Originally derived from the manufacturing industry these methodologies have been used across a variety of sectors to reduce waste, promote innovation and increase efficiency.
Read on to learn more about these top methodologies that businesses are employing to stay competitive in the global economy.
Total Quality Management (TQM) is a holistic organisational approach to meeting customer's quality expectations. It looks at each step in a process or value chain and identifies the customer of that step (be they internal or external) and the quality expectation. It engages everyone in the team in meeting those quality requirements. TQM is a series of statistical and analytical techniques that predates Lean and 6 Sigma (which also use many of these techniques) pioneered by W Edwards Deming in what is now known as the Japanese post war economic miracle.
6 Sigma is a combination of techniques that harnesses ways of analysing and improving manufacturing processes and can equally be applied to Financial Services and other industries. Six-sigma first originated in Japan where it was introduced by Motorola. It relies on a set of tools and statistical representation of how a process is performing. To achieve Six-sigma, the process must not produce more than 3.4 defects per 1 million items, i.e. a product needs to be 99.99966% free of defects. The key objective is the use of measured base approach on improving processes to reduce variation and remove defects through the application of process improvements.
Lean Manufacturing or simply referred to as "Lean" are techniques focused on reducing waste and addressing process flow in a business and was introduced by Toyota Production Systems under the name of "just-in-time" and "autonomation". If you are not adding value to the product or service you provide then what value do you bring to the customer? These techniques help identify and eliminate waste in the organisation.
More recently some manufacturers have blended Six Sigma with Lean Manufacturing and named it Lean Six Sigma. By combining both complimentary disciplines, organisations such as GE use Lean Six Sigma to focus not only on efficiencies but also on growth and helping with innovations throughout the organisation. According to Motorola Solutions, Allied Signal cost savings are exceeding $800 million since 1995. While General Electric cost saving are exceeding $2 Billion.
Agile development is used to streamline and speed up the innovation process by forming small teams to focus on delivering results quickly. This approach was born in the software development area but can be applied to any sort of product development process. Traditional waterfall method works on the premise that all the requirements are gathered and identified before coding starts. In the increasingly fast pace business world this led to a common pitfall, that by the time the solution was built, tested, and rolled out, the business requirements had evolved and changed and the solution no longer met the needs of the business.
Better development tools, languages, as well as the internet have facilitated the adoption of Agile. Agile requires a different rhythm of work where at the end of each iteration the team must have some potentially shippable product; by providing opportunities for revisiting and revising requirements it is possible to remain relevant and more competitive, and faster to react to market influences and changes.
Mass customisation – This brought forward the concept that every customer can receive a unique tailored product that meets their specific needs but allows this to be done with the efficiency of a mass production line. Over the most recent years we've seen an explosion of mass customisation, or personalisation of products thanks to technological advances, from personalised muesli or tea, to sneakers, clothing or cars. The adage of "any colour as long as it's black" from Henry Ford is long gone. Technologies such as product configurators are making mass customisation affordable, reachable and easy to adopt. Most importantly, it has provided a way to counteract the downfalls of commoditisation.
Sales & Operation Planning is a measured way of defining demand and the capacity to meet that demand so that a response to changing consumer demands and needs and the introduction of new products and services can be managed in an effective way. S&OP is essentially about balancing demand and production while orchestrating with planning and finance in a cost effective and profitable way and in line with overall corporate strategy. Since outsourcing was introduced, the importance of accurate forecasting and planning made S&OP a linchpin to production management.
The benefits of solid S&OP practice in a manufacturing context are clear, especially when considering the practice of Kanban and Just-in-time for the production of items on demand for example. In service industry this would relate to capacity planning in areas such as a Call Centre having the elasticity required to be able to sustain an increase in demand (e.g. an Insurer during a natural disaster).