Lean Six Sigma Application to Support the Shift Towards Greener Operations and Supply Chains

Task A of the report focuses on Lean Six Sigma in the industries. The report starts by introducing the Lean Six Sigma and states why many companies are usually interested in implementing it. The report also describes the training levels of Lean Six Sigma. The report majorly describes the challenges of lean six sigma application to support the shift towards greener operations and supply chain. The report used GUD Holdings Limited does describe the various challenges it’s experienced during implementation and after the implementation of Lean Six Sigma. GUD is a good representation of other companies trying to apply Lean Six Sigma to shift towards the achievement of greener operations and supply chain but in the long run, what they expected does not happen.

The first challenge identified in this report is the lack of leadership commitment. The report explains the role of leadership in the implementation of Lean Six Sigma to an organization. Further, what is required from leaders after the implementation of Lean Six Sigma is well described. GUD is used to explain how lack of commitment is a challenge toward the Lean Six Sigma application to support the shift towards greener operations and supply chains. System interactions and analysis is the other challenge that is described in this report. For better understanding, GUD is used to show how System interactions and analysis was a challenge of Lean Six Sigma Application to support the shift towards greener operations and supply chains.

Incomplete understanding of six sigma Methodologies is the other challenges of Lean Six Sigma Application to support the shift towards greener operations and supply chains that are described in this report with the use of GUG Holdings Limited. Long project duration and poor execution are the last two challenges of Lean Six Sigma Application to support the shift towards greener operations and supply chains that are identified by this report.

The report concludes by giving recommendations on how all the identified challenges can be overcome hence making Lean Six Sigma Application to support the shift towards greener operations and supply chains.

Table of Contents

Task A: Lean Six Sigma Approach used in Industry. 2

Executive Summary. 2

Introduction. 4

Challenges of Lean Six Sigma Application to support the shift towards greener operations and supply chains. 4

Lack of Leadership Commitment 5

System Interactions and Analysis. 6

Incomplete Understanding of Six Sigma Methodologies. 7

Long Project Duration. 7

Poor Execution. 7

Task B: Winemaker Application for Data Analyst 8

Optimal Production Plan and Profit 8

Sensitivity Report and Purchase of Additional Resources. 8

New Production Plan and Profits when Market Demand Changes. 9

Type of Wine to Choose and Profitability. 10

Feasibility and Unboundedness. 10

Conclusion and Recommendations. 10

References. 12

Introduction

Lean Six Sigma is usually a two-way strange approach which helps in driving continual improvement in a firm and works towards the achievement of more than 99% efficiency. Lean on one side refers to the maximization of customer value and the minimization of the area in the area of waste in a greater attempt to improved customer satisfaction and minimal waste of resources from an industry. Six Sigma, on the other hand, refers to the efforts in progress in reduction of process and product variations via a well-defined project approach. Customer satisfaction, reduce cost, improved staff morale and retained business are some of the benefits that an organization gets from combining the two approaches (Albliwi, et al., 32015). Lean Six Sigma has four training levels which are the “Belt” levels that help in explaining the level of expertise that individuals have. First is the Yellow Belt which focuses on the awareness of Lean Six Sigma to the individuals. The second level is the green Belt which focuses mainly on lean principles and the use of tools and DMAIC application. Black Belt is the third level which implies the full-time project leader. Lastly, we have the Master Black Belt which is any Black Belt that has more not less than two-year experience and is capable of teaching Lean Six Sigma.

Challenges of Lean Six Sigma Application to support the shift towards greener operations and supply chains

Most organizations experts, employees, and executives have been eying the six sigma continuous process improvement methodology for years. The process, services, and products of all companies that have been able to successfully implement this methodology have greatly increased. Increased Profitability, customer satisfaction, and productivity have been achieved in the organizations due to the greater ability of defects reduction. A good example is a GUD Manufacturing holding limited which has been applying Six Sigma hence their customer satisfaction, productivity and profitability have greatly increased (Antony, 2017).

However, there are various obstacles that hinder the implementation of Lean Six Sigma in any organization including GUD Holdings Limited. Also after the successful implementation of the methodology, there are other challenges that impact lean six sigma application to support the shift towards greener operations and supply chain.

GUD Holdings Limited is a combination of dynamic product firms that are based in New Zealand and Australia. With aid of all these businesses, GUD has been able to successfully own the Asia-Pacific religion’s premier brand portfolios. GUD Holdings Limited uses lean six sigma application in all their operations which has made GUD’s brands the market leaders in their individual product categories and within the specific organization industry. Apart from brand management, supply chain management, product design and development, and offshore sourcing disciplines are also GUD’s principal skills (Psaros, & Seamer, 2015).

The organization uses the Lean approach to develop new products and increased innovations. Innovations make the firm to be able to generate long-term financial returns. Production of long-term shareholders returns above the capital cost and also the maximization of the brand portfolio to accrue better benefits to shareholders are the main and primary objective of the company (Boakye, et al., 2017).

Lack of Leadership Commitment

Lack of leadership commitment is one of the challenges that GUD’s and other companies lean six sigma application faces while trying to support the shift towards greener operations and supply chains.

During the implementation of Six Sigma GUD first had to decide the employees who were to deal with the project. The management needs to deploy Six Sigma the entire company. However, the management made a greater mistake since they did not look for internal employees or outsourced employees who were specialized in the implementation of six sigma project (Albliwi, et al., 2014). They just picked the individuals for the project from the company at random. The lack of dedication of the project to a team of experts reduced the success of the project. It is well known that a successful six sigma project requires that the leaders dedicate all time, money and talent resources to the project (Cucoranu, et al., 2014).

However, for the deployment of current top performance in an organization for the implementation of the project can work in the short term but cannot possibly unlock the benefits of Six Sigma in the long run. This is exactly what happened in GUD Holdings limited since despite deploying unprofessional personnel to implement the project, the project was finally implemented.

The aim of the implementation of lean six sigma project to the firm was to improve operations and enhance the company supply chain management. However, with the implementation, the cycle time for the company only reduced by a small percentage, there were some traces of value-added work, there were also some traces of waste within the organization, some business were still unstable, and also some process variations were also experienced which all this caused lean six sigma ho have almost no impact to the operations of the company. In fact, the company had just incurred from the implementation of the project (Drohomeretski, et al., 2014).

Also, the methodology that was laid by the project for supply chain improvement was not achieved the emergence of several concurrent conditions. In fact, the process of sharing order and stock information between all the businesses of the company diminished. Some of the business could not even take control of their stock since they all had decided to rely on the implemented project for improved supply chain management (Furterer, 2016).

System Interactions and Analysis

System interactions and analysis is a challenge of Lean Six Sigma application to support the shift to towards greener operations and supply chain. Six Sigma improves processes independently hence doesn’t make consideration to system interactions. Also, lean doesn’t value the system or statistical analysis (Price, et al., 2018).

GUD Holding Limited different business processes were improved independently without any consideration of the system interaction. Information sharing between different business systems later became a challenge and even the company e-commerce system was almost collapsing. The different faults especially the lack of communication between one business and the other of the company lead to slowed operations of the company. All this was a big challenge towards the shift to greener operations and supply chain. The business could even not be able to discuss the products demand (Psaros, & Seamer, 2015). Determination of customer experience was also a challenge since the e-commerce technology was letting the entire company down.

Lean did not value the system analysis. System analysis is essential to the company since it usually shows all the businesses performance. The analysis will also help in making super decisions about the necessary company improvements.

Incomplete Understanding of Six Sigma Methodologies

The above-mentioned challenge also hinders the shift towards greener operations and supply chain. GUD Holdings Limited rushed into implementing Six Sigma without first understanding what is required for successful implementation. The company implemented sigma in order to keep up with the prevailing market competition and to impress the company shareholders by the use of continuous process improved terminologies in the company documentation which make the implementation of the project loss meaning. The company also gathered fewer resources that are necessary for the implementation of Six Sigma hence making it fail to shift the company towards greener operations and supply chain (Ramesh, et al., 2016).

To achieve greener operations and supply chain, the company needs to majorly focus on the core businesses operations that once impacted by Six Sigma, they would make a greater difference to the organization. The simple and easier changes need to be avoided when it comes to six sigma application so that the broader objectives may be achieved more precisely (Sreedharan, & Raju, 2016).

Long Project Duration

Long project duration is another challenge for six sigma methodology that hinders the company from the shift toward the greener operations and supply chain. Six Sigma requires that all the company projects to take the minimum time possible for better improvements in the company operations which in the long run will influence the firm profitability (Thomas, et al., 2016).

Poor Execution

Poor execution is another challenge to Lean Six Sigma application to support the shift towards greener operations and supply chain. Without good execution, the six sigma quality improvement project can go awry.

Poor execution happened at GUD Holdings Limited since the process improvement was not aligned with the firm’s objectives. The company mainly implemented the project to solve problems instead of meeting all the company strategic objectives (Timans, et al., 2016). The management also tried to ensure the implementation of the project was geared towards the improvement of an output of the entire company process forgetting the inputs. The aim of the implementation of Six Sigma to the organization totally made the project not to spearhead operations and supply chain.

The management of GUD and other companies need to understand that six sigma methodologies are not made to stand on a vacuum but should be aligned with the company goals and objectives. The methodology may be as effective as possible but the method of execution applied can make the organization not attain the productivity gains and also financial savings. Lack of effective leadership is the main source of disappointments to the project (Trzeciak, et al., 2018). The success of the lean six sigma application lies on the hands of the management of any organization that wishes to apply it. Effective leadership will lead to better execution of Lean Six Sigma hence better operations and supply chain.

Task B: Winemaker Application for Data Analyst

Optimal Production Plan and Profit

Management of any firm including the winemaker always has an optimal production plan for a certain production. The optimal production plan used to explain the resources used, the market demand and the expected profitability levels of the firm. A firm can always use the optimal production plan to forecast demand changes in the market hence prepare the market with appropriate adjustments.

The optimal production plan is that winemaker needs to use 689.6551724 liters of table wine and 1206.896552 liters of dessert wine to attain the maximum profit. For the optimal production, both table wine and dessert wine have to use all the labor hours available, all the grapes available and only 448.2758621 hours out of the 800 bottling process hours available. The winemaker by attaining the maximum production will be able to make a profit of $11,552. There are some resources left hence it giving the winemaker an allowance to produce more liters of both the wines and increase the profitability.

Sensitivity Report and Purchase of Additional Resources

A sensitivity report is always essential since it makes provisions of the allowable increase and decrease of the resources available. The report gives the allowable increase of each resource and an allowable decrease of each resource available. The report helps in the proper decision making of the additional resources that can be purchased for further processing. A resource without an allowable increased can be additionally bought. Also, the report helps in explaining the resources that can be decreased in cases of reduced market demand. Resources without allowable decrease cannot be decreased at all.

From the sensitivity report, labor hours used have an allowable increase of 550 hours while bottling process hours have an allowable increase of 1E+30 hours while grapes required have an allowable increase of 1750 kilograms. On the other hand, labor hour used have an allowable decrease of 466.6666667, bottling process hours an allowable decrease of 351.7241379 and grapes used an allowable decrease of 666.66667. the winemaker having the $ 1000 and given a chance to purchase any of the resources with labor hours costing $2/hour, bottling process hours costing $2/hour and also grapes costing $2/kg, the winemaker should purchase additional labor hours and grapes. The reason behind this is that labor hours and grapes have a shadow price. (Labor hours $1.896551724 and grapes $4.8275862017). Also, the available bottling process hours can also be used with the additional labor hours and grapes purchased. In the long-run, purchase of additional grapes and labor hours will increase the firm profitability (Benvenuti, et al., 2016).

New Production Plan and Profits when Market Demand Changes

Every producing company should always have some speculations of changes in market demand. They need to make good consultations with the various market researchers to help them with appropriate knowledge to study the market trends. Better ways of adjusting the production plan on changes of market demands need to be adopted. The company needs to have speculations of profits most likely to be made at different market demand changes.

With the market demand for both wines being 600 liters for each of them, the production plan will greatly change. The number of labor hour used will reduce to 600 hours, the bottling process hours used reduces to 300 hours and the grapes used to reduce to 1380 kilograms. The profitability of the firm will reduce to $7,800. This result shows us that the market demand for both dessert and table wines greatly affects the profitability of the winemaker. The winemaker needs to ensure that the resource usage goes hand in hand with the market demand. Focusing on methods to improve the market demand for the wine should remain the winemaker’s main goal since the higher the market demand the higher the profitability of the winemaker. The winemaker has to utilize the market research to ensure that the resources he invests in our correspondence to the forecasted demand to avoid utilization of excess resources (Azimian, & Aouni, 2017).

Type of Wine to Choose and Profitability

In case of changes in market demand, a firm needs to get advice from the market researcher on what product to major in and stop producing the other to maximize the market demand for that specific product.

Following the advice of the market researcher and the winemaker concentrating on the production of one type of wine, it is advisable that the winemaker concentrates on the production of Table wine only. Table wine has a higher profit per liter than the dessert wine. Therefore, when the market demand is tripled, the winemaker will use 720 labor hours, 540 bottling process hours and 2700 grapes to meet the market demand. The winemaker should expect a profit of $14, 400. The advice of the research consultant is important and the winemaker should take it into consideration. The profitability of the winemaker will increase by going with the research consultant advice (Rocco, & Morabito, 2016). Also, the winemaker will be able to save some of the resources that could be wasted in the production of the other wine.

Feasibility and Unboundedness

The feasibility and unboundedness graph shows that both the two wines are feasible and bounded. With lower demand levels for the wines, the feasibility region becomes empty. On the other hand, after the exhaustion of the available resources, the curve moves to the unbounded region. Increase in the resources available will make the curve to shift to the right hence increasing the feasibility of the wines. The feasible region can go to infinite so long as there are available resources to produce the output (Azimian, & Aouni, 2017). Complete utilization of the feasibility region indicates that the production is at optimal. The winemaker needs to focus on maximum utilization of the available resources to achieve the optimal production. However, the winemaker should not that the feasibility region adjusts as the demand of the wines changes.

Conclusion and Recommendations

In conclusion, Lean Six Sigma application can support the shift towards greener operations and supply chains if and only if all the constraints towards its implementation of a way of execution are eliminated. It is recommendable that all leaders in every organization to bean keen and deploy only qualified individuals to implement Lean Six Sigma in the organization.

Also, I recommend that when GUD and other comedies are improving process using Six Sigma, they should consider the aspect of system interactions to enhance information sharing between different businesses. System analysis should be a priority and a gauging factor during Lean application.

Extensive learning of Lean Six Sigma methodology is also an aspect I must recommend to all individual in GUD and other companies who are involved in the implementation of Lean Six Sigma to the organization. Lastly, Lean Six Sigma need to be applied to organizations with short project durations and properly executed to support the shift towards greener operations and supply chains.

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