma, lean manufacturing, and quality management, the greater the yield optimization possible and Return on Investment (ROI) attainable (Abdulmalek, Rajgopal, 2007). The term best practices is often used to describe real-time integration to this extent in that it translates operational strategies, often tactical in nature, to strategically significant outcomes, often measurable financially (Cumbo, Kline, Bumgardner, 2006). Value stream mapping (Abdulmalek, Rajgopal, 2007) has proven effective in ensuring process improvements made over time are relevant to the attainment of the longer-term, often financially stated performance goal. For manufacturers competing in process-based and mill-based industries these strategic objectives are often stated as increased efficiencies and cost reductions, in addition to increased sales due to the variability of product orders being buildable (Abdulmalek, Rajgopal, 2007).
The attainment of yield optimization, more efficient asset use, successful process and system integration of supply chains, and the attainment of financial results as a result the support of these factors in the production process (Abdulmalek, Rajgopal, 2007). Figure 1, Production Process for Mill-based Manufacturing, illustrates the a Mill-based production process applicable to carpeting, flooring, steel (Abdulmalek, Rajgopal, 2007), and textiles (Mukhopadhyay, Ray, 2006).
Figure 1: Production Process for Mill-based Manufacturing
Yield optimization is critically important in the Order/Stock process workflow to the far right of Figure 1. Minimizing wasted materials and process steps while applying quality-based standards in the form of NC/CA and CAPA workflows is critical as these two quality management approaches form the closed-loop feedback necessary to continually improve. The value chain in Milled and process-based goods however needs to be attuned to customized or build-to-order and order/stock customer workflows (Rondinelli, Berry, 1998) as Figure 1 shows to the left. The build-to-order workflows are dependent on the Available-to-Promise (ATP) process, as ATP communicates what the best possible delivery date for an order is. As process- and mill-based industries increasingly rely on customization of their flooring products to gain additional sales, ATP becomes crucial in getting and fulfilling orders accurately. Auditing ATP accuracy to product quality has shown that when the former is based on a reliable, scalable process the latter is less impacted by aberrant or high variability factors. When ATP is an integrated workflow at the supplier level, plant and product substitution can be attained more effectively using rules-based enterprise applications (Abdulmalek, Rajgopal, 2007).
Yield optimization attained through the use of Six Sigma methodologies in conjunction with lean manufacturing techniques to streamline the production process (Figure 1) delivers financial results over the long-term. Validation and verification of the effects of ATP accuracy on customer satisfaction in the process-based and mill-based production industries has not been completed. Empirical studies from the high technology industry however indicate that the greater the level of ATP accuracy and downstream coordination with installation and integration teams, the higher the level of custom satisfaction. For process-based and mill-based production industries however, yield optimization, lean manufacturing gains through supplier coordination to enable ATP accuracy and cost reduction through Six Sigma are the primary priorities. Six Sigma and it use to attain lean manufacturing objectives tactically is often attained through the integration of these two methodologies, especially in industries that can become commodity-driven (Shah, Chandrasekaran, Linderman, 2008).
Financial Outcomes of Combining Six Sigma, Lean Manufacturing, and Quality Management
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