Lean Six Sigma Methodologies in Sourcing Value Chain – Dairy Business Upstream

Deployment of Lean Six Sigma methodologies and practices in dairy business operations to identify & eliminate waste creating value for customers and consumers

Introduction
Dairy is one of the major businesses in Pakistan, and cost of goods sold (COGS) accounts for 77% of total delivered cost of this business. 71% of COGS is raw material cost and milk is the major raw material provided by dairy farmers.

Sourcing Total Delivered Cost (TDC) split

Business Excellence Consulting launched Lean Six Sigma methodologies in dairy business upstream in quarter 4 of 2016 in continuation of continuous excellence journey in Pakistan business value chains to
• Identify Waste from the business value chain
• Analyze waste and define ways of waste reduction from the value chain
• Develop project teams to eliminate waste and bring operational efficiency
In this journey of continuous improvement the bringing efficiency in operations shall lead to optimization of fixed and variable cost and other improvements in quality and delivery.

Approach
A formal cross functional team was set up for the Lean Six Sigma involving members from BiZToday business excellence team. Stakeholders were engaged through awareness on waste by developing zero waste mindset.
 Loss tree analysis (LTA) methodology has been developed for sourcing operations to identify and prioritize losses that is a bottom up approach to convert waste into monitory value and prioritize them for projects.
 Team was trained on Identify, Prioritize and Assign (IPA) methodology that is a top down approach to identify focus areas on any of the qualitative or quantitative KPIs
 The identified and prioritized projects were assigned resources and the projects were integrated into operational master plan of the business operations team
 The resources with assigned projects were trained to carry out DMAIC projects on white belt, Yellow Belt and Green Belt competence to carry out the projects
 Teams were coached during the projects and formal project management and presentations were ensured by the FI team to the management meeting and forums
 The completed projects were presented, acknowledged and recognized by the management for bring improvement in operational performance
 The same process of identification and elimination of waste has been deployed as an annual cycle of continuous improvement in dairy business operations and is integrated with foundations and advanced practices
Outcome/Business Benefits:
Lean Six Sigma initiative has resulted in improvements across all KPI categories, like delivery, quality and cost.
Following are the key achievement and business benefits delivered by the BiZToday team:
 61 resources Trained on DMAIC competence 25 certified White Belts
160 Resources are capable to carry out basic problem solving
93 DMAIC projects completed in MCDD value chain to improve cost, quality and delivery KPIs since 2016 till 2019
546 Mio PKR cost reduction achieved from 2016 till 2019

Next steps
Next steps will be:
1. Continuously improve to go for zero waste
2. Sharing of best practices to other markets

Contact person
Sohail Nadeem
Sohail.Nadeem@biztoday.pk

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