There are plenty of available case studies when it comes to how large corporations have integrated Six Sigma methodologies into their organizations. Less attention has been paid to the smaller and medium-sized companies that embrace Six Sigma. Can the same kind of success that big business garners from Six Sigma methodology translate to much smaller operations? Let’s look at a case study of a smaller company that has been able to prove that indeed it can.

In October of 2017, three authors that work in mechanical engineering and academia published a study in SAGE Journal that outlined their findings as to how the implementation of Six Sigma translates to small to medium-sized business enterprises. They put their focus on a company that manufactures plumbing products, bringing in a Six Sigma Black Belt for a one-and-a-half-year period to work with an assembled project team, working the DMAIC process to see what the results would be.

Defining the Plumbing Product Company’s Problem

There are plenty of options when it comes to the tools that can be used during the DMAIC process. In the Define phase of the process, the authors decided that the VoC (Voice of the Customer) tool should be utilized as one of the tools in determining where the problems were for the plumbing company. After all, what is more important than understanding how the needs of your customers are being met? Also, what better way is there to determine that than from the actual perspective of the customers?

Voice of Customer is data collected that expresses the customer’s voice. This can cover their expectations, comments, and preferences in regard to a company’s product or service. This data can be collected through surveys, monitoring reviews, observing social media comments, and feedback forms. In conducting a market research benchmarking study with the Voice of the Customer tool in mind, it was determined that the plumbing products company was not meeting performance standards when compared to competitors. The reason for this was that the organization had an order fulfillment cycle time that was not meeting the needs of its customers or the industry standard.

This revelation made it clear that this was the problem worth addressing first by the company.

Being able to meet the needs of the customer and keeping them happy is paramount to the long-term success of any company. An article in the Harvard Business Review points out that the acquisition of a new customer can be five to twenty-five times more expensive for an organization than keeping its current ones. With the plumbing products company not meeting the expectations of its customers and the standards of the competition, it likely would not be long before customer loyalty dropped off and profits declined. In the Measure phase of DMAIC, it was found that the delivery cycle time for its customers was 46% higher than its competitors. In real-world terms, it took the organization a nearly three-week turnaround to deliver a product when others could do it in 14 days.

In the Measure phase, two metrics were utilized. One was to look at the estimated amount of time from the customer ordering a product to delivery, and the other was inventory dollars. A goal was set to keep the cost of inventory neutral while cutting down on the time of delivery of products to the company’s customers.

Using DMAIC To Save the Company Money and Gain Profits

It was determined that significant money could be saved and profitability could increase by not having such a long wait time for order fulfillment. The reasoning behind this is that by decreasing the wait time for order delivery, customers are happier, are less likely to cancel orders in process, and are more likely to provide return business. Furthermore, by cutting down on order turnaround time, there is more time available for the fulfillment of orders from additional customers.

It was up to the team, however, to figure out exactly why the problem was happening.

This is where the Analyze phase of DMAIC comes in.

During the Analyze phase of the project, a brainstorming session targeted the main reasons for the company’s slow turnaround. Using the factors that came up in the session, a regression analysis was used for each of the independent variables that caused the most impact on the turnaround time (the dependent variable). The variable with the most dramatic impact, by far, turned out to be safety stock fill.

Looking at the organization’s annual sales, it was found that 52 of its 252 products accounted for 74% of the company’s sales. It was decided to look at the possibility of focusing efforts on maintaining the stock of its most popular items.

The Improve phase of the project consisted of the implementation of a monthly review that focused on the demand for the most popular products. Secondly, these products were coded for monitoring, so that forecasting could reliably occur. This would put the company in a better position for maintaining a stock of its popular items as well as responding to demand fluctuations.

The final phase of DMAIC is the Control phase. This means efforts to prevent sliding backward once improvements are made. Making improvements to processes is one thing, but being able to make sure that the improvements stick is what helps ensure long-term success. Of all the corrective measures assessed, two were deemed to be the most necessary for keeping the improvements made by the plumbing products company in place. A monthly review of the main products and an annual review of the coding were ordered. This was to make sure that there was no shifting in volume and that cycling the products through the list could be done as needed.

The Outcome Was Incredible

After the completion of the project, it was found that the company benefited from the DMAIC process with the elimination of waste by doing away with procedures that were unnecessary. Other improvements included better streamlining of the company’s delivery process, more efficient capacity planning, and increased satisfaction of customers, distributors, and suppliers.

From a financial standpoint, the project was also a resounding success. Annual sales increased by $248,034. The largest section of this increase was due to a two-and-a-half-day decrease in turnaround time. The rest of the increase in sales was due to an improvement in accurate forecasting. Forecast error dropped from 57% to 31%, which translated to $80,443 of the sales increase.

3 Best Practices When Implementing DMAIC in Your Small to Medium-Sized Business

The company that participated in the study had some advantages that many smaller businesses do not. For example, not all businesses have the financial capability to bring Six Sigma Black Belts on board to assess their organization. Another challenge could be diverting resources within the organization to such a major project. Keeping these types of potential challenges in mind, here are some tips for implementing DMAIC in your organization.

1. Being small can be an asset

If you have a very small business with only a few employees, everyone is probably already used to wearing multiple hats. With such a small organization, it is also likely much easier to wrangle everyone into addressing issues with the company. A sense of comradery can also be much easier to foster or is likely already present in companies that are on the smaller side. There is also likely less to sort through in process issues.

All of these are benefits of being a small operation and can make it easier to make meaningful and longstanding changes for the betterment of the company. All of these factors can help ease an organization’s transition to the DMAIC process, where larger organizations might find more challenges.

2. Seemingly small improvements can still have a major impact

The plumbing parts company initially had a turnaround time on orders of nearly three weeks in comparison to its competitors, who could get orders into customers’ hands within 14 days. By using the DMAIC process, the organization was able to cut its turnaround time by 2.5 days. That may not seem like a large amount, but that and one other change translated into an increase in sales of nearly $250,000.

3. Control your improvements

Out of all the steps in the DMAIC process, it can be tempting to look at the Control phase as nearly an afterthought, since it is the last. This would be a major mistake. The full results of improvements made can often take a significant amount of time, and it can feel like they are not happening quickly enough. This could lead to not keeping up with improvements and allowing the efforts made to slip or not having adequate safeguards in place to keep improvements intact.

By making sure that you have adequate protective measures in place to keep improvements intact and allowed to continue, you are helping ensure the full success of the DMAIC process and seeing the full blossoming of the results of the efforts made.

Six Sigma’s DMAIC Process in Small to Medium-Sized Businesses

The study conducted with the (unnamed in the study) plumbing products company is invaluable in showing how Six Sigma’s DMAIC methodology can work for smaller and medium-sized businesses. Knowing that this can be the case should be a great motivator for all companies that want to improve their processes for the benefit of better meeting the needs of their customers.