full version Wal-Mart'S Performance Improvement Project Essay

Wal-Mart'S Performance Improvement Project

Category: Business

Autor: edward 03 June 2010

Words: 1778 | Pages: 8

Wal-Mart’s Performance Improvement Project
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
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...
Step #6 - Ensure continuous improvement by measuring, analyzing and controlling the improved process using
DMAIC - (Define, Measure, Analyze, Improve, Contro/)
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.
(Phadnis, 2006)
There are going to be many obstacles that will need to be overcome in order for this process to be implemented full scale. Since there are many vendors and suppliers used by Wal-Mart, this process is going to have global significance. One obstacle is going to be finances. Many of the companies that Wal-Mart works with will have to make substantial financial obligations to implement the Six Sigma process into their business processes. There may even be a financial burden on Wal-Mart to assist those companies that do not have the financial backing to make the necessary changes in the quality of the products they offer. Another obstacle is going to be logistics. Since many of the companies that Wal-Mart deals with are overseas, monitoring and validating the implementation of Six Sigma processes is going to prove difficult at best. Wal-Mart may have to send representative teams overseas to verify the processes are in place and efficiently running.
One of the most difficult obstacles for Wal-Mart is going to be able to get all their suppliers and vendors to buy in on the new process. Without a buy in from all the organization’s suppliers and vendors, raising the bar on the quality of products and services provided to Wal-Mart’s customers will not happen. Wal-Mart has to get all vendors and suppliers in agreement on the long run benefits of fixing the quality issues of the products manufactured for the consumer by the implementation of the Six Sigma processes. Having all the vendors and suppliers of merchandise working along the same guidelines for quality manufacturing of merchandise and services will greatly benefit them as well as Wal-Mart by increasing sales of the products and services. Increasing sales at the store level will increase orders through the vendors and suppliers to meet customer demands.
Implementing the Six Sigma process into Wal-Mart’s products that they purchase through local vendors and suppliers from all over the world will not only have a positive impact on the vendors and suppliers but also have a positive impact on the organization’s distribution centers, warehouses and stores throughout the country. The largest gains will be noticed at the individual store level with sales increasing and the customer counts going up. The main idea behind implementing the Six Sigma processes is not only to regain the organization’s lost customers, but to increase the customer base by taking some of Wal-Mart’s competitor’s customer base as well. By gaining a larger customer base due to the improvement in the quality of products and services provided, vendor and supplier orders will increase to meet the new demands benefiting Wal-Mart and their business partners. “Six Sigma is not the answer to all problems... If you're working on business, engineering, or production processes it is practically always applicable and successful, when applied correctly. In this sense, the core methodology is remarkably general and robust.” (Wikipedia, 2006) Implementing the Six Sigma processes into Wal-Mart’s supply chain will enable the organization to have better control over the quality of the products that the organization purchases. This will improve the availability of the product in the store, improve customer satisfaction and even improve customer relations with the sales floor associates. Implementing this process will allow the organization to positively impact every store’s departments because it will help to keep the shelves stocked with quality products that customers will want.
In order for quality enhancement to become institutionalized and sustained throughout Wal-Mart’s distribution and sales processes, Six Sigma processes must be designed to be a part of the daily routine and not a burden to the existing processes. Six Sigma processes are designed to produce measurable improvements in manufacturing quality processes and outcomes, providing recognizable benefits for Wal-Mart’s customers, stores, suppliers and vendors. The benefits increase wide acceptance and support for Six Sigma processes’ improvement programs and its institutionalization within Wal-Mart’s policies and practices. This improvement project includes the effort to implement the findings and recommendations from the Six Sigma processes into Wal-Mart’s daily routine by refining and reorganizing their practice systems and processes. The results will show Wal-Mart’s local vendors and global suppliers that the process can change company level programs into system wide policies and practices that all manufacturing organizations can follow. The process will take on global proportions in order for all suppliers and local vendors to get onboard with the program. This will most likely take years to implement and many more years to perfect, but if Wal-Mart is going to remain the leader in the retail electronic technology then they are going to have to make the first step in the right direction regarding Six Sigma processes in the quality of the products they purchase.

EMA, Inc. (2003). Six sigma process improvements: Find and fix the problems, hold the gains. EMA, Inc. Retrieved on 17 August, 2006 from Website: http://www.ema-inc.com/PDF/MSS-401.pdf
Phadnis, S. (2006). Selection of project metrics. iSixSigma. Retrieved on 16 August, 2006 from Website: http://www.isixsigma.com/library/content/c011008a.asp
Wikipedia (2006). Six Sigma. Wikimedia Foundation, Inc. Retrieved on 16 August, 2006 from
Website: http://en.wikipedia.org/wiki/Six_Sigma
Winings, J. (2005). The six steps to six sigma using. Six Sigma SPC. Retrieved on 18 August, 2006 from Website: http://www.sixsigmaspc.com/six-sigma/sixsigma.html#sixsigmaastep