Hi. New processes development is a great part of Six Sigma methodology. I was thinking for a longer time, how to help people understand how its works. An idea from my current chanllenge in my job brought me to create this story. It is fictitious, but covering all DMADV project aspects. Let me know your thought, your experiences in the commnets.
This article covers:
- DMADV business case example
- Define phase example
- Measure phase DMADV example
- Analyze in DMADV
- Develop phase example
- Verify DMADV example
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DMADV business case example
There is global company producing bicycles called Bikemania. 5 years ago, this Spanish company expanded their production to Brazil and 2 years ago to Singapore. This is great, because it brought opportunities to grow their business in other markets.
European market for Bikemania is quite stabile and growing. However South Amerika and Pacific markets are struggling. Growth in these regions are not as initially expected. Research showed that company must improve their prices to be more competitive.
Strategic business case was set with several opportunities to focus on.
DMAIC example in production /manufacturing – read here
Define phase example
One of the opportunity is direct components sourcing, owned and lead, by supply chain organization. There are several suppliers delivering raw material and components to parent company in Spain. This material is re-distributed to daughter companies. This set up prolongs delivery times, increases inventory. There is double handling required On top of that. All this have direct influence on final price.
Improvement team goal is to redirect 100% of outsourced products from outside vendors to Brazil and Singapore.
International team consisted of Production, Logistics, Engineering, Legal, and of course supply chain members. All 3 facilities were represented in the team too.
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Measure phase DMADV example
Initial team kaizen event was held. Current state process map was drawn. All suppliers and their products in scope of this project were identified too. Also, future state of this process was mapped. Step by step material re-directing guideline was also developed on this event, to help team to work unified way.
To understand the best strategy, and set due date for final transferred parts some more details needed to be known.
There are too many components to be transferred from different companies. And there are some requirements deviations between daughter facilities too. Both facilities brought list of parts that are bought through parent company. 80% of parts were identical. 20% of different parts are caused by little differences for local markets. To handle amount of work, 3 project generations were identified.
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DMADV tool list (tollgate):
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Analyze in DMADV
Team decided to be focused on common parts with highest volumes in generation 1. Due date for this generation was set up for 9 months. Common parts with lower volumes for generation 2, with duration 6 months. Generation 3 will be on not common parts also 6 month duration.
Legal department contacted all suppliers in scope of generation 1. It was explained, what are new expectations. There will be 3 different destination of the products now. To let vendors understand where to ship required quantity, production orders series were changed. Each order must have required part identification number, name, and quantity on it.
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Develop phase example
New contracts with component suppliers needed to be signed. Supply chain team members calculated new expected ordered volumes. Based on increased volumes predictions, component prices were reviewed and decreased.
Logistics needed to contact transportation companies. It was needed to understand which type of delivery will fit the best, with optimal prices and delivery times. Contracts with new transport companies needed to be established.
Engineering team members reviewed drawings and documentations for transferred components. Intent was to doublecheck opportunities to decrease some component discrepancies.
Process review with suppliers was initiated to improve the situation.
In the case of discrepancy, direct communication with supplier quality department was set up. Common discrepancy documentation was defined too.
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Verify DMADV example
To verify new process set up, initial pilot components were transferred new way. It revealed challenges at customs. Different countries have different required documentation to be provided. Correct documentation was provided and updated.
Once pilot was accomplished, the rest of parts were able to be transferred without major problems.
First generation lasted 3 months more, than planned. It was because of required changes in purchasing software. Generation 2 and 3 run smoothly according initial plan.
New process runs well. Bikemania Company was able to improve their business results and local market competitiveness by 15% by implementing direct sourcing strategy. There were other teams working on other opportunities to improve competitiveness.
I do videos, blog posts, and all templates for free, in my free time. I will appreciate if you can donate me a cup of cofee, for more energy in my creation. (1 dollar counts, too 😉 Click on this link: I would like to support Erik in his effort
Hope, this article helped to reveal DMADV methodology. It is very close to DMAIC, sometimes I struggle identify on what type of project am I. So, do not be worried if it makes headakes. I have the same issues 🙂
Do not forget to visit and subscribe my YouTube channel. There are short explanatory videos to Six Sigma topics and tools uploaded regurarly.
DMAIC tools – order to use
Showed list is divided to the main tools and sub-topics, that belongs to it. Example: in defined phase project charter is a main tool, and subtopics are business case, opportunity statement, project goal, scope, high level plan and team resources.
DMAIC tool list (tollgate) – download
Yours sincerely Erik