Wal-Mart'S Performance Improvement Project

Wal-Mart's Performance Improvement Project

SYS/540

John Murdock

August 20, 2006

Wal-Mart's Performance Improvement Project

Wal-Mart has difficulty developing and implementing a process that can improve the product material quality since there are so many vendors, manufacturers and international companies involved. They need to implement a set of standards that every company needs to adhere to by setting acceptable standards that must be met across the board whether the company is a local business or a foreign company. Most of the material defective products come from overseas. The process that can afford the opportunity to fix this dilemma is the process known as Six Sigma. This method is designed to manage process variations which cause defects. The concept of this process is to take an already established defect variation and use a step-by-step chain of events that will work towards managing variation in order to eliminate the established acceptable defects. The purpose behind selecting this process is because Six Sigma has the ability to provide high-performance, reliability, and value to the products Wal-Mart purchases which offers a better quality product to the customer. The process was originated by Bill Smith while working at Motorola in 1986. The process was initially defined as a metric for measuring defects and improving quality which would set precedence and standardize defective measures for all vendors and suppliers for Wal-Mart.

Six Sigma has been so successful in manufacturing business that it has moved into other industries like insurance, banking, telecommunications, healthcare, software, marketing and construction. Fortunately, for Wal-Mart, this process has not made its debut in the retail business. This opportunity will give Wal-Mart a huge head start over their competitors. The existing metric process that rates an acceptable level of defective manufacturing is below acceptable standards and the result is Wal-Mart is losing customers due to defective materials in the products they purchase. There are six steps involved in the use of Six Sigma.

"Step #1 - Identify the product you create or the service you provide

In other words ... WHAT DO YOU DO?

Step #2 - Identify the Customer(s) for your product or service, and determine what they consider important i.e. Customer Requirements

In other words ... WHO USES YOUR PRODUCT AND SERVICES?

Step #3 - Identify your needs (to provide product/service so that it satisfies the Customer)

In other words ... WHAT DO YOU NEED TO DO YOUR WORK?

Step #4 - Define the process for doing your work

In other words ... HOW DO YOU DO YOUR WORK?

Step #5 - Mistake-proof the process and eliminate wasted efforts using...

In other words ... HOW CAN YOU DO YOUR WORK BETTER?

Step #6 - Ensure continuous improvement by measuring, analyzing and controlling the improved process using

DMAIC - (Define, Measure, Analyze, Improve, Contro/)

In other words ... HOW PERFECTLY ARE YOU DOING YOUR CUSTOMER-FOCUSED WORK?

Step 6(continued): Ensure continuous improvement by measuring, analyzing and controlling the improved process from Step #5" (Winings, 2005)

Six Sigma Methodologies

This process has at least 4 types of methodology to improve existing business processes or create new product design processes. These processes have some areas in common while slightly changing some of the basic phases of the process. The first two are the primary methodologies used and they are DMAIC and DMADV. These two methods include Defining, Measuring and Analyzing, both of which have their own personalities since DMAIC's primary role is to improve existing processes and DMADV creates new product designs that reduce the number of defects. The differences are in the next set of phases which include Improving the process based on analysis, Control the process from its setup through implementation and providing control mechanisms that monitor the process and correct defective processes before they produce them in the product.

Metrics to Monitor Success

According to an article Six Sigma is an essential component of convergent

manufacturing. "The convergent framework blends: lean/JIT Manufacturing techniques; Six Sigma methodologies; Theory of Constraints (TOC) and Learning Organization/Knowledge Management concepts." (EMA, Inc., 2003) This process offers the company a plan that can narrow the scope down to the fastest process with the lowest cost in monitoring the implementation and provide the company with the greatest return for their expenses. The team brainstorms problems that are validated through the analysis phase of the process. The metrics put in place allow the organization to locate priority sources that are enhancing defective merchandise and helps to validate the progress of every supplier and vendor as they implement Six Sigma processes. The graphic below shows the five phases of Six Sigma and how the phases are intertwined with one another to obtain the best results.

(EMA, Inc., 2003)

Some metrics that can be used to ensure that the process is effective can include leading measures in the financial, customer, internal processes and employee learning. In the financial process areas such as cost per unit, cost of poor quality and overall project savings can be measured. In the customer process the top metric would be customer satisfaction. Other areas can include ensuring the product is delivered on time, product quality and safety. Metrics in the organization's internal processes can include supplier quality, cycle time, amount of product shipped and rework hours for defective merchandise. In the employee learning processes the quality of training, lessons learned and total savings due to implementation can be monitored. There are four perspectives that offer the organization a process that will help the Six Sigma team to keep focused on the objectives of the project and will help the suppliers and vendors to buy in on the process.