samsung six sigma case study

Samsung Supply Chain Case Study – Six Sigma Analysis

Are you interested in understanding how the Six Sigma model can be applied to improve a company’s performance? If so, you might find it helpful to read this case study on Samsung’s adoption of Six Sigma in its supply chain. The case study provides detailed information on how Samsung implemented Six Sigma and its positive impact on the company’s operations and business performance. Read this report to gain insights into how Six Sigma can be effectively used to improve a company’s supply chain.

Introduction

• Samsung Six Sigma Black Belt

Samsung Six Sigma Supply Chain Management

Tailoring of methodologies, supply chain operations reference (scor), lean methodologies, the samsung supply chain management (scm) six sigma, supply chain six sigma application.

Businesses are working toward limiting their operation costs to achieve competitive edge against competitors in their respective industries. One area where quality management has been focused on by organisations is supply chain management, which is considered as a perfect way of managing inventory.

Supply chain management has increasingly received recognition as a strategic means of re-inventing an organisation’s entire business operation and planning (Evans & Lindsay, 2008).

Samsung Group, which manufactures electronic components as well as financial and services corporation, has a complex global supply chain that has in turn integrated advanced planning mechanisms and scheduling. This report highlights on Samsung’s adoption of the six sigma model and how the company has used the model in enhancing its operations and general business performance.

Supply Chain Management Six Sigma Black Belt

The initial course in adoption of six sigma at the Samsung Group is the establishment of the methodology through a training program that lasts for four months. The training program mainly focuses on training and mentoring, and it is referred to as the Supply Chain Management Six Sigma Black Belt (Choi et al., 2012).

As part of the training programme, full-time training is offered for a period of one week each month for four months. This is supplemented by guiding of supply chain management Black Belts as appertains to their selected projects. Prospective employees at the Group have to finish three similar projects before receiving a supply chain management Black Belt full certification.

Leveraging of six sigma within the established human resource belt system enables Samsung to alleviate supply chain management talent shortage. This has been the most significant obstacle in improving the performance of supply chain management.

The anticipation of the Samsung Group is that the supply chain management six sigma will lead to enhancement of performance within the supply chain management function owing to greater understanding of the supply chain in general (Choi et al., 2012).

Samsung equally expects that its move to adopt the supply chain management six sigma will in turn lead to an improved Return On Investment (ROI). The existing training program is structured within Samsung’s Six Sigma Academy with the objective of developing talent, as well as future leaders at the company.

As Bae and Kim (2004) assert, the Group’s establishment of a Six Sigma Academy was done with an aim of educating employees and building up a team of specialists empowered with the ability to solve problems.

Samsung’s Supply Chain Management Business Team drew up the main methodology that was used to develop the supply chain management six sigma at the company.

The eventual six sigma model that was adopted at Samsung was an integration of the various approaches that had been made at different companies. The companies that had successfully adopted and integrated six sigma included General Electric (GE), Honeywell, and DuPont.

GE’s most critical approach in adopting and implementing six sigma was based on tailoring the motivating methodologies in as far as specific needs together with characteristics of the business units were concerned.

Samsung’s Business Team focused its research on GE’s business, which in turn has taken six sigma’s process innovation generic methodology. GE has tailored the methodologies in such a way that they reflect specific needs in as far as product development activities and system plan and implementation are concerned.

GE medical system’s definition, measurement, analysis, design, and verification (DMADV), in particular, attempted to take into consideration the process redesign and process management within its six sigma model.

According to Hammer (2002), GE’s method and procedure attempted to move beyond the DMAIC that was originally designed for the development of high-quality products. The GE’s definition, architect, build, testing, and launching (DABTL) is an approach of the six sigma model that was designed for the development of systems.

Samsung’s main reason for analysing DuPont’s six sigma approach and design was based on the company’s combination of its six sigma principles through the SCOR model. The SCOR model acts as a good model for enhancing communication amongst players in the supply chain management. The most integral management processes of SCOR include plan, source, make, as well as deliver, and return.

Burgess and Singh (2006) highlight how important it has been to use the SCOR framework in undertaking supply chain analysis. According to Burgess and Singh (2006), DuPoint’s six sigma utilizes the “function deployment tool (QFD)” as a quality tool for customizing services and processes to meet customer specifications.

Samsung Business Team’s interest and focus on Honeywell mainly bordered around the latter’s extensive and successful application of lean operation methods. Honeywell’s successful development and eventual ownership of the Six Sigma Plus, also known as DMAIC, was the main influence behind Samsung’s decision to borrow a leaf from the firm’s approach.

DMAIC model utilizes functions of lead manufacturing together with six sigma concepts. Some of the commonly used lean manufacturing tools are the value stream and thought process maps (Flight Global, 2003).

The Samsung Business Team arrived at a decisive conclusion after analyses of the different six sigma approaches and models. This conclusion consequently led to the development of the supply chain management six sigma methodology at the Group.

SCM projects to involve both design and improvement

Often, six sigma projects target to improve the performance standards of an existing system or redesigning the processes and systems. When talking about six sigma considerations and terminologies, redesigning of systems and processes are addressed through defining, measuring, analysing, improving, and controlling; DMADOV in short (Yang & El-Haik, 2009).

On the other hand, improving the performance levels of the existing systems is often addressed through defining, measuring, analysing, improving, and controlling, referred to in short as DMAIC.

According to the estimates by the Samsung Business Team, it anticipated that close to 75 percent of the supply chain management projects would involve redesigning, with the remainder of the projects focusing on process improvement.

After the above findings by the Business Team, Samsung resolved to adapt the extant approaches of its six sigma model, where both improving and redesigning processes were settled upon.

With the anticipated mix of projects as highlighted, this new approach pursued by the company closely supported process redesign compared to improving the processes, although it continued to incorporate other relevant elements that targeted process improvement.

This methodology proved to be inadequate in offering the necessary support that was required at Samsung in order to execute the whole range of the supply chain management projects (Yang et al., 2007). DMADOV’s origins are from the design of a product, with the basis of supporting projects within the supply chain.

However, its major variation is in the fact that the project team’s tasks would be to give specifications on how a suggestion on improvement would eventually be realised after conducting analyses. This is opposed to expecting the project team to optimise or focus on design as the case is with DMADOV (Yang et al., 2007).

System Development Option

It is common to realize successful system management following pursuant of six sigma projects under supply chain management. This calls for a new approach to be taken to facilitate processes that would realize successful system building.

Nevertheless, most projects undertaken to revolutionize supply chain management call for changes to be done in the current system. Consequently, it is important to have an approach in hand such that it is possible to come up with an alternative enablement activity that can see system implementation take effect.

Samsung pursued the DMAEV approach, where five design parameters including process, organisation role and responsibility, operation rule and policy, as well as system, and performance measure were incorporated within the six sigma model.

Other critical aspects that were also incorporated included the supply chain management-related methods of investment value analysis and process modelling, as well as the map techniques of the value chain.

Define phase

The phase seeks to name the entire project, with an inclusion of the problems that require being tackled, the goal and scope of the project, together with the expected outcomes and the project schedule (Kumar, Wolfe & Wolfe, 2008).

The initial step is identification of critical issues via the customer’s voice (VOC), together with the business’ voice (VOB). An analysis of the supply chain management’s related processes is also undertaken. As a result, the customer’s critical to quality characteristic (CTQ) is identified, while also determining the CTQ-dependent variable.

Measure phase

This phase determines the CTQ-dependent variable, establishes a different target level, while also finding the important explanatory variables. Other specific indicators are also identified after verifying the CTQ-dependent variable.

The indicators can substitute the dependent variable. The current CTQ-dependent variable is then measured before an enhanced target level of the same index is established. The potential problem causes of each of the five parameters are also deduced (Kumar & Sosnoski, 2009).

Analyse phase

At this stage, the hypotheses of the potential problem causes are generated and effectively evaluated in order to reject or prove them. Evaluation of the hypotheses considers both quantitative, as well as qualitative methods. Various statistical tools are used in the quantitative analysis, and they include ANOVA correlation, and Pareto analysis (Kumar, Strandlund & Thomas, 2008).

Qualitative analysis, on the other hand, makes use of process mapping, value stream maps, as well diagrams that reflect cause and effect. The objective of this phase is to decide on the vital few variation causes.

Enable phase

The various ways of improving the ‘as-is’ are identified in this phase, with a ‘to-be’ plan also drawn out. The use of qualitative function deployment (QFD) is undertaken at this juncture in order to pick on the subjects for improvement as appertains to the vital few variation sources. Detailed action items are also elicited for purposes of achieving improvement.

Verify phase

The final phase in this process seeks to establish a test plan, with the main objective of validating and verifying the solutions selected in the previous ‘enable’ phase (Kumar & Sosnoski, 2009). The change management plans, as well as control mechanisms are developed here before operationalisation of the optimal solution.

Investigations of the internal, as well as external business environments formed the basis of the VOC/VOB analysis at Samsung. A major aspect of the initial stages of the application involved identifying the project’s clients.

The external business environment turned out to be challenging as the devaluation of the local currency, the won, as well as a rise in the prices of crude oil offered challenges to the business operations for the company (Miltenburg, 2005). Additionally, Samsung endured a challenging moment as operation costs, particularly those related to holding surplus inventory, affected the firm’s profitability.

The company identified its business units, including planning and administration, top management, sales, purchasing, production, transportation, and global operation centre as the primary clients of the project.

The definition stage also involved identifying inefficiencies and problems that affected the supply chain management business processes. This involved production-related activities such as manufacturing and material purchasing, global operation activities such as weekly production plan, order fulfilment, and inventory management.

The sales activities included order management, forecasting, transportation, sales, and transportation. Up to eight inefficiencies were realised. They included lack of visibility in all the critical areas of process replenishment, forecasting of inventory and demand, packing and shipping, as well as weekly production planning.

From the above analysis of the VOC/VOB process, two probable CTQs were drawn out. They centred on demand stabilisation on the one hand, and inventory stability on the other hand (Miltenburg, 2005). Samsung evaluated the priority of the two aspects elicited in line with the VOC/VOB findings of the process analysis. This saw the development of a management process pegged on the inventory being settled upon as the CTQ aspect.

The surplus inventory rate’s baseline level was established at over 10 percent after making the appropriate definitions. This led to the establishment of a new target, which was put at 6 percent. The new changes required that Samsung reduces its surplus inventory by 42 percent.

Five design parameters that included operation rule and policy, process, performance measure, system, as well as organisational responsibilities and roles were established as the probable root causes of variation (Miltenburg, 2005).

A consideration of the project owners that also involved client groups’ representatives eventually settled on seven causes of variation. These seven causes encompassed the three critical parameters of role and policy, process, and system. Thus, the three parameters formed part of the variation sources.

The selected variation sources had the respective data collected in order to enable the firm undertake an extensive data analysis. The results included both qualitative and quantitative analyses, including the inclusion of statistics, graphs, Delphi method, benchmarking, document review, and on site visit.

According to the data results that were obtained from the analyses, three variances exceeded the surplus inventory level, which was also established as the standard excess inventory management (Miltenburg, 2005). The factors were considered to have had a significant effect on the CTQ.

Out of the three vital few variance factors, Samsung came up with three probable solutions as a way of improving the supply chain management. Each solution had extensive improvement subjects that were elicited with regard to the established five parameters. The entire information was formulated via a quality function deployment, abbreviated as QFD.

Samsung thereafter used benchmarking to develop the three probable solutions of what it anticipated in solving the challenges it faced. The company determined how highly relevant a web-based user interface that had been designed for purposes of managing inventory turned out to be. This was with regard to the improvement subjects that had been identified in the quality function deployment.

Necessary changes were eventually designed and implemented using optimal solution. The basis for this included the five parameters that had previously been identified. An illustration on the ‘process’ parameter involved identification of all the processes that were listed for purposes of requiring improvement.

DABTL was employed in the case of the ‘system’ parameter in order to identify the system requirements, as well as architect, build, conduct tests, and operationalise the web-based system (Choi et al., 2012).

Pilot tests were carried out in two stages within the company in a selected business unit. The initial stage focused on providing proof concerning the applicability of processes that had newly been proposed, roles and responsibilities, rules and policies, as well as performance measure. The system’s pilot test did not feature in this initial stage.

In the second stage, all the improvement subjects that were linked to the previously established five parameters were piloted (Choi et al., 2012). The results of the pilot test saw a reduction in the range of 37 percent in as far as the level of the surplus inventory was concerned.

The actual changes in figures reduced to 6.5 percent from a high of 10.4 percent. The drop in inventory levels fell short of the anticipated target, but it saw associated costs drop to $1.9 million from a previous high of $2.7 million.

Samsung later developed a control and change management plan. The control plan comprised of performance indicators, such as inventory consumption rate, the methods that needed to be followed to control, the respective business unit that was responsible for every of the individual factor, and the necessary actions required for unexpected events.

In particular, the change management took into consideration important aspects, such as the critical success factors needed for systems to register success, training, communication among different groups, incentive systems, and ways through which potential conflicts could be resolved.

Samsung Group’s adoption and eventual implementation of the supply chain management six sigma was purposely meant to improve process and quality performance at the company. The company equally sought to synchronise its value chain with regard to inbound logistics and customer services, as well as sales in general. Samsung has attained growth and high levels of innovation by implementing the six sigma model.

The implementation of the six sigma model within the company’s supply chain management has seen Samsung reduce and eliminate costs that were previously associated with holding surplus inventory in some cases.

Another critical focus of the company even as it implemented the six sigma model was to produce workers with the highest skills and knowledge that could enable the company compete effectively in the market with its rivals. This has in turn created a deep knowledge reservoir in the company, which is used to equip employees for purposes of enhancing their performance going forward.

Burgess, K., & Singh, P. (2006). A proposed integrated framework for analyzing supply chains. Supply Chain Management: An International Journal, 11 (4), 337-44.

Choi, B., Kim, J., Leem, B., Lee, C., & Hong, H. (2012). Empirical analysis of the relationship between Six Sigma management activities and corporate competitiveness: focusing on Samsung group in Korea. International Journal of Operations & Production Management, 32 (5), 528-550

Evans, J. R., & Lindsay, W. M. (2008). Managing for quality and performance excellence, 9 th edition . Mason, OH: Thomson

Flight Global (2003). Honeywell proves benefits of strong business focus . Web.

Hammer, M. (2002). Process management and the future of six sigma. MIT Sloan Management Review, 43 (2), 26-32.

Kumar, S., & Sosnoski, M. (2009). Using DMAIC Six Sigma to systematically improve shopfloor production quality and costs. International Journal of Productivity & Performance Management, 58 (3), 254-273.

Kumar, S., Strandlund, E., & Thomas, D. (2008). Improved service system design using Six Sigma DMAIC for a major US consumer electronics and appliance retailer. International Journal of Retail & Distribution Management, 36 (12), 970-994.

Kumar, S., Wolfe, A. D., & Wolfe, K. A. (2008). Using six sigma DMAIC to improve credit initiation process in a financial services operation. International Journal of Productivity and Performance Management, 57 (8), 659-676.

Miltenburg, J. (2005). Manufacturing strategy: how to formulate and implement a winning plan, second edition . New York, NY: Productivity Press.

Yang, H. M., Choi, B. S., Park, H. J., Suh, M. S., & Chael, B. K. (2007). Supply chain management six sigma: a management innovation methodology at the Samsung Group. Supply Chain Management: An International Journal, 12 (2), 88 – 95.

Yang, K., & El-Haik, B. (2009). Design for six sigma: a roadmap for product development . New York, NY: McGraw-Hill.

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How Six Sigma and the DMAIC Process Made Samsung Into an Industry Leader

Updated: September 10, 2023 by Lori Kinney

With strategic implementation, Six Sigma can do wonders for an organization. The methodology can drastically improve processes, cut down on waste, and even help provide better results in the design and R&D of new products. Samsung found that it was having issues with all of the above and, in 1999, conducted a complete overhaul of the way it did business in order to make major improvements and bring its company into the future.

When Samsung introduced the Six Sigma methodology into its organization, it started with one project, but that quickly evolved into thousands within a couple of years. Each of these projects utilized the Six Sigma tool known as DMAIC . The company quickly saw the value of Six Sigma and this tool and worked towards incorporating it into every aspect of its operations in order to become the industry leader that it is today.

Samsung Had a Problem

Samsung Electronics Company began in Seoul, South Korea, in 1969. Its first product to enter the market was a television receiver in 1971. Throughout the first thirty years of its existence, the organization incorporated a wide variety of tools and techniques to improve. Some of these included total quality control, product data management, customer relationship management, and supply chain management.

By 1999, however, Samsung was finding large quality variations across several products. Not only that, but they were finding the same defects occurring repeatedly. Excessive quality costs related to failures were being reported, and there was an insufficient amount of unified information for productivity and quality.

It was concluded by Samsung that the keys to making improvements in these areas would be focusing on statistical and scientific approaches to product quality, eliminating waste from processes, and developing a system of continuous learning. In order to make these changes, a complete overhaul would be necessary. A contract was made in 1999 between Samsung SDI and Six Sigma Breakthrough, Inc. This one-year contract for $3.4 million was meant for SSBI to help integrate Six Sigma into every area of Samsung SDI that could be helped.

The process began towards the end of 1999 and into the beginning of 2000 with the training of Samsung’s management and other employees that would be responsible for the deployment of the new Six Sigma program.

Samsung Expanded its Use of Six Sigma’s DMAIC Process

Samsung’s integration of Six Sigma expanded to utilize the Six Sigma DMAIC process in manufacturing and the design stage of developing new products. This process is a cornerstone of the Six Sigma method and involves five phases. These phases are: Define, Measure, Analyze, Improve, and Control.

During the Define phase of DMAIC, the problem to be addressed is defined. Also defined are the goals of the project, areas for improvement, and the requirements of the customer. Six Sigma tools implemented during this phase include Voice of the Customer and value stream maps.

In the Measure phase, the primary activity involves measuring how the current process is performing in relation to the expectations of customers. Six Sigma tools utilized during this phase include process maps, capability analysis, and Pareto charts. With a process map, the activities that are part of the process are recorded. In capability analysis, the ability of the current process to meet requirements is assessed. A Pareto chart is used to analyze the frequency of issues.

In the Analyze phase of DMAIC, the root causes are found through analysis of the process. This is accomplished using Six Sigma tools like root cause analysis, failure mode and effects analysis (FEMA), and a multi-vari chart. In root cause analysis, the actual root cause of problems is found. With FEMA, product, service, and process failures are identified. A multi-vari chart detects different types of variations that are occurring within a process.

The Improve phase of DMAIC is the actual improvement effort that is implemented. This involves actually addressing the root causes that were determined during the Analyze phase and eliminating them. Six Sigma tools typically used during this phase include design of experiments (DOE) and Kaizen events. The use of DOE aims to solve problems derived from complex processes and systems where there may be several factors that are influencing the outcome and where isolation of one variable from the others is impossible. A Kaizen event is typically a short-term event that serves to introduce rapid change by putting a focus on a narrow project with group involvement directed towards achieving a positive outcome. The final phase of DMAIC is Control, and its purpose is to lock down the improvements that have been made so that the issues do not occur again. Six Sigma tools used during this phase include statistical process control, mistake proofing, 5S, and the use of a control plan. Statistical process control is a tool that monitors process behavior. Mistake proofing serves to make errors immediately detectable or even impossible. 5S is a tool that creates visual control in a workplace, and a control plan documents what is needed to maintain the improvement of a process.

After bringing the DMAIC process to new product development and manufacturing, Six Sigma was used for transactional purposes to improve Samsung’s internal and external business and support services. This meant addressing what had become critical customer interactions and needs. The Six Sigma deployment extended even further into the development of Sigma Park. This was a worldwide intranet site that united all of Samsung’s facilities. It provided reference materials, opportunities for benchmarking, and Six Sigma project enhancement when projects extended across several countries.

Within three years of deployment, the number of Samsung employees who were accomplished enough in Six Sigma methodology to achieve either Master Black Belt, Black Belt, or Green Belt status reached over 15,000. This accounted for one in three Samsung employees. By 2001, Samsung had doubled down on Six Sigma to the point that a total of 3,290 Six Sigma projects had been completed within the organization by the end of the year.

The Outcome Was Incredible

Implementing Six Sigma led to a whole slew of financial benefits for Samsung. By 2002, cost savings, increased sales profits, and new product development all grew to a total of 1.5 billion dollars. The Six Sigma projects conducted between 1999 and 2001 also led to a reduction in defects by 50%. Earned net income increased to a total of $2.2 billion on $24.4 billion in total revenue. Samsung’s debt-to-equity ratio became lower than any company operating at the same level, and its operating profit ratio exceeded that of any of its competitors.

At the time that Samsung was implementing these changes, there was a downturn in the world economy. Despite this downturn, Samsung was able to report an operating profit of 8.5%. Credit for this ability to maintain a significant profit is due to the integration of Six Sigma into its processes.

With its Six Sigma overhaul, Samsung became one of the leading electronic manufacturing companies in the world. Its achievements were recognized by Business Week magazine, which named Samsung number one in its 2002 information technology guide. Samsung’s improvements also changed the perception of the company on the world market, leading it from being nearly unknown in the United States to the U.S. accounting for 37% of Samsung’s total yearly sales.

Six Sigma also changed the culture at Samsung, which has been a major factor in the organization’s ability to continually improve since. By bringing Six Sigma into the way it does business, Samsung has made it so that the main motivator for employees is delivering quality to customers. Employees at Samsung credit Six Sigma’s emphasis on quality for driving the organization’s profit growth, increase in customer satisfaction, higher sales, and ability to cut costs.

5 Best Practices When Incorporating Six Sigma Into an Organization

A flattening of Samsung’s organizational structure was necessary in order to make a complete overhaul of the company’s operations using Six Sigma. Whether a company is looking toward having Six Sigma improve all aspects of how it operates or opts to focus on just one area of the business, some key practices need to be upheld. Samsung credits the following best practices for its initial and continued success with Six Sigma:

1. Gain support from top management

A key factor in success when working with Six Sigma in your organization is having support from top management. Running a Six Sigma project requires the allotment of dedicated resources toward the cause, and this means top management will need to give approval for the use of these resources. Doing so will keep the project on target as well as do a great deal toward convincing other employees to give their full support to maintaining the integrity of the project as well.

2. Employee acceptance and implementation

Making a Six Sigma project work will require that everyone involved is on board. Include any employee who is working with the system. The desired results come through proper training as well as making the employees accountable for the project’s success. Regular communication and the sharing of success stories will also help keep employees enthusiastic about the program. It will also be necessary to not divert employee attention away from the Six Sigma project with other tasks that are outside of the project parameters.

3. Have all innovative and infrastructure activities linked with the program

This really applies only to organizations that are using Six Sigma in every aspect of how they choose to do business, but it is a key factor in Samsung’s phenomenal success. Samsung chose to use Six Sigma in all areas of decision-making, including the R&D of new products. This ensured that the changes that the organization was making to its processes would maintain throughout its efforts to innovate long into the future and that improvements made would not be undone in the manufacturing of the company’s next exciting products.

4. Accuracy and fairness in the evaluation of projects

In order to properly track the effects that Six Sigma was having on the company, Samsung made a practice of accurately and fairly evaluating all of its Six Sigma projects. This openness to the results allowed the organization to have a real sense of how much true improvement was coming from using the Six Sigma method and led to the organization utilizing the method on thousands of improvement projects. By being transparent and accurate with its data, Samsung was able to get the support needed to weave Six Sigma into every part of its operations and transform the company into the industry leader that it has become.

5. Recognize and reward employees

By recognizing and rewarding employees that had an impact on Six Sigma projects, Samsung was able to maintain support and enthusiasm for the program. Showing your employees their value and how integral they are to the success of these projects will not only go a long way toward the project’s outcome but will be a key factor in their active involvement in further improvement efforts.

Samsung’s Integration of Six Sigma Made It a Global Industry Leader

Samsung was already a very successful company before its adoption of the Six Sigma method, but the organization had its share of problems. Once it realized that these problems were holding the organization back, a complete overhaul of its operations transpired over the course of thousands of Six Sigma projects in just a couple of years. The changes to the company as a result of these Six Sigma projects made Samsung a worldwide leader in the electronics industry. Whether a company is a massive one like Samsung or a small mom-and-pop shop, all organizations can look to Six Sigma as a proven system for quality improvement.

About the Author

Lori Kinney

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Six Sigma in Electronics Company: A Case Study on Samsung

Six Sigma is a method that provides organizations equipment to improve the capability of their business procedures. This increase in performance and decrease in process variation lead to defect reduction and enhancement in profits, employee morale, and high quality of product or service. Six Sigma quality is a term normally used to indicate a process is well in control. Electronics have become an important part of human life. Electronics is used every work done by the human being. cooking food, health, in driving, in watching and many other things you will see the existence of electronics around. in this paper we will discuss about the six sigma application in samsung.

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Six Sigma (SS) methodology is nowadays one of the most used approaches in the Quality Management field since its benefits coming from the improvement of the process outputs quality by identifying and removing the causes of defects and variability in manufacturing and business ...

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Please note you do not have access to teaching notes, supply chain management six sigma: a management innovation methodology at the samsung group.

Supply Chain Management

ISSN : 1359-8546

Article publication date: 20 March 2007

This paper seeks to introduce a six‐sigma based methodology for the SCM domain which was developed and has been used in Samsung.

Design/methodology/approach

The paper provides a detailed description of how and why a six‐sigma‐based methodology for the SCM domain was developed in Samsung and presents a real industry case to illustrate the usage of the methodology.

In Samsung, the effort and investment in synthesizing SCM and six sigma, and developing a unique six‐sigma‐based methodology to improve its SCM operation, have turned out to be fruitful. The Black Belt program has produced highly qualified and talented SCM specialists, who are currently training the methodology to members in their organizations and leading SCM projects. SCM projects are being prepared and conducted in a more disciplined way and their outcomes are continuously monitored and shared through the company's repository.

Research limitations/implications

To generalize its usefulness, the methodology needs to be applied to the SCM projects of those companies whose organizational and cultural contexts are different from those of Samsung. In addition, the overview of an illustrative SCM project presented in the paper is brief due to space limitations.

Practical implications

Today, SCM is increasingly recognized as a strategic way to innovate a company's business operation. This paper shows that a methodology such as Samsung's SCM six sigma can be the key to conducting SCM projects in a more disciplined way and for fruitful outcomes.

Originality/value

The paper introduces a unique six‐sigma‐based methodology for the SCM domain which has been developed and applied in a leading global manufacturing, financial, and services conglomerate. This methodology could be adapted by other companies for their SCM projects to increase the likelihood of project success.

• Supply Chain management
• Project management

Mo Yang, H. , Seok Choi, B. , Jin Park, H. , Soo Suh, M. and Chae, B.(K). (2007), "Supply chain management six sigma: a management innovation methodology at the Samsung Group", Supply Chain Management , Vol. 12 No. 2, pp. 88-95. https://doi.org/10.1108/13598540710737271

Emerald Group Publishing Limited

Copyright © 2007, Emerald Group Publishing Limited

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Six-Sigma Model: Samsung Supply Chain Management Case

Methodology, works cited.

This article discusses how Samsung Company has systematically developed a unique six-sigma model for running its supply chain management. The author traces the evolution and growth Samsung from the 1930s to present. According to the author, Samsung’s investment in the six-sigma model of supply chain management has led to its exponential growth in the last few years. In the second part of this article, the author provides a detailed discussion of how supply chain management operates using the six-sigma model.

The third section provides a summary of how the six-sigma technique has transformed the entire operations of Samsung Company. The last section draws conclusions on the application of six-sigma methodology to improve supply chain management activities.

The author of this article aimed at demonstrating how Samsung has used the six-sigma model to modernize its supply chain management. Six-sigma technique applies a systematic procedure of defining, gauging, scrutinizing, developing, and controlling supply chain management. Six-sigma has boosted Samsung’s integrated system of identifying and monitoring all its ventures beyond their achievement. This ensures sustainability of the improvements made in the supply chain management. Samsung has significantly improved the capacity of its workers to implement supply chain management initiatives using six-sigma approach.

For example, “its colored belt system has clearly delineated levels of competency; thus, it has helped in managing people in a differentiated way from the human resource perspective” (AMR 2). The six-sigma model applied by Samsung was developed through extensive research on various supply chain management techniques. The second component of Samsung’s six-sigma model has a set of principles that guides its implementation.

In writing this article, the author used secondary sources such as books and journal articles that discuss supply chain management techniques. The author analyzed the growth trends of Samsung to determine the reasons for its successful growth in the last few years. In addition, the author has applied a case study methodology. In this case, the author has examined how the Samsung has improved its supply chain management using six-sigma approach (AMR 11).

The article reveals that six-sigma methodology has the capacity to improve supply chain management services. Another finding is that Samsung Company has increased its sales volume, decreased its inventory and distribution costs by adopting the six-sigma technique in its supply chain management. Moreover, “the article reveals that six-sigma and supply chain management are among those techniques that facilitate process and quality improvement, and synchronization of a company’s value chain, from inbound logistics to sales and customer services” (AMR 10).

This article has shown the journey of Samsung to success and has emphasized the importance of an efficient supply management system. The author has clearly demonstrated that Samsung’s growth in the recent past is because of its unique adoption of a superior supply chain system that integrates both supply chain management and six-sigma technique (Kiling 7). This article also reveals that contemporary innovations such as six-sigma technique are indispensable tools for streamlining the management and operations of a company. The success of Samsung has motivated the inventors of six-sigma to mentor several specialists on how this technique works.

With the development and propagation of the six-sigma technique, many companies have a great potential to improve their supply chain management. Consequently, sophisticated supply chain management techniques should be developed to improve the operations of various companies.

AMR. The AMR Research supply chain top 25 for 2005. 2005. Web.

Kiling, Kelly Tatum. SCM Six Sigma in Samsung.  2013. Web.

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EduRaven . 2022. "Six-Sigma Model: Samsung Supply Chain Management Case." January 30, 2022. https://eduraven.com/six-sigma-model-samsung-supply-chain-management-case/.

1. EduRaven . "Six-Sigma Model: Samsung Supply Chain Management Case." January 30, 2022. https://eduraven.com/six-sigma-model-samsung-supply-chain-management-case/.

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EduRaven . "Six-Sigma Model: Samsung Supply Chain Management Case." January 30, 2022. https://eduraven.com/six-sigma-model-samsung-supply-chain-management-case/.

Implementing Lean Six Sigma in Supply Chain Management

• First Online: 31 August 2018

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• Souraj Salah 3 &
• Abdur Rahim 4  

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SCM is essential for any company in order to be able to survive the increasing pressures of global competition. There have been continuous changes in the manufacturing and service markets across the world which caused the SC members to reassess their effectiveness individually and as a whole. SCM can utilize the QM concepts as well as the LSS tools and CI principles to achieve high levels of customer satisfaction regarding cost, quality, and delivery. Researchers considered the integration of Lean and Six Sigma with SCM. This chapter extends the previous works and proposes the implementation of LSS in SCM.

• Supply Chain Management (SCM)
• Lean Six Sigma
• Continuous Improvement (CI)
• Quality Management (QM)
• Just-In-Time (JIT)
• Value Stream Mapping (VSM)

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This chapter is mainly prepared based on our published work: Salah, S., Rahim, A., and Carretero, J. A. (2011) Implementation of Lean Six Sigma (LSS) in supply chain management (SCM): an integrated management philosophy. Int. J. Transitions and Innovation Systems , Vol. 1, No. 2, pp. 138–162.

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Salah, S., Rahim, A. (2019). Implementing Lean Six Sigma in Supply Chain Management. In: An Integrated Company-Wide Management System. Springer, Cham. https://doi.org/10.1007/978-3-319-99034-7_6

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Six Sigma Case Study: Everything You Need to Know

Explore the field of Six Sigma Case Studies in our comprehensive blog. From defining the methodology to real-world applications, our 'Six Sigma Case Study: Everything You Need to Know' blog sheds light on this powerful problem-solving tool. Uncover success stories and learn how Six Sigma can drive efficiency and quality improvements in various industries.

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By analysing such case studies, one can gain insights into the successful application of Six Sigma in various industries and understand its impact on process improvement. Read this blog on Six Sigma Case Study to learn how real-world businesses have achieved remarkable process improvement and cost savings. 

Table of Contents  

1) Understanding Six Sigma Methodology 

2) Six Sigma Case Study 

a) Improving customer service 

b) Improving delivery efficiency 

3) Conclusion 

Understanding Six Sigma Methodology

By applying statistical analysis and data-driven decision-making, Six Sigma helps organisations identify the root cause of problems and implement effective solutions. It emphasises the importance of process standardisation, continuous improvement, and customer satisfaction. With its focus on rigorous measurement and analysis, Six Sigma enables organisations to drive efficiency, reduce waste, and deliver exceptional products and services. The methodology follows a step-by-step process called Define, Measure, Analyse, Improve, and Control (DMAIC). These five phases are briefly explained below: 

a) Define: The project goals and customer requirements are clearly defined in this phase.  

b) Measure: In this phase, data is collected to understand the process's current state and identify improvement areas.  

c) Analyse: This phase focuses on analysing data to determine the root cause of defects or variations.  

d) Improve: This phase involves implementing solutions and making necessary changes to eliminate the identified issues.  

Six Sigma Case Study  

In this section we discuss two Six Sigma Case Study that will help you understand and use it better.  

Case Study 1: Improving customer service  

This Six Sigma Case Study will focus on a telecommunications company facing significant customer service challenges. The issues included long wait times, frequent call transfers, unresolved issues, and many more. The company decided to apply Six Sigma methodologies to enhance customer satisfaction.  

a) Define phase: Using the DMAIC approach, the team began by defining the problem: long wait times and inefficient call handling. They set a goal to reduce average wait time and increase first-call resolution rates.  

b) Measure phase: In this phase, data was collected to analyse call volume, wait times, and reasons for call transfers. This helped identify bottlenecks and areas for improvement.  

c) Analyse phase: During this phase, the team discovered that inadequate training and complex call routing were key contributors to the problems. They also found that certain product issues required better resolution protocols.  

d) Improve phase: In this phase, targeted solutions were introduced and implemented to address these issues. The team revamped the training program, ensuring agents were well-trained and equipped to handle customer inquiries. They simplified call routing and introduced automated prompts for quicker issue resolution.  

e) Control phase: Finally, monitoring systems were established in the control phase to track key metrics and ensure sustained improvements. Regular feedback loops were implemented to identify emerging challenges and make necessary adjustments.  

The results were exceptional. Average wait times were reduced by 40%, and first-call resolution rates increased by 25%. Customer satisfaction scores improved significantly, leading to increased loyalty and positive word-of-mouth.  

This Six Sigma Case Study highlights how Six Sigma methodologies can drive transformative improvements in customer service. By focusing on data analysis, process optimisation, and continuous monitoring, organisations can achieve outstanding outcomes and deliver exceptional customer experiences. 

Understand the in-depth process of Six Sigma with our Six Sigma Yellow Belt Course . Join now!  

Case Study 2: Improving delivery efficiency

a) Define phase: The business used the Voice of the Customer (VoC) tool to understand customer needs and expectations. They identified prompt delivery, correct product selection, and a knowledgeable distribution team as crucial customer requirements. 

b) Measure phase: The team collected data to evaluate the problem of slow delivery. They discovered that their Order Fulfillment Cycle Time (OFCT) was 46% longer than competitors, leading to customer dissatisfaction.  

c) Analyse phase: The team brainstormed potential causes of slow delivery, including accuracy of sales plans, buffer stock issues, vendor delivery performance, and manufacturing schedule delays. They conducted a regression analysis, revealing that inadequate buffer stock for high-demand products was the main issue affecting delivery efficiency.  

d) Improve phase: The distributor implemented a monthly demand review to ensure that in-demand products are readily available. They emphasised ordering and providing customers with the specific products they desired.  

e) Control phase: The team developed plans to monitor sales of the top 20% of bestselling products, avoiding over or under-supply situations. They conducted annual reviews to identify any changes in demand and proactively adjust product offerings.  

By applying Six Sigma Principles , the plumbing product distributor significantly improved its delivery efficiency, addressing the root cause of customer dissatisfaction. Prompt action, data-driven decision-making, and ongoing monitoring allowed them to meet customer expectations, enhance its reputation, and maintain a competitive edge in the industry. This case demonstrates the power of Lean Six Sigma in driving operational excellence and customer-centric improvements. 

Take the next step in your professional development and boost your career by joining our Six Sigma Green Belt course .  

Conclusion  

We hope this blog gives you enough insights into the Six Sigma Case Study. This blog showcased the effectiveness of its methodology in driving transformative improvements. By applying DMAIC and using customer insights and data analysis, organisations have successfully resolved delivery inefficiencies, improving customer satisfaction and operational performance. The blog highlights how Six Sigma can be a powerful framework for organisations seeking excellence and exceptional value. 

Learn the six-sigma methodology to achieve business objectives with our Six Sigma Certification Training today!  

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Samsung Six Sigma Case Study

3. Analyze For the selected Xs, data was collected over a period of time and for each data point, a detailed data analysis (both quantitative – graphs, statistics and qualitative – bench marking, Delphi method, site visits) was conducted. Based on this data analysis results, three Xs - standard for managing excess inventory, recording past surplus inventory, and web user interface design to handle inventory management – came up as vital few Xs that were considered to affect the CTQ-Y significantly. 4. Enable For each vital X, a solution or course of correction was thought of to improve the current SCM. So three vital Xs led to three possible actions. Further, for each action/solution detailed improvement plan was drawn based on five design …show more content…

Supply chain management and six sigma are among those techniques that aim for synchronization of company’s value chain, from inbound logistics to sales and customer services via process and quality improvements. At Samsung, SCM and six sigma are two main enablers for group’s management, innovation and growth. Samsung realized that there is noteworthy room for improvement in its Supply chain operations. Thus this effort was made to synthesize the SCM and Six sigma and thus develop a unique six sigma based methodology to improve its SCM operations. Samsung’s effort & investment has turned out to be productive. The SCM six sigma Black Belt program has created highly qualified & talented SCM specialists, who are currently training this methodology to other associates in their organizations and leading SCM projects. SCM projects are being organized and conducted in a more disciplined manner and their results are continuously monitored & shared through Samsung’s intranet repository for six sigma. Samsung’s effort for global optimum is continuing & SCM-six sigma is projected to play and pivotal …show more content…

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Advantages And Disadvantages Of Efqm

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Lenovo Essay

Competitive strategy is a suit of methods and action sequence deliberately planned and put into place by companies in the face of market competition. This seems to be a clear way of keeping their market shares, expanding sales and managing the product lines to deliver desired results. The corporate world often needs some sorts of solid strategies considering the trends of the market competition. Beyond the issues of quality and distribution, companies often need to plan ahead and protect their market share in the sale.

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These are organizational procedures, systems, as well as, other interactions planned to produce a project or service (Spector, 2013, p. 6). In ASDA case, in order to make changes in regard to the poor quality and customer satisfaction, Archie could utilize and implement a total quality management process. Additionally, he could use a balance score card and run operations lean so that there would be a solid balance between the financial objectives and the internal/ external business processes. The balance between non-behavioral and behavioral elements can lead to success (Spector, 2013, p. 6). Next, to address the poor communication, the organization could change this behavior by linking and coordinating the vital value chain activities of the organization such as purchasing, delivering, sales etc.

Samsung: A Case Study: Cost Structure Of Samsung

 COST STRUCTURE OF SAMSUNG Low cost structure of Samsung and high responsiveness to economic events has made Samsung more competitive. For example, initially Samsung focused more on volume and domination on market rather than increasing profitability. However, in 1990s, during the Asian financial crisis, Samsung cut costs and reemphasized product quality and manufacturing flexibility, which allowed its consumer electronics move from project phase to store shelves within next six months. Under the resources-based view of strategic management, effective resources available to a firm, as well as the competency of a firm is responsible in affecting competitive advantage received by a firm.

Samsung Manufacturing Strategy: Process Strategies

Process Strategies The process strategies, for such a large manufacturing company, would need to be varied. The production process type would be determined by the product life cycle stage at that time (Thayer 2004).Product life cycles for items such as smartphones and tablets do not generally follow the standard life cycle stages. The maturity stage can be interrupted by discontinuation or irrelevance of a technology, which recommences the cycle (Giachetti & Marchi 2010). Incidentally, during the product life cycle of these items, a cyclic improvement of both process and product is required to stay in contact with market changes.

Strengths And Weaknesses Of Operations Management

When organization decided to implement six sigma there will be lot of changes in the organizational strategy and policies, management should identify the changes to ensure the organization in the right direction. Thus leader and management have to play a crucial role every stages in six sigma and "failing which means not lead to planned benefits in terms of Cost saving, revenue, customer satisfaction, employee morale and so many other parameters"(whatissixsigma.net,

Advantages And Disadvantages Of Supply Chain Management

The best companies in the world are discovering a powerful new source of competitive advantage. It's called supply chain management and includes all onboard activities that bring products to market and satisfied customers. The Supply Chain Management program covers topics from manufacturing operations, transportation, purchasing and physical distribution for a single program. Coordinated the successful management of the supply chain and all these activities integrated in a continuous process.

Samsung Case Study: Samsung Business Strategy

1. General business strategy 1.1. General business philosophy Samsung work with the aim of developing innovative technologies and provide people with efficient processes so that regularly new markets are created and they continue to rule the digital work. They follow five core values including: • People: Samsung gives all the resources and opportunities their people need to give their best. • Excellence: Samsung makes sure to provide their customers with excellent products and services.

Leadership In The Workplace: Team Case Study

By using low-cost incremental technology that software applied to inventory control, order selection, short interval scheduling as well as sales forecasting. Company have managed to reduce their inventory levels through just-in-time system, electronic direct interchange (EDI) and extranet enabling retailer and supplier to be in constant touch. Electronic warehousing systems are used for the storage of information. (Marketing policy, planning and communication) For any changes which may occur, the company must be ready to adapt by having IT department that will handles all the technological issues.

More about Samsung Six Sigma Case Study

Related topics.

• Data management
• Data mining

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