Benchmarking and Lean Six Sigma to Facilitate Change

Question: Write an essay that demonstrates how both Benchmarking and Lean Six Sigma can be used by organisations to facilitate change in their business processes to enhance and sustain their competitive advantage. Answer: Introduction Quality is a measure of excellence that conforms to requirements and free from defects in a service or product and which meets the standards for a customer. Benchmarking is a method to compare the key metrics of the day to day operation with other companies in the same industry (Marksberry, 2011). This helps the companies to identify how they are performing, how they can improve their processes and systems and in turn become more competitive. Benching marking is a method to understand how to get the best performance in an organization, by the competitor or a different business and information obtained in this process, is used to identify the gaps in the operations of the business. Six Sigma and Benchmarking currently is the practical and cost-effective way to bring in the industry best practices to the company (Ray Das, 2010). Lean Six Sigma and Benchmarking The concept of Six Sigma started in the company Motorola and they are the pioneers in introducing Six Sigma Quality program. Lean Six Sigma is an approach followed by the management for problem-solving and to improve and streamline the processes using different combinations (Angelis Fernandes, 2012). Eliminating redundant and repetitive processes or tasks from operations along the value stream, where tasks can be automated, which requires less space and capital, cost effective and fewer defects is lean methodology. Following this approach, the management information system (MIS) becomes simple and more accurate (S. Reosekar D. Pohekar, 2014). It is a continuous process improvement system which is used in service and manufacturing industry. It is about creating the maximum value for the client using the minimal resources and time. Six Sigma is an approach, developed by Bill Smith an engineer at Motorola in the year 1986 which uses certain tools and techniques to eliminate the defect s from a data-focused approach which drives standard deviation between the mean and nearest specification limit. Simply put Six Sigma concept tries to accomplish zero defects with 3.4 defects in a million occurrences (M., 2015). Together the lean and Six Sigma methodology is a powerful and proven method for business process improvements and increasing the efficiency. The key factors on which the Lean Six Sigma works is customer focus, the value stream mapping ( understanding the flow of the process and how the work gets completed), management and improving the processes and ensuring the smooth process flow. Removing the redundant steps which do not add value to the operation, use the facts to reduce deviation and involve the right skilled people to complete the job and keep improving. Lean Six Sigma is a five-step process to improve the business or operations efficiency and they are DMAIC- Define, Measure, Analyze, Improve, and Control (South, 2005). Define is to find the objective of the improvement and what is the problem statement. Measure is to streamline the process and to find the capability in improving the system. Analyze the data with tools and other specifications and find the root cause of the var iations and Improve and implement the process by working on the defects analyzed by eliminating them. The last step is Controlling the process improvements for better performance (Franchetti Yanik, 2011). Benchmarking is a method to find a measure, a benchmark and it is not a simple process or tool. It is important to have a thorough understanding of the processes, systems and operations of an organisation before using the benchmarking tool. The organisations have strict policies around the information to be procured and whom the practitioners can get in touch with, to get the information. Benchmarking is not about making inquiries to other organisations or documenting their processes and systems. A business should not limit its range in its own industry. It focuses on the industry best practices and works on continuous improvements, knowledge sharing, and information, strives to maintain a cut-throat competition and keeps on adapting to new changes based on the customer choices. It focuses on immaterial actions, inefficient actions and gap activities to accomplish business goals (Raharjo, Hin Chai, Xie, Brombacher, 2010). Business process changes that can be achieved by deploying the Lean Six Sigma techniques are enhancing quality and cost cut back, trim down the inefficiencies in the transactional exercise (Ray and John, 2011). Using this methodology, break the complex process and redesign into simpler processes with negligible variance and waste (Goh, 2014). This process change brings improvement in the client loyalty. The employees learn a new expertise, Lean Six Sigma, which would improve their job performance, with the application of these skills. Many Australian companies have deployed Lean Six Sigma in their operations and moved to another process like sales and production and other areas of the business (Moriarty, 2011). Application of Benchmarking enhances anybusiness processby exploiting industry best practices and then simply measuring the top performance and best practices bring the best results (Delpachitra, 2008). Organisations which have deployed the Benchmarking have increased opportunities tactically, operationally and economically. The Hackett Group is one of the top practitioners of Benchmarking tool and provides this service to various organisations. The companies need, to be honest enough to believe that another company in the same industry is doing better and they need to outdo, using the benchmarking tools (Presley and Meade, 2010). Motorola on applying the Lean Six Sigma principle became a successful organisation with a greater market share of its cell phone brand. The business didnt take any external assistance, but implemented the logic of Lean Six Sigma in their manufacturing process which removed the defects and adapted this process in all other departments and they continuously improved their processes, and sustained and controlled them on a day to day basis (Mandal, 2012). This process helped Motorola save seventeen billion dollars from 1986 to 2008 and Six Sigma became their trademark. It became an exemplary organisation inspiring many other companies to follow the same path. Samsung Electronics Co. is using the Lean Six Sigma tool to enhance its productivity, approaches its products, processes and development of human resources in an innovative way for efficiency and excellence. Since 1971 Samsung is using quality tools and techniques like Total Quality Management, Enterprise Resource Management and finally upgraded to Lean Six Sigma to improve its market position. The Six Sigma projects done by Samsung reduced their defects by 50% from 1999 to 2001. Without Lean Six Sigma there is no improvement and quality, and Samsung endorses this thought. All business examples, manufacturing, services, call centres, software is applicants for Lean Six Sigma (Mo Yang et al., 2007). The hospitality industry irrespective of its size has to be efficient by keeping the costs low, have a competent management and deliver quality services in the constantly changing economy (Kumar Sharma, 2012). Six Sigma and Lean are the proven principles implemented by the industries, example, General Electric, Starwood Hotels and Caesars Entertainment and Lockheed Martin, which have produced an incredible turnaround without compromising on the quality of services and products (Gray Anantatmula, 2009). Lean and Six Sigma methods have been used in the manufacturing industries which gives an impression that it would be not effective in the service industry. In the following part of this paper, the discussion would be on the Lean Six Sigma and Benchmarking principles that can be applied in the hospitality industry and discuss the methods to improve the efficiency of LOT1, Sydney. It is a three level venture that has re-energized the dining and socialising experience in Sydney, Austral ia. It boasts of its full three levels of Italian cuisine, LOT1 combines conventional Italian with a tapas style of dining so that their guests can taste everything on their menu. The principles of lean and Six Sigma have not been much into practice in the hotel industry. Here in this paper, we will see how to use the principles of Lean Six Sigma to make LOT1.1 Sydney cost efficient and profitable and best in class for quality service and defect free. The first step to achieving this would be to identify the problem and define the problem statement, issues in taking orders. Some of the common problems faced are customer service and management. Taking up the orders and overseeing them well is very critical and LOT1 should analyze this puzzle of its day to day operation. Some of the questions which it can think or ask to identify the issues would be, how many customers does LOT1 have on a daily basis and on weekends or holidays, keeping a track of the regular menus ordered and menus w hich are not so popular and if they can be taken off the list (Gupta, Acharya, Patwardhan, 2012) . What are the most lucrative menus and what are the costs and time were taken to make and the profit margin from that menu? Is there a budget for the labour charges and a benchmark when compared to other hotels and restaurants? To check for losses arising from the inventory and sales targets and whether LOT1 is meeting them or not. Some other points to consider are the customer service and thats the key to having happy and recurring customers. We need to ask whether LOT1 is handling its customers efficiently, is there a proper communication in addressing the needs and wants of the customers, understanding their dining experience, were the customers greeted well when they came in and when they left. Collate information on the USP of LOT1, the skills of the staff, good marketing through social media, friends, and other modes of marketing have been engaged or not. Once the issues and the cracks have been identified, then the next step would be to measure the gaps and defects. LOT1 is facing issues in taking orders. A sample data should be collected for a period, which is the core element of Six Sigma. Data should contain the orders details, the correctness of the orders taken and if there are any customizations in order, and if handled well, time is taken to deliver the order (lead time) and customer feedback need to be documented. The data gathered needs to be analyzed and Six Sigma relies on statistical analysis. Usually, the restaurant and hotel owners feel that they dont connect to these services and fear the key performance indicators(KPI), however, the data collected over a stipulated period of time gives a meaningful insight into the gaps and the performance issues (Garza-Reyes, 2015). Now LOT1 can work on the gaps identified and analyzed in their process, right from greeting the customer at the door, their orders, lead time taken to deliver order and custome r delight until the customer has left the place. A value stream map would be useful here to find out the redundant and non-value adding steps and developing a To-be process where the gaps in the performance have been handled. The next step for LOT1 is to improve the process of taking the orders, customer service management and communication by the developing an organization chart and hierarchy and implementing the improvements. Finally, it is the responsibility of the management and the staff to keep the improvements controlled and monitoring them continuously accomplish the goal of the defect free customer service, ordering and aim to get the customer delight. Leadership must devise a plan to overcome management that has been unenthusiastic to buy in Lean Six Sigma logic and perhaps engage new staff in the infrastructure. For the failures or accomplishments that have occurred, management will work out a plan to sustain the achievements and to improve the failures (Worley Doolen, 2 015). Conclusion With the implementation of Lean Six Sigma by Motorola in 1986, there has been a revolutionary change in the thinking on the business whether manufacturing or service are handled with high-quality controls in place and ensure the organisations take pre-emptive methods to prevent or minimize the errors. Adopting the Lean Six Sigma methodology has its set of advantages, which lays stress on measurable goals and implementation of those projects which would produce remarkable results (Salah, Rahim, Carretero, 2010). Six Sigma uses scientific techniques and accurate tools like Minitab and involves everyone in the business, leadership, and the different levels of management. The 5S of Lean-Sort, Straighten, Shine, Standardize and Sustain have proven benefits on an organisation who have implemented them as it gives the organisations a clear picture what needs to be used and what needs to be eliminated (Ray Das, 2010). The Lean 5S are the essential A value stream map would be helpful here t o find out the wasteful and non-value adding steps and developing a To-be process where the gaps in the performance have been handled basics for a business to measure and drive for Kaizen which means to aim for continuous improvements and change for better. 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