Six Sigma: No Magic Bullet!

According to a study by the strategic advisory firm, The Hackett Group, the Six Sigma methodology is no magic bullet in terms of cost reduction and improvement of back office operations.

Indeed, while the Six Sigma is used in the continuous improvement of internal operations in many enterprises (e.g., finance, IT, and HR), some administrators are having trouble achieving the expected efficiencies. According to the Hackett Group, this can be explained by the radical nature of the changes sometimes required by these back office services, which can be incompatible with Six Sigma’s incremental improvement approach.

The Hackett Group does not question Six Sigma’s overall effectiveness: many of their clients use it, alone or in conjunction with another methodology, and report considerable savings. However, many find Six Sigma less effective when important structural changes are needed.

According to Penny Welle of The Hackett Group, companies must know how to adapt Six Sigma, depending on the nature of the transformation at hand and the importance of their change management needs. This is all the more relevant when shared services are involved, where changes to one service need to account for the impact they may have on other services. It becomes therefore vital to recognise when a complementary or alternative approach to Six Sigma might be advisable.

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Source : The Hackett Group, 2007-01-17 Press Release

Canada Invests in Smart and Secure Borders

WINDSOR, Ontario, January 12, 2007 — The Honourable Stockwell Day, Minister of Public Safety, today announced an investment of $431.6M over five years to reinforce smart, secure borders. This funding will allow three key initiatives under the Security and Prosperity Partnership of North America (SPP)—eManifest, Business Resumption and Partners in Protection—to move forward.

“Canada’s New Government is taking action to keep Canadians safe from potential security and health threats, while ensuring the smooth flow of trade across our borders,” said Minister Day. “This significant investment is testimony that our government is moving forward and working with the business community on key programs to increase security and support economic prosperity.”

“Ensuring that the Canada-U.S. border functions well is vital for Canadian industry. That is why The Canadian Manufacturers & Exporters (CME) is pleased that the Government of Canada is supporting these critical initiatives,” said Perrin Beatty, President and Chief Executive Officer of CME. “We look forward in particular to working in partnership with the Canada Border Services Agency (CBSA) to successfully implement eManifest - an important undertaking that will further streamline cross-border trade, lead to greater harmonization between Canada and U.S. processes, and bring increased predictability to the transborder trade environment.”

The $396M investment for eManifest will provide the CBSA with electronic data that allows for 100 percent automated risk assessment before shipments reach the border. Highway and rail carriers will be required to submit electronically and pre-arrival all cargo, crew and conveyance information. This will allow the CBSA to have the right information at the right time in order to make informed decisions.

An investment of $24M will allow the CBSA to further harmonize and strengthen its business resumption planning with the United States so that trade keeps moving across the border in the event of an emergency. The CBSA will continue to work with its partners to conduct exercises and develop protocols to ensure it has an appropriate coordinated response that would minimize the impact on business in the event of an incident at the border.

Finally, border security will be further enhanced with an investment of $11.6M to strengthen the Partners in Protection (PIP) program. PIP is an initiative that enlists the cooperation of private industry and is designed to enhance border security by combating organized crime and terrorism, and helping to detect and prevent contraband smuggling. The PIP program will expand to maximize benefits for members and become harmonized with a similar program in the United States called the Customs-Trade Partnership Against Terrorism (C-TPAT).

For more information on the CBSA’s priorities and programs under the SPP, please visit the CBSA’s Web Site at www.cbsa.gc.ca.

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Source : Canada Border Services Agency

Industry Canada Study of Logistics and Supply Chain Management Key Performance Indicators

A major study by Industry Canada sheds some light on the state of Logistics and Supply Chain Management (SCM) in Canada. It aims to define and analyse Key Performance Indicators (KPI) relating to logistics and supply chain management, and inform businesses and decision makers of the best course of action to increase their competitiveness.

The study contains six reports analysing logistics and SCM KPIs in manufacturing, retail sales, aerospace, the pharmaceutical industry and the automobile industry, as well as a Canada-US perspective. (The reports may be found online at the address below.)

“In order to compete against low cost countries (such as China), Canadian firms must develop supply chain agility in a just-int-time and mass customisation mode.”, according to Philippe Richer, the study's author. Indeed, the analysis of KPIs will likely play an important role in the economic prosperity of North-American businesses.

In this respect, the analysis of KPIs relating to logistics and SCM is bearing fruit, as 37% of businesses adopting such practices report a reduction of over 15% in their shipping delays, compared with only 7% of the businesses that did not resort to such practices. Thanks to Industry Canada, logistics activities at Canadian businesses will benefit from objective measurements based on the activities in their respective industry.

The first report concerns the Canada-US perspective and examines three main KPI categories—inventory turnover (inventory turns), logistics costs, and logistics and SCM technology adoption—and attempts to shed light on various industrial sectors across Canada and the United-States.

Inventory turnover is a KPI that points to the agility of a business' supply chain. Based on this criterion, the Industry Canada report reveals the following:

According to the study, the stability of growth of the inventory turnover ratio is indicative of a real productivity gain in inventory management, in Canada as well as in the United-States.

Logistics costs, whether internal of outsourced, is a KPI that allows us to measure the efficiency of the logistics and SCM operations. Based on this criterion, the study provides the following results:

Technology adoption is an key indicator that allow to measure an enterprise's ability to achieve its logistic and SCM potential. Based on this criterion, the study provides the following results:

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Source : Industry Canada