Using Six Sigma statistical thinking to improve business processes
A Cummins case study

Summary

Concepts:

customer, business, Sigma, Cummins, variation, market, customer needs, voice, quantify, power, manufacturing, customer expectations, competitors, vision, common.

Summary:

These products clearly meet customer needs in terms of the range of benefits they offer.

To achieve a competitive advantage it has to manage this process more efficiently than competitors.

The ability to survive and grow in these long-term competitive markets therefore, not only depends upon how organisations bring new and innovative products to market but also how they manage and develop all of the business processes that allow these innovative products to be supplied to their customers.

In a factory, for example, operations would involve bringing together finance, labour, equipment, materials, administration, marketing expertise, as well as the creative and efficient use of people and management processes to transform all of these inputs into desirable goods and services which meet or exceed customers expectations.

This case study illustrates how a large global manufacturing organisation, Cummins, uses an initiative called 'Six Sigma' for rapid process improvement from a range of key elements across the organisation to significantly improve its business processes.

Using statistical tools and data as a base for analysis and a disciplined, logical approach, Six Sigma enables decision-takers within Cummins to improve their understanding of critical business and operational processes, generating major cost savings, developing and sharing best practices.

It is part of Cummins' overall business model, developing better business processes to suit higher customer expectations.

Cummins diesel engines are used to power everything from trucks, buses, construction equipment, tractors and boats, to trains and huge mining excavators.

The focus for any business model is a vision that shows a clear idea of where an organisation is going.

Actual impact, or 'voice of the process' is then compared with the desired output, the 'voice of the customer' to quantify the improvement needed.

Data, for example, might illustrate how a process is running, include accounting information, technical process data and customer information.

By understanding the critical inputs that cause the variation it may be possible to reduce this variation to align with customers' needs.

Six Sigma has provided the opportunity to drive forward important customer focused initiatives across the Cummins global organisation.

Learning outcomes:

As a result of carefully reading this case study, students should be able to:

  • link customer needs in the marketplace, with the efficiency of the business processes that satisfy such needs
  • understand B2B operations and the notion of added value
  • appreciate the importance of customer focus
  • understand the role played by basic statistical data such as the mean and standard deviation, for analysing the status and capability of business processes
  • analyse the link between business processes and a customer-driven initiative.

Cummins | Using Six Sigma statistical thinking to improve business processes

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