Implementing 6σ Methodology For Profitability Improvement In Automatic Specialties Inc

Benefits of implementing 6σ in organizations

Is an improvement approach that has been well received thanks to its ability to provide an effective solution to many problems facing organizations today [1]. For this reason, Thousands of companies over the globe have implemented this approach as a business strategy to improve the quality of products and services, improve process efficiency, increase customer satisfaction, increase green environment and profitability. While there is research showing that 6σ can generate benefits in organizations, regardless of size, there are others that show that these benefits are in large companies compared to SMEs. This situation is largely due to factors such as lack of management commitment; limited financial resources and personnel; resistance to change; the absence of a culture of continuous improvement; lack of leadership; the lack of recognition of the importance of the methodology; the lack of performance measurement processes, among others [2].

A 6σ program is much more than just an improvement program, it is a management system to form lasting, high-performance leaders to benefit the business, customers, partners and shareholders. According to the above author, it is also a capability of measurement processes in a goal for improvement, whose aim is to get close to perfection. Ang & Sin boon [3] complemented with a broad overview of 6σ, highlighting it as an approach that drives improved business performance and value of customer satisfaction through, (I) Strategic approach to management, (ii) an application of statistical thinking at all activity levels; (iii) the use of performance indicators;

It is very clear that implantation if 6σ based on five phase methodology, Define, Measure, Analyze, Improve & Control, commonly called DMAIC, by its acronym (Define, Measure, Analyze, Improve, Control) and it aims to increase the capacity of the process, so that they generate only 3.4 defects per million opportunities (DPMO), whereby errors or malfunctions are almost imperceptible to the customer [4].

At present time, when market completion is in very niche condition, low profitability is because serious problem for entire business, The Company for which we are proposing for research is named as Automatic Specialties Inc. the reason for selecting this company is that, it is one of the company which is news for making lower profitability and seeking some extraordinary leap in the market with its new clutch wire product, started two year ago. The company itself started in 1975 and making wired product with around 28 people in organization and situated in Marlborough, MA. The current revenue for this company is around $ 4961000. For clutch wire production, they setup the machine which is known as twist mill has totaled operating hour is 475200 min/year. There is a rumor on shop floor that if the machine is optimized, its total time will be reduced by approx. 15%, then time for other operation will be reduce by 8%. The requirement of production time is around 43200 5 min/year, this would increase the saving of $ 496000. Our motto is to implement the 6σ methodology with the hypothesis is that, we can increase the profitability by implementing the 6σ and save this 10% amount.

Challenges of implementing 6σ in small and medium-sized enterprises

This is the situation of predicting specific relationship between variable, therefore It is better would go of one tailed hypothesis, and it can be defined as

There are dozens of research have been done which try to find the correlation between implantation and improvement, some of the research is described in Literature review

II.LITRATURE Review

The 6σ program is seen in the literature as a statistic or strategic approach. In the statistical approach, the focus is on the quantification of the variation, which is made in standard deviation quantities associated with a random variable of interest in the study of a critical process .Harry  [5] states that the source of defects is often connected to some form of change, or materials, procedures, process conditions, etc. According to the cited author, this is the reason why the variation is so frowned upon based on the 6σ fundamentals because change means customers will not get what they want. The Sigma level, represented by the Greek letter (σ) or the number of standard deviations of a process depends on the customer requirements, thus not always work with a high number of standard deviations is advantageous because it can become very costly for the company. According to Harry [5], the sigma level is the capability of a process, measured in defects per million opportunities thus allows very different processes can be compared. The standard deviation measures the dispersion of individual values around a mean.

The literature provided by Javed and Darshak, Desai [6] suggests that, implementing 6σ helps to achieve breakthrough strategy and not only helps organization themselves by detecting the defect and improve their financial performance, but also helps in generating innovative ideas for future sustenance, they further agreed upon the fact that 6σ methodology is applicable in all sizes of organization. Their suggestion regrading DMAIC process with some more improvement tools which is applicable for other SMEs, show the new dimension of analysis improvement. They propose the research methodology should be in such a way that, involvement of top management, availability of resources and utilizing the tools and techniques used, this will surely shows the way for sustained future, and 6σ is most structured tools for it [6]. 6σ deployment in SMEs is surely having the stronger foundation if framework given by Kumar et al. is used for 6σ implementation. The research based on triangulation basis is still under naïve phase, and requirement of highly qualified literature is still unavailable, so that triangulation basis can be more rigidly adopted for implementation of 6σ and involvement of qualified literature should be increased. The main challenges in triangulation framework are facing the constraints of the resources, which can disable the whole process, if the implementation process is not aligned with strategic objective of the company. The phase wise implementation is also viable in triangulation framework of implementing 6σ [7].

Other works have been developed in the same industry with similar characteristics, such as Vinod & Ruben [8]. This paper points out that the company usually develops customized products according to customer demand, thus becoming the sole supplier of many of them. With this customer dependency relationship, which cannot switch suppliers or simply terminate their contracts at any time, it appears that the partnership between the companies involves high investment and therefore requires trust on both sides. The company has high demand for domestic and international customers, is interested in increasing the production capacity, but some waste such as rework, delays and other losses in the processes prevent this increase. The 6σ program can become a chance for the organization to stand out in the market and be the preference of customers due to its structured approach to the problem and have customer focus. In the case the analyzed company can also supply this need for rework reduction, thereby increasing its production capacity. Another paper published that refers to similar company analyzed (same corporation but other plant) is [5], according to which the company uses events such as Kaizen together with DMAIC, to assist in the implementation of improvements. Kaizen is used in three phases: measuring, improve and control. In phase measure, the author states that can reduce the time, when there are many improvements that do not require further analysis, not needing so, wait until the phase to improve. An appropriate way to use would be to staff stay united and concentrated for a period, leading brainstorming and discussions, typical Kaizen. This avoids wasting time in conducting several smaller meetings. In the step of improving the Kaizen is to basically speed up the process and control, for example, to quickly implement visual controls the processes.

Implementing 6σ in Automatic Specialties Inc

Talat & Pietro [8] invented a model for implementing 6σ in supply chains. The model consists of two cycles, the first deals with relation between consumer manufacturer and supplier of the organization and the second cycle focuses on the implementation sustainability responsiveness and innovation-based program, using game-theoretic approach, especially for closed loop supply chain. The entire process involves in depth analytical skill with the use of proven mathematical formula. They also suggest that, increase in marginal production cost may lead to certain innovation which can lead to long time success of organization. Their centralized vertical integration examination for CLSC facilitates the candidate to change their strategy in the absence of dual marginalized effect. Their conclusion of improving the profit by centralizing helps to generate more profit than decentralized condition [8].

To successfully implement a 6σ program, Mayas & Ala [9] state that one of the main critical factors of success of 6σ in the UK is the involvement and top management commitment to the program – as in the case of Motorola. Besides these factors are of equal importance to cultural change and investment in training for absorption and application of knowledge necessary for a successful project development. The training of employees involved in 6σ uses a distinct practice, by which names are assigned according to the workload of according to their level of knowledge in the categories of Green Belts, Black Belts and Master Black Belts. These are supported by leaders, or champions, that are responsible for removing the barriers that arise for the development of these projects Warner & Timans [7].In addition to these factors, it is important to implement the program the selection and management of 6σ projects, since the lack of skill in selecting and driving a project can consume time and resources which then generate frustrations and failures. A set of guidelines for the selection of 6σ projects are as follows [10].

The implementation of 6σ in aeronautical industries contradicts the thesis that 6σ is limited to low production volume organization. But at the same time researchers admits that some characteristics certainly influence the application in some more degree or less, it due to nature of product provided in aeronautical industries. Even the type of work force is highly qualified in this field, so they easy to train as compared to other sector but hinders the way of work done by staffs. The main advantage in implementing 6σ in this sector is that they are already having high demand of quality, which empowers the methodology in certain degree [10].

Most of the food industry has pioneered in their lean managing process, and hence implementing 6σ leveraged them beyond direct gains in productivity, the implementing cases illustrated by Orlando & Alexandro et al [11] is similar to previous article and they also believe in giving pure attention by management philosophy. Only one thing is fascinating in this research is that it also believes in reinforcing employee engagement is critical to success. They are heading towards future work of benchmarking with the other sectors parameters [11].

Literature review

III.Research method

We have discussed earlier that, for implementing 6σ in Automatic Specialties Inc. we must optimize the machine and production flow of the system, using the VMS or SIPOC tools, the research related to flow is can be achieved very easily. The interrelation between each of the transaction with reference to time and cost will help the data analysis, so that problems can be identified.

The implementation of 6σ through DMAIC framework is the best method we have observed till the time. The use of statistical tools in every required step is key to this framework.

 The define stage will consists of, it can be performed in a way that we can compare the average machine running time with average of downtime profitability, for the case of Automatic Specialties Inc (ASI) copied text, plots, equations, etc. The average comparison confirms the cause, which was achieved with the help of VMS. The formation of team of experts is also being held which is known as belts.

In this stage we also considered that the identification of delay in processing is done with a visual inspection is carried out a study matching attributes, the results yielded an overall error rate of 5%, thus it was considered that the consistency in the process and inspection criteria they were acceptable.

Figure 1 Time series analysis of Mc Idle time and profitability before 6σ

After analyzing the time series, it is clearly visible the when machine idle time increases the, the profit (%) decreases. This show that there is some inverse relation between these two. It also means that, reducing the idle time can increase the profitability.

The second stage which is Measure, in this stage as we observed two problems which can be considered is reducing idle time and increasing profitability, the target time for machine is to optimize it by 15% and in same time observe the indicator profitability and check performance.

Figure 2 Theory of constraint process, Proposed by Eliyahu M. Goldratt

In the third phase we must use the tools, to remove the variable that has effect on machine. Generally, in this context, pareto chart or plot box etc. can be used to identify the variables, but in this case, we will use a tool which is known as “theory of Constraint”, the first used and proposed by Eliyahu Goldratt, and often accepted by number of SME and larger company to increase their profitability. In this process, the larger constrains is being removed by exploiting and subordinating it and repeat the process for another bigger constraint.

During implementation phase, we also gone through involvement of management and supporting team with the help of several tools

Further, identifying root causes of delay, we should make an analysis of the variables involved in the cutting and assembly processes. In the process of cutting the causes for which the wire cut did not meet the established tolerances, since this problem hampers coupling with knockers’ drawers and dressers of the alcoves they were identified. On the other hand, in the process of assembling the causes which were poorly assembled drawers were identified. Ishikawa diagram used as a tool to identify each of the causes, which were classified into six (6) categories: Labor, Materials, Methods, machines, measurement and work environment [12].

Conclusion

The cause associated human factors were validated by examination and procedural variance factors by analysis of failure modes and effects (FMEA). The results showed that the root cause was linked mostly to errors in the cutting process, however the experience and knowledge of the operator were not relevant. It was established that cutting processes were not properly standardized, no guidance or support tools were used to perform high-precision cutting and inspection processes in the cutting area did not guarantee an acceptable quality for the assembly process [5].

The result obtained from the measures phase which is also known as result of root cause analysis directly being implemented in fourth phase i.e. implementation phase of DMAIC methodology. The priority which was considered in earlier condition, was caused by the problem of suppliers, in time material availability and quality of steel wire, which is to be drawn not up to the specified level. This causing breakage and stops the machine automatically, which is assigned to do so.

One of the fundamental characteristics of 6σ approach is the intensive use of data and information, used for process analysis, design improvement strategies and decision-making. For this reason, before developing the phases of analysis and improvement it is necessary to ensure that sources of information and measurement systems are sufficiently reliable to avoid taking wrong actions leading to lack of results. Additionally, at this stage we must raise a baseline, to serve as a starting point for evaluating the effectiveness of the improvements achieved with the achievement of each project. the improvement actions must be implemented in accordance with the previously defined plan, and on which should be regularly monitored for compliance and take corrective action when necessary [2]. The improvement action we must use statistical tools and management attention, not only to generate ideas and support decisions, but also to structure them into an action plan with specific activities. For this we must use statistical methods such as regression analysis, DOE, methods of response surface, simulation, and can also be used tools Lean as 5S, Kanban, the flows of one-piece, Total Productive Maintenance, SMED, Visual Management, rolling lines and Poka-Yokes. The last step of implementation is regarded as validating the results on as they are implementing the improvement actions. In this step assess the impact they generate on the problem, this is done with the review and analysis of the LSS metrics, operational metrics and financial metrics. If the target is not met should review and reconsider the actions defined [11].

Validation of the methodology being carried out in Automatic Specialties Inc. dedicated to the manufacture clutch wire. Given the company so far validation did not have a strategic direction, proceeded to identify targets in the medium and long term, some of these are: position their products among higher sales; improve the quality standards of its products, which is reflected and decline in services generated returned by the end customer; improve the productivity of their production processes, which impact on production costs, the costs of poor quality, rework, cycle times and production capacity.

IV.DATA ANALYSIS

For data analysis, data collection is an important factor, in our case; data collection is based on primary data given by the company, the annual reports, production report, and case studies. The initial analysis of data which is already given in graph shows that there is high variation in production process and it need to make even to some extent. The monthly production of company is as given in the table, which shows that

Table 1 Monthly production and cost data for ASI

Month Production (No of Coil) Profit ($) Operating cost ($)

1 12 33120 350400

Almost every three months, the production goes down for some reason, and after that it recovers.

The theory of constraint is applied first for fifth month; because it is the month which has lowest production (only 11 bundles of wire were created, the average size of coil is 300 kg.

The equation for calculating profit from production cost

The Operating cost

The initial calculation by the given data result in this

Table 2 Calculation of some relevant parameter

10.18 660 1 0.15

7.65 616 44 7.14

6.83 528 132 25.00

From calculation we can see that, around 650 min the machine is not utilized for their production, it is around 10% percent of total operating time.

After implementation of Theory of constraints, it was found that the supplier is not able to provide material on time, and company stocking the material for three months only, from second month of material coming, they start chasing the supplier, but time of deliveries always failed by 1 or 2 weeks. This causes loss of production. To acquire this better production plan is required; the procurement can also be done with two of more suppliers, so that material is available on time.

After exploiting the first constraint, we should move to another constraint and repeat the process till all the constraint will be elevated. As discussed earlier, the use of other tools such as   Ishikawa diagram, Box plot, etc.

Figure 3- Wire breakage problem in ASI

V.RESULT DISCUSSION

As discussed earlier that, the outcome of data reveals that the problem is with supplier of the material. The failure of delivery time is the main cause in this case, the other factors that influence the profitability is %C in the supplied material is not up to the standard. This cause wire breakage in processing the steel material. Brainstorming is one of the best tools that can be used before making cause and effect diagram.

 The event like wire breakage took around 30 minutes to start the machine again, if this problem is solved the, machine will available for around 600 minutes extra available for production. Only these factors will elevate the profit % by 10. It was always seen that after implementing 6σ, the efficiency rose by more than what is target taken initially.

After implementation of methodology, the improvement process does take leave for a moment, it’s a continuous process.

At this point the ASI seeks to incorporate and standardize the changes in the stage of improvement. For this reason, it is important to document processes or modified processes, and can be used for this approach quality assurance through ISO 9001. Additionally, mechanisms should be designed to ensure that changes and improvements achieved are maintained over time, to give continuity beyond the project closure. Key activities at this stage are:

Standardize and integrate process improvement: This activity should lift procedures manuals, process diagrams, process maps, and if the company has a quality management system, then you must update the quality manual.

Define control mechanisms improvements: mechanisms should be designed to monitor and maintain the improvements achieved. For this reason, it is necessary to communicate changes to stakeholders, and if necessary to enable them to assume the new changes. To create discipline and order can turn to tools like 5S, and to monitor indicators can be used control charts and Visual Management.

Close project: when you have achieved the goals and expected impacts should develop a project closure report, by which it can communicate to stakeholders, clearly and precisely, all the outcomes of the project.

Evaluating of the results derived from the implementation of the project portfolio is critical because it identifies new opportunities for improvement and lessons learned that lead to the realization of new LSS projects. LSS is important for the team to highlight the positive and negative aspects of each project, as this enhances organizational learning.

The evaluation process involves Increase in the capacity of the cutting process, specifically in the accuracy of the dimensions of the cut pieces. Increased capacity drawer assembly process, since the percentage of non-compliance is decreased in this area. to Increase in capacity of machine assembly process, since the percentage of non-compliance by the presence of open fault was decreased. The complaint given by external customer should be reduced.

VI.Conclusion

The proposed methodology greatly facilitated the deployment of 6σ in the Automatic Specialties Inc. as this methodology provides the necessary elements to design and implement organizational changes that would enable it effectively to develop 6σ projects processes. The improvement process is focused to identify key problems and have a clear procedure for implementing and evaluating the process. While improvement provides positive effect in the financial and operational values, evaluation of the results of the improvement project shows that still need to be change in fundamental aspects, to achieve better results, these changes are generating greater commitment of management and staff of ASI. To implement systems for measuring key variables, which eliminates subjectivity in the inspection of products is the subject of deepening the cultural change towards continuous improvement and operational excellence. As can be seen in the proposed changes, the human factor plays a key role in the implementation of 6σ.

At least in calculation the hypothesis generated by us in the beginning is true for this company. But to establish strong the relation between profitability and implementation of 6σ need some more company to research. This gives the way for our future work related to this research proposal.

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