1. Six Sigma Process Improvement in the Supply Chain using SCOR MAESC 2006 March 31, 2006 Paul Babin – Mimeo.com Doug Geyer – Mueller Industries

2. Six Sigma Process Improvement in the Supply Chain using SCOR Six-Sigma Supply Chain SCOR model Model Measures Balanced Scorecard Integration

3. Six Sigma Process Improvement in the Supply Chain using SCOR Abstract: Six Sigma is an important quality tool for driving business results through process improvement. Using project teams that focus on reducing process variation, the Six Sigma approach has been used successfully across a wide spectrum of engineering and business problems. When applied to Supply Chain improvement, the Supply Chain Operations Reference (SCOR) Model provides a framework to identify and select the most influential Six Sigma projects that can drive important operational and strategic benefits. This presentation will provide a practical explanation of how SCOR is used, and how it relates to other tools including Six Sigma and the Balanced Score Card.

4. What is 6-Sigma? 3.4 ppm 3.4 PPM

5. MeasureDefineAnalyzeImprove EXECUTION Control Control the process to assure that important improvements are sustained. Define the key processes that affect customers. Analyze the data, converting it to insightful information. Improve the process to achieve the results desired. Measure the performance of key characteristics. 6-Sigma Process Improvement Methodology

6. Comparing Six Sigma, Lean, TOC ref Dave Nave, Quality Progress, March 2002 ProgramSix SigmaLean ThinkingTheory of Constraints TheoryReduce variationRemove wasteManage constraints Application Guidelines 1. Define 2. Measure 3. Analyze 4. Improve 5. Control 1. Identify value 2. Identify value stream 3. Flow 4. Pull 5. Perfect 1. Identify constraint 2. Exploit constraint 3. Subordinate constraint 4. Elevate constraint 5. Repeat cycle FocusProblem focusedFlow FocusedSystem constraints

7. 6-SigmaTools by DMAIC Phase ref Implementing 6-Sigma, Breyfogle 2003 Define Project Selection Matrix Cost of Quality Project Charter Measure Key process output variables Financial Metrics Voice of the Customer Analyze Box Plots, Pareto Charts, Control Charts Scatter plots, Comparison Tests Regression Analysis ANOVA (Analysis of Variance) Improve Key process input variables DOE (Design of Experiments) Full Factorial DOEs 2 k Fractional Factorial DOEs Robust Designs Response Surface Methodology Improvement Recommendations Control Process Maps, SOPS, Failure Mode and Effects Analysis, Mistake Proofing Control Plan Change Management

8. Supply Chains Cross Functional vs. Departmental Customer Focused vs. internal process focused

9. SCOR - Model Supply Chain Operations Reference Model Tool for Supply Chain Improvement Analysis Methodology – Opportunity Identification Hierarchical Levels Common Definition of process elements Measures appropriate to each level and element Applicable to Make-to-Order and Make-to-stock

10. SCOR – Management Processes Your Company Supplier Internal or External Customer Internal or External RETURN MAKE PLAN RETURN SOURCEDELIVER RETURN MAKE PLAN RETURN SOURCEDELIVER RETURN MAKE PLAN RETURN SOURCEDELIVER

11. SCOR Supply Chain Example Level 1 scope for copper fittings wholesale supply chain

12. Balanced Scorecard Strategy Deployment Tool Measures Initiatives Strategic Thrust – Compete based on Supply Chain Excellence

13. Balanced Scorecard PerspectiveStrategyMeasurementTargetsInitiatives Financial Customer Internal Business Perspective Learning & Growth

14. Integrating Six Sigma SCOR BSC $$$

15. References: Breyfogle, Forrest W. III, “Implementing Six Sigma – Smarter Solutions Using Statistical Methods, 2 nd Edition”, Wiley, 2003. Nave, Dave, How to Compare Six Sigma, Lean and the Theory of Constraints. Quality Progress, March 2002. Supply Chain Council, Supply Chain Operations Reference Model, version 7.0, www.scc.org

16. Questions?

17. Extra Slides