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Business Management Improvement

Continuous Improvement Strategies

Introduction to Business Management & Improvement Strategy

Competition in the domestic market as well as globalization acts as impediments for the profitability, growth and survival of corporations. Both organizational and technological aspects are synergizing for the creation of an aggressively competitive environment centered on customers. In addition to this, such factors are rather unpredictable and hence their pattern cannot be determined. The extent of uncertainty and rate of changes are likely to accelerate in the coming years (Milgate, 2004). Competitive rivalry is expected to grow rapidly both in the home ground as well as globally. There will be a plethora of new goods and services which will lead to shorter life cycles and development cycles. Certain sectors will have more customization and variety with relatively lesser production quantities. New techniques are bound to optimize manufacturing processes and enhance quality. As consumers become increasingly knowledgeable about the quality and availability of different products in the market, their expectation and sophistication levels increase (Ahern and et.al., 2008). The aim of the current report is hence to identify the different business management and continuous improvement strategies adopted by different organizations to improve their performance.

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Concepts and Aims of different business improvement strategies

Concept and aim of TQM

As defined by The Institute of Management Services, total quality management is a strategy used for the improvement of performance by gaining the involvement and commitment of the entire workforce to completely satisfy the requirements of customers, at optimum costs achieved through continual improvement of goods, services and business processes (Ahire, Golhar and Waller, 2007). The conception behind TQM can be put across as ‘achievement of success by delighting the consumers’. Total quality management aims at bringing excellence to all aspects of a business be it production, finance, marketing or customer service (Carlucci, Marr and Schiuma, 2004). This phenomenon can be more explicitly understood by learning about its primary elements which are as follows:

    • Process oriented – Process thinking is one of the core elements of this strategy. All the steps needed in a process are outlined and the performance yardsticks are continually monitored to find out any unlikely variation (Coronado and Antony, 2002).
    • Customer centric – It is the consumers who ultimately decide whether the quality of a product is up to mark or not. Hence, the entire process of TQM is centered on the final consumers.
    • Employee participation – Under this strategy the entire workforce strives towards achievement of common goals. Commitment of employees can be obtained only when the feeling of fear has been eradicated and empowerment has taken place (Nwabueze, 2001).
    • Integrated system – Though there are a variety of operational specialties normally arranged in form of vertical departments, still it is the parallel processes that connect these functions which are focused while applying TQM.
    • Continuous improvement – The main thrust of total quality management is continuous improvement of business processes (Yusof and Aspinwall, 2000).

Concept and Aim of Six Sigma

Six Sigma is primarily a set of strategies and tools for the enhancement of processes. Its aim is to augment the quality of outputs by determining and eliminating the reasons behind errors and alleviating the inconsistency in production and other processes. It makes use of different quality maintenance methods also encompassing statistical techniques. Six Sigma is defined as a heavily disciplined strategy which helps in focusing on the development and delivery of near perfect goods and services (Agus and Hassan, 2011). Sigma is a term of statistics which calculates the extent to which a process swerves from perfection. The chief conception behind this strategy is that if the number of defects a process has can be measured then it can be systematically figured out that, how such deviations can be eliminated. Six sigma fundamentally stands for the Six Standard Deviations from mean. It is a data-driven and fact based strategy of achieving perfection which prefers prevention of defects over their detection (What Is Six Sigma? The Roadmap to Customer Impact. n.d). Due to the implementation of this system, developmental and production costs are mitigated, inventory levels and cycle times get reduced and there is an improvement in customer satisfaction as well as profit margins.

Concept and Aim of Lean Six Sigma

Lean Six Sigma is more of a synergized executive notion of Lean plus Six Sigma which leads to the removal of seven times of wastes related to over-processing, transportation, defects, overproduction, waiting, motion and inventory. This strategy is a process improving method which is a blend of two thoughts: Lean – an assortment of techniques for mitigating the time required to produce goods and services, and Six Sigma – a group of techniques to improve the quality of goods and services, mainly adding to enhanced consumer satisfaction (Abilla, 2010). This is a time tested business management strategy which assists companies in operating more effectively. It has been identified as the most accepted performance improvement tactic in the history of business development. Lean is described as an approach which aims at improving the flow in the value system and eliminating the waste. A combination of lean and six sigma offers an unparallel improvement philosophy which includes strong data driven tools for solving problems and creating swift transformational enhancements at lesser costs (Breyfogle, 2003). This strategy is aimed at identifying the value of a particular process by making a distinction between the value adding steps and non value adding steps coupled with eradicating waste so that finally all steps attach value to the operational processes. It is persistently concentrated on work. Though the strategy has witnessed widespread popularity yet critics regard it as inconsiderate of human factors as it is followed by incessant layoffs (Carlucci, Marr and Schiuma, 2004).Notwithstanding the criticisms, companies are using this technique as they believe that combination of lean and six sigma can offer efficient tools to resolve issues which would result in increased productivity, enhanced quality, reduced costs, improved speed and exceeding consumer expectations (Davis, 2006).

Establishment periods of the three strategies

History and Perceived shelf life of Six Sigma

It is a common belief that the strategy of six sigma was formulated by Motorola Company and it was implemented for the very first time in the late 1970s. This is undoubtedly true; however, crediting solely Motorola for this breakthrough will not be a correct thing. This is because the roots of this strategy are dated back as far as the eighteenth century (Pyzdek, 2003). This was the time when the industrial revolution was altering the contours of Europe. The initial contribution can be attributed to Carl Frederick Gauss, who provided a theoretical presentation of the approach by utilizing a normal curve metric. In addition to this, contributions of Walter Shewhart are also significant as he presented the suitability of procedural rectifications on the basis of three sigma deviations from mean (Milgate, 2004).Progressing onwards, the Japanese people also gave contributions to this philosophy. In the 1970s a team of Japanese experts were called in for the improvement of operations of a television producing unit under the control of Motorola. Innovative techniques and commendable workmanship was showed by the Japanese which were then branded together to form Six Sigma quality enhancement method (McAdam and Bailie, 2002).Any research associated with the evolution of the Six Sigma strategy will be imperfect without citing the names of Mikel Harry and Bill Smith of Motorola. Their contribution during 1987 was in the shape of a research project which established that the performance of a good or service is directly linked with the amendments made in the related processes. This report emerged as a revolution as it was clearly signified by it that the performance of a particular product in the market arena can be augmented by merely alleviating the number of non-conformities at all production stages (Maier and Remus, 2003). This was followed by the creation of logical filters which were termed as Measure, Evaluate, Improve and Manage by Bob Gravin, the then CEO of Motorola. The filters mentioned above collectively symbolize the present time methodologies of Six Sigma i.e. define, measure, analyze, implement and control.The evolution of this strategy has not withered. In fact, its developmental pace has escalated over time largely due to the increasing need of companies to accommodate newer technologies and business processes (Linderman and et.al., 2003). As continuous evolutions taking place in Six Sigma have helped it in sustaining and surviving, it would not be incorrect to presume that it is not going to fade away in many years to come.

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History and shelf life of Lean Six Sigma

The origin of Lean Six Sigma is similar to that of Six Sigma Approach. Toyota formulated the concept of Lean in the 1950s on the basis of works of Deming and Walter, A. Shewhart. However, the term used by the company was not lean but Toyota Production System. Deming developed the lean foundation i.e. Total Quality Control and applied it in both Japan and US. Shewhart developed the Statistical Process Control which is also considered as the foundation of lean (Martichenko, 2004). The two themes were espoused by Taichi Ohno, the father of Toyota Production System. Toyota developed the concept of TPS as a means to attain unsurpassed levels of flexibility, quality and productivity with minimal contribution due to the elegance and simplicity of process control (Byrne, Lubowe and Blitz, 2007).

Tools, techniques and software found in each strategy

Tools and Techniques in TQM

Tools that are most often cited in the literature on TQM are the seven management and seven quality control tools. The management tools are Tree Diagram, process decision, priorities matrix, matrix diagram, interrelationship diagram, affinity diagram and activity network diagram. The quality tools are control charts, scatter diagram, check points, flow charts, fish bone, histogram and Pareto chart (Sanders and Hild, 2000).

Tools of Six Sigma

  • Box Plot – It gives an instinctive graphical depiction of the five number synopsis of a data set.
  • Benchmarking – A benchmark is a point of recognized upright elevation.
  • SIPOC – It is a picture of high level depicting how a particular process is serving the consumers (Pepper and Spedding, 2010).
  • Affinity Diagram – It makes easy prioritizing and sifting of ideas.
  • Fishbone Diagram – It helps in identifying the root cause of an effect which can be either positive or negative. Pareto Chart – This is a chart which illustrates the frequency of occurring of an event (Breyfogle, 2003).

Tools of Lean

  • Value Stream Analysis – A map of value stream depicts the flow of information and materials and then categorizing activities into non value adding, value adding and value enabling (Davis, 2006).
  • Ishikawa – It is a diagram which helps in effective root cause assessment by putting in 5 whys.
  • Load Balancing – This is normally applied in the designing stage if bottlenecks are pointed out during the root cause analysis.
  • Mistake proofing – It is employed to tune the steps of processes (Abilla, 2010).

Similarities and Differences among the three strategies

The overall differences and similarities between the origin, concepts, theory, approach, process, tools and effects are presented below:

Origin and theory

Though the origin of TQM, lean and six sigma is the same, their relevant concepts have differently developed. Total quality management became a very popular phenomenon in the break of 1990s among both practitioners and researchers. This strategy is time and again connected with the eminent figures in the domain of quality management i.e. Deming and Juran. However, they have not made use of this particular term (Trienekens and et.al., 2005). The success of six sigma in Motorola was one of the chief reasons behind the widespread use of this term and concept in other corporations. In contrast to lean and six sigma, there was no company behind the origin of the word total quality management. A noteworthy disparity between six sigma and lean six sigma is that the former was labeled by Motorola while the latter was labeled by the authors and researchers of the field (Ahire, Golhar and Waller, 2007). Another notable dissimilarity between the two relates to the fact that the earlier one focuses on attaining error free processes while the latter one emphasizes on improvement of process flow and elimination of wastes. The elements of attainment of no errors and removal of waste are also present in TQM, but its primary objective is to increase the satisfaction level of both internal and external customers along with optimal use of resources (Coronado and Antony, 2002).

Process view and approach

The enhancement initiatives in a six sigma program are carried out in a number of areas and at varied levels of intricacy for the purpose of reducing variations. When the discrepancies in a process are mitigated by the team members and thereby the business goals have been achieved, then this enhancement is visualized by the senior managers of the organization. Certain senior level managers are also frequently involved in the performance enhancement projects (Yusof and Aspinwall, 2000). Consequently, this program also garners adequate support from the higher management of the firm as the managers are aware of its economical impact. This can be explained as one of the main reasons for the documented success of this strategy as compared to TQM. On the contrary, Lean is a discipline which emphasizes on the efficiency and speed of process or its flow for the purpose of increasing consumer value (Carlucci, Marr and Schiuma, 2004). Under lean manufacturing, groups are normally formed to bring about the required improvements. Where, lean and six sigma focus on bringing about betterment in performance mainly through projects, TQM on the other hand employs a rather disparate approach. The strategy of total quality management stresses on the participation and commitment of the entire workforce. Like lean and six sigma, TQM also places strong emphasis on processes. The primary goals of the process work in total quality management concept are to uniform and improve the processes alternatively (Breyfogle, 2003).

Conclusion

It can be concluded that with the growing need to satisfy consumers earlier than competitors, companies have to absorb some or the other performance enhancing strategies. In lines with the fable mentioned above it can be argued that a blind men’s vision of the three business improvement strategies will be very similar as the three concepts have many similarities concerning their evolution, tools and methodologies. However, this vision also varies in some aspects mainly in approach and theory. Yet the notions are complementary and especially, lean and six sigma are admirable road maps which can be employed solely or in combination (Folaron, n.d).

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References
  • Agus, A. and Hassan, Z., 2011. Enhancing Production Performance and Customer Performance Through Total Quality Management (TQM): Strategies For Competitive Advantage. Procedia-Social and Behavioral Sciences. 24. pp.1650-1662. Ahern, D. M. and et.al., 2008. CMMII Distilled: A Practical Introduction to Integrated Process Improvement. 3rd ed. Addison-Wesley Professional.
  • Ahire, S. L., Golhar, D. Y. and Waller, M. A., 2007. Development and Validation of TQM Implementation Constructs. Decision Sciences. 27(1). pp.23-56.
  • Anand, G. and et.al., 2009. Dynamic capabilities through continuous improvement infrastructure. Journal of Operations Management. 27(6). pp.444-461.
  • Andersson, R., Eriksson, H. and Tostensson, H., 2006. Similarities and differences between TQM, six sigma and lean. Emerald. 18(3). pp.282-296.
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