Applying Lean Six Sigma to Siam Sponge Foam

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Nowadays, business research is the vital tool to help any firms to develop the strategic management for the company that would like to know how to execute their organization to reach their goal effectively among high competitiveness in the business world. By the way, the pressure of economic recession is the main impact to global business. Any level of enterprises must concern their business strategy to be survival in serious economic crisis. According to own researcher's interesting topic, this research focuses on operation management of Siam Sponge Foam Company who is Thai rubber insoles producer in Thailand. Their main raw materials are latex, chemical and crude oil which is fluctuated price based on price of global market. Trend of those materials' price tend to be increasing which affect negatively to producer itself and its customers due to the higher cost of production. There are 2 possible ways to help the company who is the producer to bear the higher cost of production. Firstly increasing the price that charges from customers but it is the tough way to do that causes by company relies on the buying of customers so they have to maintain their customers and market share. Secondly, Control the cost of production by revision the strategic management internally. Similarly, concentration on how to minimize cost in the production processes which emphasizes on reducing wastes rate as much as possible that occurred during production processes. So, thus topic research focus on

"How to minimize the wastes of Siam Sponge Foam Company?"

The outcome of this study can guide the manager to make the right decision and implement the effective management to reduce its wastes rate of production.

The purpose of the study

The purpose of the research is to study how effectiveness of Lean Six sigma which can be applied to the case study of Siam Sponge Foam in the aspect of minimizing wastes rate and improving quality management in order to figure out the best solution to the manger how to handle the problems in the term of offering the optional solutions.

Project objective

To study the appropriate management to minimize the wastes based on Lean Six Sigma.

The Scope of this study

The research focuses on the following lists:

Describing roughly of the company production processes.

Analyzing the cause of occurring high wastes rate.

Understanding what Lean Six Sigma is.

Providing the suitable management to solve the problems.

Limitations:

Time and resource limitation to collect the data.

Unrevealing confidential information about techniques of production processes.

Research on a specific industry which might has different problems in manufacturing process.

SIAM SPONGE FOAM COMPANY

Company background

Siam Sponge Foam Company is the small business in footwear industry in Thailand. It was founded in year 1995. Mr. Prasit Rungrojboonyakul is a business initiator and position in Executive Manager. There are 7 shareholders who invest in this business. Siam Sponge Foam produces the high quality rubber insoles which are the main part of shoes. For example full socks, half insole, arch cookies, sheet and so on. Company's Vision: To be the leader of the best quality insoles. They are categorized as Business to business; the products are required further processes to be composed as a leather shoes, sport shoes, sneakers and Student shoes and etc. The manufacturing place is located in 28/3 Moo1 Bang Rakum District Nakornchaisri, Nakornpathom Province. Tel: 034-206121-2 FAX: 034-206123. E-mail:siamspongefoam@hotmail.com

Office: 1213/308 Town in town village Wangthonglang District Bangkok Tel: 02- 5593254 FAX: 02-5593253

The brief description how to manufacture the insoles (Production Processes)

The beginning step is mixing the formula which is consisted of the different amount of latex and some chemical depends on the product types and specification. This is the most important process that operated by chemical staffs, that is considered as confidential technique which is defined as a key success factor of the company. Molding on the assemble line and steaming them in the boiler. Next, splashing the water to the heat molds to cool down in order to pick them up from the mold manually by employees, putting them to the spin machines to get rid of the water from the insoles, drying them in the heater. The insoles are closed on the cloths by special type of glue. Then cut them by cutting machines, this stage requires expert skill to implement because it has high probability to occur products damage. Those are all the stages of production and after that send them to packaging department.

Identification the cause of products defection: wastes

Raw material

Latex is the sensitive material that is hard to control its quality during in production processes because time of mixing and temperature are the sensitive factors that mainly affect its effectiveness. A qualification of latex can be varied on the temperature; it means high degree of heat surrounding causes it is deform. Occurring the difficulty for molding process.

Large number of labor forces involved in production processes

As notice from the pictures, all stages involved workers so that is the substantial problem to control their work behavior. Naturally, workers who operate manually in production processes cannot perform their tasks consistently and standard when compare to proceeded by machines.

Inefficient of Training program

New recruited workers are not given training enough. They do not understand the actual action or clear knowledge to work on their functions. Some tasks are required the skillful workers to operate for instance, mixing formula, Molding, Closing the insoles on the cloths, cutting clothed insoles. Above stages have high probability to evoke defective product.

Application of SIX SIGMA model to minimize wastes

Six Sigma is used at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process -- from manufacturing to transactional and from product to service. The statistical representation of Six Sigma describes quantitatively how a process is performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma opportunity is then the total quantity of chances for a defect. It is also used to define a philosophy of improvement focused on reducing defects and providing customer satisfaction. In addition, Six Sigma is the integrated process of benchmarking, productivity improvement, strategic deployment and statistical techniques which benefit all level of workers understand as well as the common goal and company's objectives. Six sigma is definitely not a get-rich-quick scheme; it is strategic method that can help the organization create real and lasting improvement in performance that leads to increase customer satisfaction and an improved bottom line. It also helps workers grow into effective and knowledgeable managers having ability to understand the business form a cost, quality, and delivery point of view as understand the role of improvement from a pratical perspective.

Literature reviews:

Article: Lean Six Sigma Cuts Waste, Tackles Tough Manufacturing Problems

Analysis of the article

Many manufacturing companies faced the same problems of waste or scarp, reworking is most happened in their cases. The only Lean management could solve the problem of speed of processes by reducing wastes. For the advanced approach to tackle the problem that related to quality, precision and process variation, Lean Six Sigma is the effective tool to reduce the cost of production proved by the previous cases study of many organizations for instance, Motorola Company. Lean Six Sigma is the most suitable method which is designed to attain both speed and accuracy. Moreover, it can address the hidden costs of quality issues, long time cycle times, expediting cost, downtime, overtime and lost sales which are the internal problems that needed to revise.

However, pure Six Sigma itself is the method that invented by the complicated statistics, it is hard to use practically. So, implementing Lean Six Sigma can work through the whole process with less level of statistics and be very fruitful decreasing the errors and mistakes. Lean Six Sigma also aids manufacturers deal with cultural change issues like resistance to change. The Lean side of Lean Six Sigma gets workers involved early because they can see the waste. Then you can get into the variation issues as vital issue. It helps if you work together as an organization. People see problems and resolve them. It gives them a strategy and the confidence to do that effectively. Lean Six Sigma utilizes Lean Culture infrastructure and tools to engage and empower employees, resulting in sustained continuous improvement. Implementing Lean Six Sigma begins by evaluating the current state of the business. Lean Six Sigma can be adapted to the front office as well as the shop floor - anywhere waste and errors occur. The current state is assessed using Value Stream Mapping, a Lean tool that specifies non-value added activities in a process. The Value Stream Map shows where the bottlenecks are; then you can use waste-cutting Lean tools to attack low-hanging fruit and Six Sigma analytical tools to focus deeper and find the root causes of tougher problems.

In fact, analysis always not depends on statistic but analyzing the measurement can improve the by using real data. The key point of this method is to find the right combination approach that suit effective for the situation. Allowing manufacturers to customize and scale their Lean Six Sigma work in order to maximize benefit.

The Conclusion of benefits from using Lean Six Sigma is following:

Increased yields

Shorter cycle times

Reduced costs

Better quality

Less waste

Satisfied customers and employees

Six Sigma is management that emphasized on reducing the error or defective products, declining the problem of redoing and editing on the products' mistake. Vitally, guiding the workers to operate their tasks successfully based on the company's objective. The understanding of five steps can be described following: Six Sigma process is relatively straightforward. But need a good understanding and analysis and use of "variables" that are required. Controlling the processes of improvement is sustained.

Principle of Six Sigma: DMAIC which consists of five steps:

Defining the problem

Measuring current performance

Analyzing the problem to determine the root cause of the poor performance

Improving the situation by addressing the root cause

D: Define is the way to target processes that need improvement. For instance, how to deal effectively with manufacturing supplier may be seen that the method used in the present. Lose a lot of time. Cost high Quality not as good as hope. And consumers feel confident this may be a disadvantage to competitors, customers pay less to gain time and not work out well as expected.

M: Measure is the way to start for issues that affect the process. To be conducted in a variable measured at Such as the extent of the first will be sent to estimate the equipment supplier.

A: Analyze the conclusion is that the variables are complete and good, then the appropriate parameters to analyze the relationship in reason

I: Improve is the method to find ways to improve processes. It is needed to be measurable. Providing various options for the best solution.

C: Control is very important step. It is often a problem in many organizations. When problems are being reduced. It has opportunity to happen the existing problems. Therefore, controlling must occur to ensure that the value of deviation from the target has been permanently removed. The need to create the correct standard. And training must be conducted. And broadcast regularly. They must be confident that the way to "receive" information and feedback from operations to be used regularly to improve processes in the future.

Relevant Research:

RESEARCH AND CONCEPTS

The integration of lean management and Six Sigma

Edward D. Arnheiter and John Maleyeff

Lally School of Management & Technology, Rensselaer Polytechnic Institute,

Hartford, Connecticut, USA.

Analysis of previous research

This research point out the effectiveness of integration of lean management and Six Sigma which can improve internally root cause, Six Sigma alone can explained in the aspect of reduction of waste in the range of acceptable rate of product defection, quality improvement which is related to TQM approach, recognition of responsibility belongs to all employees to minimize wastes and to produce effectively, focus on employee training, all process improvement is invented and concerned in order to provide the most customer satisfaction and company profitability. On the other hand, lean management focuses on lowering inventory, shortening cycle of manufacturing which is initially used by Toyota production system. Furthermore research provided the statistical illustration how effectiveness of both models combination can attain the satisfaction of both customer view point and producer viewpoint.

SWOT analysis

SWOT analysis is the tool to assess the value based management in the organization or project, helping managers or entrepreneur to determine strength and weakness of internal aspect of business, finding opportunities, threats which are the external impact that influence the company.

Strengths:

Product Quality which means high durability, tear resistant, retains its structural integrity under high pressure.

Lower production cost which advantages from lower labor cost due to the location of production is located in metropolitan area.

Superior Know-how in production process. Expertise in latex and relevant chemicals field.

Financial stability. Higher liquidity and trustful image about finance which can support business transaction.

Larger domestic market share refer to ability to capture the main domestic footwear manufacturing; SCS, Gold city, Nun-yang, Walker and Etc.

Weaknesses:

Extensive labors requirement in production processes, it is difficult to control workers performance.

Scarcity of skilled employees. For example, Marketing Staff, Engineering.

Opportunities:

Leaving existing Competitive firms

Technology development

Threats:

Global competitors who can lower cost of production who are Chinese and Vietnamese competitors and etc.

Fluctuated material prices those are latex price, chemical price and crude oil price.

Economic pressure, global economic crisis affects shrinking the demand for products and purchasing power.

Analysis of SWOT of Siam Sponge Foam

According to SWOT analysis shows that the company perceived the high rate of waste as a crucial problem that should be resolved as much as possible. High waste rate reflects the higher cost of production. Then higher production cost has both undesirable effect to company itself and its customers respectively because of declining in their profitability. Moreover, wastes can be referred as a suck cost that gone forever without generating the additional output.

In the case of Siam Sponge Foam Company supplies the rubber as the main material to produce the various types of insoles and many kinds of chemical are required as the mixed-components For example ZINC OXIDE, ZMBT; the most important substantial to stimulate the heat in steaming processes, crude oil is needed in plant's operation. Those are the heart of supplies that are unstable price, trend to increasing price and uncontrollable prices which depend on the global market price. Thus, the reasons why the manager should control and focus on production process and minimize wastes seriously.

Design/methodology/approach - Comparative study of Six Sigma and lean management usingcavailable literature, critical analysis, and knowledge and professional experience of the authors.

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