Lean Six Sigma at 3M Assignment/Case Study Solution

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Lean Six Sigma at 3M Assignment/Case Study Solution.

3 M started its operations in 1902 in Minnesota as a mining company. The company found the industry to have slow profitability and growth chances, therefore moved towards sandpaper products. Since then the company has maintained a steady focus on the production of products that are based on innovative and creative ideas. For instance the manufacturing of first water proof sandpaper in 1920s was made possible due to research and experimentation with new ideas. Other eminent examples of the company’s innovative mind set can be seen in the form of invention of masking tape in 1925, launch of electro mechanical products in 1950s and Post-it® Notes in 1980 (At a Glance, 2013).

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Running head: LEAN SIX SIGMA AT 3M

Lean Six Sigma at 3M

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Abstract

3M has evolved into a global company with emphasis on innovation and production of high quality products. The introduction of six sigma tools in 2001 has enabled the management to initiate the manufacturing of high quality products with an emphasis on continuous improvement of their quality. The integration of the elements of commercialization and lean management has further supported 3M in attaining its objectives of performance optimization through elimination of waste and reduction of cost. The company has been able to apply the DMAIC process to identify the elements in supply chain that can be eliminated to save costs and reduce variability. Moreover, the use of lean six sigma method has also proven to be beneficial in reducing the sales cycle. The use of lean six sigma method has also resulted in value creation for the firm in terms of its financial performance. 3M has been able to attain 11% and 4% increase in sales ratio and operating income respectively from 2010 to 2011. The revenue of the firm has increased up to 14% from 2006 to 2010. Lean six sigma method has also allowed 3M to maintain its focus on sustainable improvement with the adoption of customer driven ‘six sigma’ strategy.

Key words: six sigma, lean method, 3M

Company’s History and Growth

The company has gained an eminent position in the industry as a firm providing innovative solutions to the customers. The management has fostered a culture which is conducive to the use of innovation and creativity for manufacturing products which are able to fulfill the demands of the consumers effectively. Closely connected to this notion is the focus on quality as a prime feature of the various products manufactured at 3 M. The company slogan “inspired innovation” depicts its focus on manufacturing products which are in alignment with the needs of the customers. It reflects management’s emphasis on continued growth and sustainable development towards excellence (Annual Report, 2011).

The growth and success of 3 M can be attributed to the adoption of Six Sigma strategy which has allowed it to attain its goal of creating value for each customer. The application of lean six sigma strategy has helped 3 M in cost reduction and process optimization thus creating greater degree of value for the customers. Moreover it has also resulted in elimination of waste in terms of defects. This has further strengthened the company’s ability to manufacture high quality products which meet the criterion of quality and value creation (3 M Lean Six Sigma, n.d). In 2001, the organization has launched a lean six sigma strategy on a company-wide scale to train all the personnel to become better adept at implementation of the lean methodology. The implementation of lean six sigma strategy was a challenging task as employees had to be trained to adopt the perspective and behaviors associated with lean manufacturing. Moreover, critics have argued that the application of six sigma strategy and its subsequent standardization has decreased creativity and innovation at 3M (Hitt, Ireland & Hoskisson, 2012).

Strengths and Weaknesses of 3M

The major strength of the company is the use of creativity for brining innovative products for the customers. 3M has been associated with the notions of innovation and novelty, as the company history depicts various products based on creative ideas of its personnel. Within the context of the problems at 3M, the management was focusing on reducing the number of defects and deviation in the quality standards. In order to reduce the waste resulting from production of defected items, the adoption of lean six sigma method was an effective course of action (3 M Lean Six Sigma, n.d).

Define the Problem

As mentioned earlier, the problem being faced by the management at 3M was related to the elimination of waste due to the manufacturing of defected products. It was also seen as an obstacle to the attainment of the company’s vision to “Achieving Breakthrough Performance for our Customers, Employees and Shareholders” (EPA, 2011). In order to address the gap between the current and desired performance, the company needed to engage in cost reduction, process optimization and value creation. These objectives were achieved through the integration of lean methodology and six sigma strategy.

Lean Methodology at 3M

The implementation of lean six sigma strategy can be traced back to February 2001, with the intention to pursue the goal of sustainable quality improvement. In 2002, the company has added the element of commercialization in its six sigma strategy to include the feedback from the customers for modification and improvement of the products. 3 M has experimented with the idea of lean management in 2002 and 2003, introducing the framework to selected locations only. By 2006, the successful results have encouraged the management to integrate lean method as a part of the various production facilities operating at an international scale.

One of the key factors which have instigated the process of quality improvement at 3 M was the incorporation of standardization across the process and people. This was made possible by application of DMAIC process consisting of the phases of ‘Define opportunity, Measure performance, Analyze opportunity, Improve performance and Control performance’ within the manufacturing and production units (3 M Lean Six Sigma, n.d). The integration of principles of lean six sigma strategy has also helped the management in increasing the efficiency of quality production while simultaneously engaging in waste reduction. The employees engage in the phase of opportunity analysis, planning and focusing on improvement, delivery of performance and its continued improvement.

Current and Future State

Before the implementation of lean methodology and six sigma tools the employees were not able to respond to process issues as effectively. For instance the 3M unit in Canada was facing issues in terms of its sales cycle which consumed 8 months of the company. The employees were faced with the problem of reducing it 40% which was possible through waste elimination. The project team developed a process model for simulation on the basis of which the process delays were identified. The adoption of lean methodology and six sigma helped in the using the right tools to identify, solve and bring improvement in the sales process. Lambert (2008) indicated that the 3M has also used Value Stream Mapping (VSM) to identify the processes that are reducing the value in the production and supply chain process to xpedx. The slow moving items were directly provided to the customers, thus reducing the time frame of handling those products through traditional supply chain process.

Currently, lean methodology serves as the basic framework for defining, maintaining and improving the processes and people at 3M at a global scale. The employees are trained to use the principles of lean management and use six sigma tools to create value for the customers. The use of lean six sigma strategy has resulted in increased operating income and revenues. Overall, the company was able to gain a margin increase of $1 billion within 5 years of six sigma implementation. The goal of creating value for customers by producing high quality products in firmly based on the adoption of lean six sigma tools and methodology. Therefore it is considered to be customer driven lean six sigma approach.

Analysis of Implementations

Implementation of lean six sigma strategy at 3M was made possible due to the management’s ability to identify, manage and control the issues arising during its deployment. Furthermore, the process of identification and elimination of sources of waste that decreased the efficiency were also diligently handled. The case of 3M Canada illustrated how the process of 8 months sales cycle was successfully reduced to 5 months. The case of supply chain for xpedx customers also indicates how the distinction between slow and fast moving items was used for effectuation of six sigma lean method.

The changes arising out of the integration of six sigma method from 2001 had a substantial impact on the production and supply chain process at the company. The company has been able to move beyond the scope of waste reduction only to optimized production and value creation for its stakeholders. Within 3 years of the introduction of six sigma tools, the 45,000 full time employees were provided with the related training to adopt the perspective of sustainable quality improvement. 99% of the personnel at executive position have received six sigma training by the end of year 2012, with black belt six sigma personnel employed in various regions. The quality movement has resulted in undertaking of more than 10,000 projects which utilized the lean method and six sigma tools for bringing high quality products with the optimum potential to create value for the customers (3 M Lean Six Sigma, n.d).

Despite the success of lean six sigma approach, 3M has faced criticism in terms of decreasing innovative capacity of the employees due to heightened emphasis on standardization. Nevertheless, 3M continues to adhere to lean six sigma methods for optimizing its performance, reducing cost, waste elimination and establishing greater degree of customer satisfaction.

Conclusion

3M as a proponent of lean six sigma method has established itself as a company that provides high quality products which are in accordance to the customer needs and expectations. The company has taken the initiative to implement six sigma, commercialization and principles of lean management to successfully optimize its production, bring continuous improvement in quality and customer satisfaction. From a quantitative perspective, 3M has been able to obtain $ 1 billion cost saving by the end of 2012. The example of respirator unit also demonstrates how the integration of lean six sigma method is expected to help 3M in reducing $ 400 million in 2013. While the overall revenue of the organization has increased from 21% to 35% in the five years after the implementation of lean six sigma methods in 2006. In 2011, the sales depicted an 11% increase and the operating income has shown an increase of 4% from last year (Annual Report, 2011).

In terms of value creation, the customers have been able to gain access to the company products with speed and agility. At the same time the component of quality has been refined by the inclusion of DMAIC process and commercialization. The elimination of waste and decrease in variability has been at the core of enhanced customer value. Moreover, the adoption of a customer driven six sigma approach supports the company is aligning its production with customer needs and expectations.

References

3 M Lean Six Sigma (n.d). 3M. Retrieved on January 30, 2013 from http://multimedia.3m.com/mws/mediawebserver?6666660Zjcf6lVs6EVs66SuyRCOrrrrQ-

Annual Report (2011). 3M. Retrieved on February 1, 2013 from http://media.corporate-ir.net/media_files/irol/80/80574/Annual_Report_2011.pdf

At a Glance (2013). 3 M. Retrieved on January 31, 2013 from http://solutions.3m.com/wps/portal/3M/en_WW/History/3M/Company/At-a-Glance/

EPA (2011). 3M Lean Six Sigma and Sustainability. United States Environment Protection Agency. Retrieved from http://www.epa.gov/lean/environment/studies/3m.htm#sigma

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic Management Cases: Competitiveness and Globalization. South-Western Pub.

Lambert, D. M. (2008). Supply Chain Management: Processes, Partnerships, Performance. USA: Supply Chain Management Institute.

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