Module 5 DQ2: Six Sigma

Module 5 DQ 2 
What are the advantages and disadvantages of Six Sigma? Would you implement it in your organization? Why or why not?
From a peer
Re:Module 5 DQ 2
Six Sigma is based on quality principles and efficiency gains within a company, which can save the company money. The goal is perfection or defect free. Six Sigma involves a five-step process and requires commitment from top management. The five steps are define, measure, analyze, improve and control. The process involves widespread change throughout the organization (Daft, 2014).
Although the Six Sigma strategy was once highly popular, one article proclaims that the mindset is not fully accepted by employees. Employees will tune out the parts they do not want to hear. Over analyzing is a common occurrence among management when using the strategy (Hindo & Grow, 2007).
The Six Sigma strategy is appropriate for certain aspects of healthcare. One forum the strategy would be useful in is infection control. A goal of perfection or zero hospital-acquired infections is prudent and recommended. Hospital acquired infections increase patient mortality and decrease reimbursement. After all, no patient wants to be a statistic or acquire an infection. Hospital acquired infection is not acceptable. Hospitals should strive for zero infections.
References
Daft, R. L. (2014). Management (11th ed.) Mason, OH: South Western Cengage Learning. ISBN-13:9781285068657
Hindo, B., & Grow, B. (2007). SIX SIGMA: SO YESTERDAY?. Businessweek, (4038), 11.
LECTURE NOTES 
Operations Management
Introduction
Operations managers are concerned with finding ways to create greater efficiencies and lower costs while improving the quality of their products and services in order to remain competitive. Sometimes these efficiencies and improvements are achieved within existing operations through programs such as Six Sigma. Other times, they are found through alternative sources for the factors of production, such as labor and materials. Another option often used today is outsourcing, when non-core activities are performed by outsiders rather than by the firm's own employees. In the past, Operations Managers focused primarily on the internal operations related to the production of goods and services. Modern Operations Managers are concerned with finding efficiencies in every link of the company's supply chain. Increasingly, a company's supply chain is becoming more global, with certain activities performed overseas.
An Overview of the Concept of Supply Chain Management
A supply chain refers to the activities involved in producing a company's products and services and how those activities link together. The concept involves a total systems approach to managing the flow of materials, information, finances, and services from suppliers all the way through to the ultimate customer. Supply chains are an integral part of quality and cost management. A typical company's supply chain costs can represent over 50 percent of assets and 80 percent of revenues.
Inventory, carried throughout the supply chain, is expensive to handle. Supply chain management often focuses on reducing levels of inventory so long as the company is still able to provide products when needed at the desired level of output and quality. New technologies have helped with achieving effective supply chain management. Web-enabled tools for supply chain planning and execution have helped companies integrate their supply chains with suppliers and customers. Wal-Mart and Dell are two examples of companies who have been able to achieve significant competitive advantage through their supply management strategies.
Quality Improvement, Six Sigma Systems, and Mass Customization
Quality improvement involves managing an entire organization so that it excels at all dimensions of products and services that matter to the customer. Total Quality Management (TQM) is a company-wide approach to quality invented at Bell Laboratories in the 1920s. Teams are the key to TQM, and one kind of team is the quality circle. Quality circles are small teams that meet periodically to discuss how to make improvements to their particular area and the product or service they create. To work effectively, quality circles should be established in all parts of the company not just manufacturing.
Six Sigma has reached a high level of popularity in recent years in such companies as Honeywell, Raytheon, and General Electric. Essentially, Six Sigma is a process by which management reduces defects and variation. The process involves rigorous analytical tools and leadership from the top to solve problems. The concept has had much appeal because, if implemented well, it can reduce costs, increase efficiencies, and improve customer satisfaction dramatically. This is particularly true in the United States, where nearly 30 percent of work performed consists of redoing faulty work. Six Sigma involves five steps: define, measure, analyze, improve, and control. The CEO or another senior executive usually plays an active role in implementing Six Sigma, because it is necessary to mobilize significant resources and break down functional silos. The advantages of Six Sigma were surveyed, and found to be:
1. Increased cost savings (45 percent of respondents)
2. Increased customer satisfaction (20 percent of respondents)
3. Reduction of defects (15 percent of respondents)
4. Increased company growth (10 percent of respondents)
5. Increased quality (5 percent of respondents)
One challenging aspect of Six Sigma is that it often requires significant culture change. This may cause conflicts with the company's values and ethics. According to GE, the very DNA of their company had to change when they implemented Six Sigma because the process changed the work at GE in every product they design.
Mass customization has gained much popularity in recent years. It is a method for a company to use a flexible, and often computer-aided, manufacturing system to produce and deliver products and services to meet the needs of different customers. Typically, mass customization means that some percentage of the product or service is the same for everyone, while other aspects are customized specifically for a particular customer. Mass customization is used to varying degrees by companies such as Toyota, Dell, Hallmark, and L.L.Bean. Mass customization is used most often when there is the potential for differentiating the product at some stage near the end of production. For example, automobile companies leave details like the choice of interior color and fabric to the end customer, who finishes building the automobile to their specifications. The goal is to be able to function at maximum efficiency but still respond rapidly to customer's demands while maintaining minimal inventory.
Issues Related to Global Sourcing
Global sourcing is the relocation of some or all of a company's business activities or processes to a foreign location. The primary reason for global sourcing is to obtain lower prices; however, there are other reasons, including following key supply chain partners into a new market, or when certain products needed for production are not available locally and must be imported. Occasionally, outsourcing occurs because a company needs to be close to one of its largest markets. China is an interesting example: the Chinese market is growing quickly and many U.S. firms locate in China as much for market reasons as for lower costs.
Although more than half of U.S. firms with sales of $10 million or more per year engage in some level of global sourcing, there are some disadvantages. Overall costs may not be as low as anticipated, since there are added costs such as freight insurance, packing, and import duties associated with transporting goods or parts around the world. There are also currency risks that may require hedging. Finally, there may be security risks related to intellectual property and technology transfer in certain parts of the world.
Conclusion
Operations management has taken on additional importance in recent years because of the impact that supply chain management can have on the bottom line and ultimately the overall competitive position of a firm. Many companies, such as Toyota, have enjoyed substantial competitive advantage resulting from the precise way they manager their operations and supply chains. In fact, Toyota is so confident about its production system that they are willing to share their practices with other companies, and do not fear that others will be able to copy it effectively.
References
Ball, D., McCulloch Jr., W. H., Frantz, P. L., Geringer, J. M., and Minor. M. S. (2005). International business: The challenge of global competition (10th ed.). New York: McGraw-Hill/Irwin.
Spear, S. (2004, May). Learning to lead at Toyota. Harvard Business Review, 82(5), (pp. 78-86). Retrieved October 25, 2005, from EBSCOHost database. AN: 12933022.
Spear, S., and Bowen, H. K. (1999). Decoding the DNA of the Toyota production system. Harvard Business Review, 77(5), (p. 96). Retrieved October 25, 2005, from EBSCOHost database.