A lean six sigma framework to enhance the competitiveness for smes, empirical evidence from vietnam

Nội dung text: A lean six sigma framework to enhance the competitiveness for smes, empirical evidence from vietnam

1. HUFLIT International Conference On Ensuring A High-Quality Human Resource In The Modern Age - Oct 16, 2020 doi: 10.15625/vap.2020.00117 A LEAN SIX SIGMA FRAMEWORK TO ENHANCE THE COMPETITIVENESS FOR SMES, EMPIRICAL EVIDENCE FROM VIETNAM Nguyễn Thị Xuân Lan1, Hoàng Đức Sinh2 1Ho Chi Minh City University of Foreign Languages and Information Technology 2Tomas Bata University in Zlín lan.ntx@huflit.edu.vn, dhoang@utb.cz ABSTRACT: In the contemporary world, economic uncertainty and globalization have motivated leaders to develop innovation and operations that would help improve the competitiveness of small and medium-sized enterprises (SMEs). The study has established that adopting an integrated Lean Six Sigma framework can help SMEs compete favorably. This article tends to investigate how the adoption of the Lean Six Sigma framework can enhance the competitiveness of SMEs which comprise four companies in Vietnam namely Boeing, Daimler AG, Hershey and Kanban company. The quantitative methods of research were adopted in this paper. The research targeted small and medium-sized enterprises in Vietnam that have adopted the Lean Six Sigma approach and those that have not applied this framework. In doing so, various SMEs in Vietnam were selected randomly, and a comparison was made on the most competitive factors. The results of the study demonstrated that SMEs that have adopted the Lean Six framework is more competitive as compared to those that have not yet adopted the approach. Hence, the adoption of an integrated Lean Six Sigma framework by SMEs in Vietnam has been fundamental in enhancing their competitiveness compared to enterprises that have not adopted it. Keywords: Lean Six Sigma (LSS), globalization, SMEs, competitiveness. I. INTRODUCTION Both Six Sigma and Lean have established acceptance as companies recognized business improvement methods, particularly in Vietnam, contributing to significant growth for their popularity (Chaurasia, Garg & Agarwal, 2016) [1]. In this regard, the Six Sigma approach is essential in enhancing the competitiveness for small and medium-sized enterprises (SMEs) and the empirical evidence from Vietnam. Moreover, this approach can be applied to achieving sustained customer satisfaction due to its attention to the customers' needs. By putting more emphasis on the customer requirements, the Lean framework can be significant in eliminating possible performance matters before they happen. The DMAIC cycle, inherent, known as the Define, Measure, Analyze, Improve, and Control within the Lean background, is used to describe the data-centric improvement method (Chatterjee, 2016) [2]. The completion of each particular DMAIC cycle seeks to create the sigma framework's goal in the improved performance and the sustained quality for SMEs in Vietnam (Chaurasia Garg & Agarwal, 2016) [1]. A Lean can be considered the value-focused and a waste reduction method, which tends to eradicate non-value-added processes. In a particular effort on processing, the lean approach can be well-defined as a systematic method applicable to eliminating and identifying waste through continuous product improvement to please the client (Swarnakar & Vinodh, 2016) [3]. The Sigma approach seeks to initiate business activity improvements by adopting the fundamental structures of both Six Sigma and Lean and joining these structures to one specific framework to enhance the business's performance. In doing so, SMEs place more focus, adding value and hence lowering and eradicating waste. Six Sigma has adopted the old Sigma DMAIC cycle in which the Sigma tool can be used to produce a diverse range of merits to the customers, particularly for SMEs in Vietnam (Deshmukh & Chavan, 2012) [4]. If there is a utilization of the right tools in a specific area, there will be a bigger yield for the improvement desired. Past study has established that some initiatives can help organizations and SMEs reduce competitive problems in Vietnam and the world (Chatterjee, 2016) [2]. In this regard, the fluctuating setting is the integrated Lean approach, which has been identified as one of the most efficient business improvement methods that give concepts, experience, and ways to lead to a transition and endure competitiveness for SMEs’ competitiveness in Vietnam. SMEs that tends to employ the Sigma approach may create substantial savings as established in other range of organizations and business in Vietnam. The Six Sigma approach has been recognized globally as a significant process improvement and the change management approach that has helped various businesses, companies, and SMEs achieve their performance. A good example of people who have been efficacious through the Lean Sigma approach is Jack Welch. Welch is one of the earliest people who have benefitted from the Lean approach. However, many businesses have been offering Lean services globally. There is no way to get access to these methods from a credible provider in Vietnam, focusing on the outcome custom-tailored to SMEs. Small-scale enterprises do not have access to the best resources and the option available to improve their competitiveness.
2. Nguyễn Thị Xuân Lan, Hoàng Đức Sinh 431 The socio-economic success in Vietnam has been significantly attributed to the SMEs ((Sahoo, 2019) [5]. In this note, the SMEs in Vietnam reside in an overwhelming proportion for the country's enterprises' largest figure, which accounts for almost 97 % and 87 % by the steady workforce and the registered capital criteria in the year 2005, respectively. This SMEs in Vietnam have contributed 39 % of the country's GDP Apart from the SMEs being relatively dynamic in the country's economy, and these enterprises have been significant in upholding diverse mobility of the labor market and also in the creation of jobs in the county (Tetteh & Uzochukwu, 2015.) [6]. Globalization also grants the SMEs in Vietnam with the additional problems of competing globally. Having in mind the significance of SMEs and the problems associated with globalization, it is good to observe the existing framework, methodologies, and philosophies required for running effective operations by these enterprises to establish new methods to the problems mentioned above. This study aims to establish the best Lean Sigma framework applicable in improving the competitiveness for SMEs and the empirical evidence from Vietnam. Additionally, the study will tend to create a background for the effective application of Lean Sigma in the SMEs in Vietnam. In doing so, the study will also identify several impending factors applicable to the execution of Six Sigma in SMEs in Vietnam. The study will also address the fundamentals required for successful adoption and the Sigma methodology's sustainable application in these enterprises. Past study has established that some manufacturing SMEs in Germany and the United Kingdom have been reluctant to apply the Lean Six Sigma approach (Kandil & Abd El Aziz, 2018) [7]. The proven merits to the large businesses seem to have been unsuccessful in convincing a diverse majority of these enterprises to implement the Lean Six Sigma approach. II. LITERATURE REVIEW The purpose of the LSS is to eliminate waste from every possible process in an organization. LSS framework has extensively gained acceptance as a better plan of action than various businesses and sectors. Traditionally, applications and models of LSS had concentrated on putting in practice manufacturing and making improving environments (Meisel, 2007) [8]. Nevertheless, LSS has been employed with significant achievement in education, health care, and construction. Almost all LSS implementations planned endeavors have concentrated on regular and relentless employment of Six Sigma focused DMAIC approach to differentiate results produced and state solutions concentrating on LSS and its employment of creating and generating environments. In comparison, the employment of LSS upon generating and creating environments is widely admired. Additionally, its specific implementation areas like maintenance and repair purposes and provide chain methods that enhance enhancement. A determined body of scholars’ knowingness occurs on the employment of means of particular Lean implementation. Similarly, the employment of means of Six Sigma in MRO processes has as well increased notable attention, particularly through Welch’s effort in making better the main business improvable way whist at General Electric. Over 200 journal reports returned the pursue of academic databases. These journals were reviewed, and some of the key texts, especially which were related to Lean Six Sigma practices, were moreover established for synthesis (Plenert & Cluley, 2012) [9]. The analysis provided several major conclusions, the first being that the scalar quantity of particular applications in LSS employed to MRO operations quoted in academic articles is ever so low. Hwang concentrated on the application of Six Sigma planned endeavors in aerospace corporations and established amidst other matters. The main roots of Lean Sigma project let down in aerospace applications were inadequate data and human error. Karunakaran is one of the few explorers who applied the Standard LSS method toward decreasing aircraft preservation cycle times through replicating the “future state” and also makes enhancements in execution over the practice of the Lean framework. Secondly, the LSS methodology is motivated by implementing the five stages Six Sigma DMAIC framework method. Salah and Rahim (2018) establishes that the normal pull to mainly employ a Six Sigma concentration restricts the LSS towards better based planned endeavor at the damage of driving at the same time a mixture of Lean and also better-oriented projects or Lean (Salah & Rahim, 2018) [10]. This proves that MRO corporations persist fixated on the employment of single paradigm methods of Six Sigma. The scholarly body written works around integrating both Six Sigma and Lean has its supporters into the only approach; for example, Rathilall establishes the function that active lean Sigma might have a better supply restraint resilience. As a result of their hard work, they established an urge to perfect both Lean as well as Six Sigma to decrease the supply chain. Similarly, the journals of Rathilall summarize the potential that Sigma and Lean and also decrease the supply chain and better overall supply chain results (Rathilall, 2014) [11]. The framework offers a serviceable controller to the causative application of LSS in the aerospace environment, so thus, for MRO corporations to completely grasp the advantages of a double and integrated LSS framework. Additionally, the integrated Lean Six Sigma identification and categorization of processes have to outline the concept method of operation clearly. Although several success articles support the achievement enhancement related to the Sigma and Lean as Standalone systems, some disadvantages have been noted in every method over the previous years. The most notable weakness related to Lean is the failure to include the device to decrease variation. In the free interchange of thoughts, another notable feebleness of Six Sigma is the failure to establish a connection between
3. 432 A LEAN SIX SIGMA FRAMEWORK TO ENHANCE THE COMPETITIVENESS FOR SMES, EMPIRICAL EVIDENCE FROM VIETNAM quality and Lean approach (Salah & Rahim, 2018) [10]. This emphasizes to the world of business that the processes had decreased the appearance of Lean and Six Sigma advancements and suggested the urge to integrate these methods to make an undivided enhancement approach with fewer weaknesses. The reasonable logic of the integration is to benefit the potency of both Lean and Six Sigma methods and explain impotent as a standalone. They finalized that to capitalize on the potency of Six Sigma and Lean that the most extreme balance is in making fair value from a customer’s point of view and decreasing the diversity to gratifying levels. Combining enables a corporation to benefit from the advantages of both types of advancements. In conclusion, integrating Lean and Sigma was accepted over several years in corporations that preferred to combine the two approaches rather than working with the approach independently. Six Sigma is an improvement in better management to enable corporations a little more competitive, to accomplish business perfection. From the time of the establishment of Six Sigma, improving organizational competitiveness appears to be frequent in commercial sectors. Six Sigma converted to an advanced methodology for lowering focus disparity by concentrating on ongoing breakthrough advancement. Nevertheless, Rathilall elaborates that altering mindset and the growth of skills to make use of all Six Sigma devices essentially effectively is necessary to reach the highest focus of DPMO. The Sigma applications are ardentl based on the project's achievement in high regard to its critics and the anticipated financial benefits. Sraun and Singh (2017), vindicate the Lean Sigma system in which he claims that it is an effective management approach to succeed and sustain excellence in services and operations. Moreover, Pilotto and O’Donnell-Young depict Six Sigma themes: process focus, customer focus, and data focus. To enable SMEs any further competitiveness, the importance of the three themes is relevant. Sraun and Singh (2017), also shows the distinction of Six Sigma based on three major points, it has a planned procedure, is result-oriented, and provides a good training podium. Furthermore, Sraun and Singh (2017), depict four viewpoints that show the distinction between Six Sigma from TQM [12]. It also employs specific metrics, and it also has maximum time enhancements experts. Consequently, it adds to the general performance enhancements of the businesses. This discovery in quality management in Six Sigma opens a new debate. Full discussions on Six Sigma are debated on business magazines, media, and academic literature. III. RESEARCH DESIGN AND METHODOLOGY This particular section's focus is to detail the method which the study will undertake to collect data and information for empirical research. The data are collected from SMEs in the manufacturing sector in Vietnam. The businesses that have applied the quality management approach as the Sigma were given priority for this research. This study will incorporate the quantitative technique as the methodology to validate the goal of the research. A step-by-step approach will help determine the Lean approach adopted by small and medium enterprises to enhance their competitiveness, particularly in Vietnam. Moreover, it will examine the study methodology in detail. The best research method will be explored by explaining several research paradigms and giving details of the data collection method and analysis. This area was exploratory and concluded that adopting the Lean Six Sigma approach plays a vital role in enhancing SMEs' competitiveness in Vietnam. The literature review played a vital role in accomplishing this research in which it was easy to realize loophole in knowledge and thus ensure research questions. This was later accompanied by designing an effective method to address the research questions, which helped the data collection method concerning SMEs in Vietnam. Data SMEs in Vietnam was were analyzed, and research findings were drawn. The study outcomes and findings were validated against the research goal. A conclusion was arrived on how a Lean framework would be applied to SMEs to improve their competitiveness. The lean Sigma framework has demonstrated its potential to discourse quality-related issues in SMEs in Vietnam. Initially, past studies have shown that the SMEs lacked more interest in the Lean Six Sigma framework. However, the Lean approach can be implemented to enhance SMEs' competitiveness and empirical evidence from Vietnam. Figure 1 shows the proposed framework, which can be adopted by various enterprises in Vietnam to enhance their competitiveness. Additionally, the figure depicts how SMEs in Vietnam should first develop their strategic decisions. Later, these SMEs translate these decisions into effective projects that will help them to facilitate persistent improvement. The above framework is required to be supported by these SMEs to ensure success. When the proposed projects for these SMEs are handed over to the operational level, the DMAIC cycle follows. This particular cycle is robust and can be applied to prevent the establishment of hasty assumptions and provide sufficient investigations on the alternative solutions to the proposed projects. The above part of the Lean framework is tactical since it brings into line the satisfaction of the customer via the operational activities.
4. Nguyễn Thị Xuân Lan, Hoàng Đức Sinh 433 Figure 1. The Proposed Lean Six Sigma Framework A. Survey instrument design The choice made on this research has established that the developed questions and scales had a precise degree of validity and comprised of the Lean approach on SMEs, which was deemed to be justified in this particular study. The structure of the questions used in this study was based on SMEs that employ the Lean approach to enhance their competitiveness. Additionally, the question was also based on the following categories: organizations that practice the Lean technique as a standalone system, organizations that practice the Six Sigma technique as a standalone system, LSS critical success factors, and usage of different tools and techniques. The study adopted both open-ended and close- ended questions in the questionnaire design. The close-ended questions were designed on a five-point Likert scale ranging from “Do not agree at all” (1) to “Totally agree” (5). The target population and sample size The survey used in this research assessed practical knowledge and experience instead of a particular notion; the target population included managers from the Vietnam SMEs. The managers in this business were interviewed on how the Lean approach could improve their competitiveness. Questionnaires were used to gather more data, which were later analyzed and a conclusion made. A census sampling was adopted when data was collected and involved a sample of SMEs in Vietnam. The Stat Graphics application used in the sample size indicated that a 95 % extent of confidence indicated an efficient sample size. It was indicated in the literature that to get accurate data and information, the statistical analysis comprised at least 30 elements to be used in the investigation. Table 1. Data collected on the four companies Manager Name Company Job Title Lean Experience Used Lean Tools Mr. K Boeing Production 2 years 5S, Kanban, Poka-yoke manager Mr. S Daimler AG Lines manager 4 years S, Multi-task worker, Kanban, Visual control, Kaizen, VSM, Operational Standardization Ms. H Hershey Manager 3 years Leveled production (Heijunka), Preventive maintenance, Jidoka Mr. M Kanban Manager 3 years Kanban, Kaizen Company
5. 434 A LEAN SIX SIGMA FRAMEWORK TO ENHANCE THE COMPETITIVENESS FOR SMES, EMPIRICAL EVIDENCE FROM VIETNAM B. Data analysis methods The Statistical Package for Social Science was acquired to process and analyze data acquired through the questionnaire. Every quantitative question was analyzed separately based on their reliability, the frequency of responses, and the content. A gap analysis approach was applied to appraise the difference that occurred in the desired operating stages of the crucial achievement of Lean Six in SMEs in Vietnam. A descriptive analysis was applied to collect and gather data. The data analysis also played a very important role in developing advanced questions to design the interview methods used in this study. The survey method adopted assisted in establishing Six Sigma that practices the SMEs. In identifying the motivation behind the Lean Sigma adoption, various factors were experienced during the Lean framework implementation on SMEs in Vietnam. This case study applied is suitable for discovering concealed facts. Means and frequencies were suitable methods adopted to analyze the data by establishing the distribution of the results for every variable by finding whether the results on various variables are related to each other. The mean results used were considered to be independent for the Six Sigma and Lean enterprises. The gap analysis method was used to describe the differences in the desired operating extent and the current operating extent concerning the success factor by Lean Sigma in the sample institution. The gap score acted as a representation of differences between the hypothesized score and the actual mean results. C. Survey analysis As described earlier, this study's goal was to establish how the Lean approach can be adopted to enhance SMEs' competitiveness in Vietnam. Therefore, this section addresses the survey results to obtain an overview of SMEs' operations in Vietnam. From the data collected by the questionnaire, it was established that only four SMEs in Vietnam that were currently practicing the Lean Six Sigma approach. Out of the four businesses engaged in the questionnaire, three of them had a huge financial turnover. These four enterprises claimed that they were using the Six Sigma approach. This helped to increase their competitiveness among the other enterprises that had not adopted the Lean Six framework. For this study's goal, it was established that the Lean Six Sigma approach was significant since those SMEs that had adopted the Lean approach were more productive than the other. IV. DATA ANALYSIS AND RESULT A. SMEs using the lean method as a standalone system The positive response that was given by the participants concluded that the Lean method as a standalone system. The finding above indicates that SMEs that have adopted the Lean approach is more productive than others. The journey towards adopting the Lean approach began with the vision of one of the SMEs in which the manager had to introduce several quality initiatives in the production process. After the execution of the Lean approach, SMEs in Vietnam successfully integrated the Lean framework. To comprehend how the Lean framework enhances SMEs' competitiveness in Vietnam, a precise review of academic and professional literature was conducted. In doing so, quality management was described, which was followed by applying the Lean approach leading to the fact about the manufacturing of SMEs in Vietnam. The SMEs' Lean approach acted as a motivation to the enterprises, which increased their competitiveness from the research carried out. However, it was found that performance loopholes were present in the processes concerning the Six Sigma and Lean tools from the findings. Some of the tools and methods are connected to the achievement factors of the Lean framework. The data collected from the questionnaire indicated that the adoption of the Six Sigma approach in Vietnam is rare. Hence, the majority of these enterprises are not competitive. The literature establishes several theoretical foundations and rationales for the adoption of the Lean methodology. The survey conducted in Vietnam highlighted some concerns on the existence of conceptual confusion to the Lean relevance, little awareness on the Lean approach was the fundamental reason as to why some SMEs failed to adopt the framework. Finally, the integrated and step-based application of the Lean approach established leverage for SMEs to apprehension a coherent approached geared towards constant development. B. SMEs using the lean and six sigma method as a standalone system The research established that there were no SMEs that adopted Six Sigma only as a standalone system. In this regard, SMEs in Vietnam adopted some of the Lean before and later applied the Six Sigma method into their manufacturing process. Although in terms of feedback towards Sigma framework. Both mathematical and statistical tools make it very tough for the average employee within the SMEs to get maximum results.
6. Nguyễn Thị Xuân Lan, Hoàng Đức Sinh 435 Table 2. Outcome pertaining to SMEs infrastructure SMEs infrastructure Mean Gap Communality Cronbach’s p-value for type of alpha practice Entire processes and 2.7 -2.1 0.738 - 0.045 policies within SMEs The SMEs’ strategies 2.6 -2.2 0.720 - 0.034 The SMEs commit to 3.3 -1.5 0.534 - 0.264 modifying systems The SMEs respect and 3.2 -1.6 0.762 - 0.461 supports A culture of continuous 2.7 -2.1 0.713 - 0.192 improvement Overall 2.9 -1.9 0.693 - C. The status of lean six sigma implementing SMEs From the data collected, 33, which is 35.87 % of SMEs in Vietnam, were practicing the Lean Six framework, which improved their competitiveness. The majority of SMEs in Vietnam were local firms where few of them represented joint ventures. These enterprises were spread over Vietnam and belonged to a large manufacturing sector. The majority of them had started a quality department where the majority measured their client's satisfaction level. Some of SMEs were using the Lean Six approach to control their internal wastes. Several businesses that had adopted the Lean approach received formal training and believed that their business culture supported the Six Sigma framework. Table 3. Example of wastes important for the SMEs Measure type Frequency Percent ( %) Producing defect 27 86.8 Inventory 17 64.5 Waiting 18 49.5 Over production 18 47.5 Over processing 8 28.3 Motion 6 16.2 Transport 4 14.1 The above data shows some of the SMEs who benefited from the Lean Six Sigma approach. Some of which includes less process waste and less rework. Table 4. Merits after implementing the Lean Six Sigma approach Measure type Frequency Percent (%) Financial Savings 28 88.9 Reducing inventory 27 85.8 Less process Waste 27 83.8 Increased product understanding 26 86.8 Reduced Lead Time 29 76.8 Less rework 24 73.7 Others 6 13.1
7. 436 A LEAN SIX SIGMA FRAMEWORK TO ENHANCE THE COMPETITIVENESS FOR SMES, EMPIRICAL EVIDENCE FROM VIETNAM Some of the SMEs thought that the Lean approach could be implemented before Six Sigma, while some thought that it would be effective if the two were implemented on the same time. Table 5. Outcome pertaining to production control SMEs Pull production system in Mean Gap Communality Cronbach’s p-value for manufacturing process alpha type practice Single piece 2.7 0.866 - 0.365 flow of resources is maintained between -2.4 processes Application of Kanban systems to signal 2.8 -2.1 0.776 - 0.191 for resources requirements in each process The factory layout is sectioned into 2.5 -2.3 0.881 - 0.135 producing cells that encompass product families with comparable manufacturing requirements The production schedule is directly 2.4 -2.3 0.643 - 0.363 connected to the rate of customer demand We apply the Single-Minute Exchange 2.5 -2.5 0.675 - 0.362 of Dies (SMED) technique to give rapid changeover of tooling and fixtures The seven forms of manufacturing 3.5 -1.6 0.425 - 0.425 waste (overproduction, waiting, transportation, processing, inventory, motion, defects) are identified and highlighted in our processes We practise the 5S tool to guarantee that 4.5 -1.5 0.551 - 0.296 the organisations shop floors are well organised, clean and safe We have standard operating methods for 3.4 -1.4 0.7342 - 0.130 all processes Production is stopped immediately for a 3.3 -1.9 0.741 - 0.104 single abnormality Overall 3.4 -1.2 0.653 0.983 - V. DISCUSSION AND PROPOSED FRAMEWORK This study tends to explore how the application of the Lean approach improves the competitiveness of SMEs in Vietnam. Both Six Sigma and Lean have established acceptance as companies recognized business improvement methods, particularly in Vietnam, contributing to significant growth for their popularity. In this regard, the Six Sigma approach is essential in enhancing SMEs' competitiveness and the empirical evidence from Vietnam. The Six Sigma approach has been recognized globally as a significant process improvement and the change management approach that has helped various businesses, companies, and SMEs achieve their performance. The empirical evidence in this research established that Lean and Six Sigma have various limitations, such as the standalone system. VI. CONCLUSION The research concluded that several gaps are outlined in the processes concerning Six Sigma and Lean tools and methods. This particular tools and methods have been associated with the critical success factor of the Lean Sigma framework. The analysis made on SMEs that have adopted the Lean approach is that they are more competitive than those that are yet to apply it.
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