Integrating the Balanced Scorecard with Six Sigma

Applying Lean Six Sigma Methodology to a Pharmaceutical Manufacturing Facility: A Case Study

This research examines a case study on the implementation of an effective approach to advanced Lean Six Sigma problem-solving within a pharmaceutical manufacturing site which manufactures acetaminophen (paracetamol containing pain relief) tablets. Though this study was completed in a single manufacturing company, the implementation of this study delivers important application and results that can be deployed in other such manufacturing companies. The manufacturing site faced backlogs in customer orders due to increased demand. Increased demand is due to brand popularity and recognition, product efficacy and a COVID 19 pandemic that intensified the demand for pain relief tablets in an already very busy site. With increased demand, to ensure timely deliveries, customer satisfaction and minimize delays, sources of site productivity losses and wastes needed to be analyzed and reduced or eliminated. Manufacturing Packaging line downtime was identified as one area of concern. The goal of the research was to introduce a problem-solving technique to reduce downtime within a manufacturing site without affecting the production required to fulfil customer demand while increasing product quality. The research utilized an integrated LSS methodology which identifies, stratifies and effectively eliminates non-value adding (waste) activities, by following a 7-step customized problem-solving methodology which resulted in complete elimination of the issue under investigation and savings of just under half a million dollars. The learnings are being deployed and leveraged worldwide across the pharmaceutical organizations parent site and sister sites. The presented results demonstrated that Lean Six Sigma methodology and tools are effective for accurate root causing of problems and enablers of implementation of continuous improvement.

Analyzing the Lean Six Sigma enabled organizational performance to enhance operational efficiency

Purpose

The aim of this analysis is to review the Indian manufacturing organizations practicing Lean Six Sigma (LSS) tools/techniques with an objective of monitoring the performance of an organization and to develop recommendation for strategies to benchmark organizational operational efficiency.

Design/methodology/approach

This study offers insights of the LSS performance measurement aspects of the Indian manufacturing organizations based on Data envelopment analysis (DEA) approach. The five inputs and two outputs are considered on the basis of literature review and discussed with the practitioners.

Findings

In this analysis, the relative efficiency score of 18 Indian manufacturing organizations has been determined in order to assist evaluation of the impact of monetary investment on the outputs. The present analysis not only investigates the optimum level of input variables but also lays down a significant observation that an organization having higher profit and inventory turnover ratio is not necessarily an efficient organization.

Practical implications

The results assist to determine the best practice units, potential source of inefficiency and deliver beneficial data for the consistent enhancement of the operational efficiency. The DEA results assist managers and decision makers to derive appropriate strategies to enhance their performance with reference to the efficient organization and to regard it as their role model.

Originality/value

This analysis renders a DEA based framework of LSS practicing Indian manufacturing organizations. The framework is unique in terms of its input-outputs variable selection and measurement procedure.

Examining the influence of expatriates’ social capital and knowledge-sharing behavior on financial performance

Purpose

The purpose of this paper is to examine the impact of expatriate’s social capital and knowledge sharing on multinational companies’ (MNCs) financial performance, with a specific focus on the influence of trust, commitment, organizational support and the four elements of balanced scorecard (BSC).

Design/methodology/approach

A quantitative questionnaire survey was conducted using expatriates of MNCs in Taiwan as the respondents.

Findings

Trust and organizational support are significant predictors of knowledge sharing and social capital, which further facilitate their influence on learning and growth, customer satisfaction, internal process improvement and financial performance of MNCs. Besides, social capital serves as an accelerate agent to promote the influence of trust on knowledge sharing, and customer satisfaction serves as a catalyst on the influence of learning and growth and internal process on a firms’ financial performance.

Practical implications

This study provides a clear articulation of the role of knowledge sharing on the financial performance and its moderation effect on the elements of BSC. Trust and organizational support are essential for knowledge sharing and expatriates’ social capital. The roles of social capital and knowledge sharing are critical for expatriates to be success in the overseas market places.

Originality/value

Since the evidences regarding expatriate performance rarely integrate the variables of social capital, knowledge sharing and BSC into a more comprehensive framework, the results of this study can be an important reference for academicians to do further validation. These results are also critical for practitioners to develop dispatching policies for the expatriates in the oversea market places.

Does CSR matter in the pharmaceutical distribution industry?

Purpose

Given the important role of corporate social responsibility (CSR) in today’s business world, this study aims to investigate how it affects the performance of pharmaceutical distribution companies by using the balanced scorecard (BSC).

Design/methodology/approach

Drawing upon the existing literature, a questionnaire consisting of 32 questions was prepared and distributed to examine ongoing practices and to probe uninvestigated domains related to CSR. To confirm the efficiency of the research model and the accuracy of the measurement model – which was utilized to examine the correlation between different variables – variable scores were acquired from a national study and were entered into a structural equation model.

Findings

Analysis of 933 completed questionnaires revealed the existence of large correlation between subsets of the considered dimensions. The questionnaire contained five underlying dimensions: employee relations, corporate governance, societal concern, economic and financial concern and environmental concerns. All CSR variables can be condensed into these five dimensions, which are the main features of the CSR model proposed for the Iranian pharmaceutical distribution companies. Not only did the results support the research model but also indicated that CSR’s impact on BSC and its four components – financial perspective, customer perspective, internal process perspective and learning and growth perspective – was both positive and significant.

Practical implications

This paper identifies five dimensions through which CSR practices can effect positive changes in an organization’s performance in relation to the four BSC perspectives. Thus, in focusing on these dimensions, a company increases its likelihood of enhancing its performance and, consequently, realizing significant gains. In addition, as managers play the most significant role in CSR implementation, they should support all associated practices to achieve their strategic goals.

Originality/value

Pharmaceutical distribution companies tend to apply CSR – which is commonly described as informal and voluntary humanitarian activities – to different domains, including the workplace, marketplace, community and environment. This study contributes to the existing literature by shedding light on various domains in which CSR practices are applied to enhance organizational success in pharmaceutical distribution companies.

Empirical analysis of Six Sigma project capability deficiency and its impact on project success

Purpose

The purpose of this paper is to understand the deficiencies in Six Sigma project capability and empirically validating its impact on project success.

Design/methodology/approach

Deficiencies are identified from literature focusing on Six Sigma challenges or barriers. The study used a survey approach by circulating questionnaires to 400 Six Sigma professionals from 40 multinational organisations. The conceptual model is composed of 16 items measuring five constructs for hypothesis testing. Furthermore, structural equation modelling was used to identify the relationship between Six Sigma project capability deficiency and project success.

Findings

The findings of the study suggest that inadequate top management support, inadequate resources and change management and inadequate quality maturity form Six Sigma project capability deficiency and affect project success.

Research limitations/implications

The study uses resource-based view to understand the deficiencies in Six Sigma project capability and their impact on project success. The study confirms that organisational capabilities in implementing Six Sigma affect the success of the projects.

Practical implications

The results of this study reveal that inadequate top management support, inadequate quality maturity of the organisation and inadequate resources and change management result into a deficiency in Six Sigma project capability. Quality managers in manufacturing and service organisations should attempt to improve these capabilities to achieve competitive advantage.

Originality/value

The study contributes to the literature by exploring the capability outlook of Six Sigma. The study attempts to fill the gap in Six Sigma literature by providing a structural model for understanding Six Sigma project capability deficiency and its impact on Six Sigma project success.

The effects of knowledge creation process on organizational performance using the BSC approach: the mediating role of intellectual capital

Purpose

Knowledge is a key success factor in achieving competitive advantage in the current fast-paced and uncertain economic environment. Several studies in the literature have analyzed the relationship between knowledge creation (KC) and organizational success; however, the mechanisms by which KC leads to accumulation of intellectual capital (IC) and thereby affects various dimensions of organizational performance are understudied. The purpose of this paper is to examine how KC and IC and their relationship influence key dimensions of organizational performance.

Design/methodology/approach

A research model was developed and tested based on the literature in the areas of KC, IC and organizational performance. This study uses a survey sent to companies in an intensive knowledge-based industry. The balanced scorecard (BSC) approach was used to measure the key dimensions of organizational performance.

Findings

The results from structural equation modeling (SEM) on 470 completed questionnaires received from the pharmaceutical companies in Iran reveal that KC activities lead to the accumulation of organizational IC and IC has a crucial and positive impact on the BSC. Furthermore, the results from the path analysis indicate that IC mediates the effects of KC on the BSC.

Practical implications

The findings of this study contribute to the extant literature on the relationship between knowledge and organizational performance by demonstrating that knowledge and KC lead to performance when organizations utilize KC activities and leverage them to accumulate IC. Once used effectively, IC will result in a better performance in the knowledge-intensive environments.

Originality/value

This is the first study that investigates how KC contributes to firm performance by incorporating the mediating impact of IC on the BSC. The proposed model and results will help organizations to identify the mechanisms through which KC initiatives improve organizational performance.

Integration of Taguchi and Shainin DOE for Six Sigma improvement: an Indian case

Purpose

The purpose of this paper is to demonstrate the application of Six Sigma/design of experiments (DOE) hybrid framework for improving damping force (DF) generation process in a shock absorber assembly unit.

Design/methodology/approach

The study adopted a case study research method with single case (holistic) design. This research design was found to be appropriate for testing the projected framework for integrating DOE approaches within Six Sigma define-measure-analyze-improve-control (DMAIC) cycle. In the proposed framework, Shainin’s component search technique (CST) was deployed at the “analysis” phase of DMAIC for the first stage filtering of process parameters, followed by the use of Taguchi orthogonal arrays (OA) at the “improve” phase for identifying the optimal setting of the parameters.

Findings

The application of Shanin CST facilitated in ascertaining that assembly component (piston with rebound stopper) was causing the variation and not the assembly process. Further, the use of Taguchi OA at the improve phase allowed the collection of necessary data to determine the significant piston parameters with minimum experimentation (eight experimental runs in this case as opposed to the expected 64) and analysis of variance on the collected data facilitated the selection of parameter settings to optimize the “critical to quality”, i.e. rebound DF.

Originality/value

This study provided a stimulus for wider application of integrated DOE approaches by the engineering community in the problem solving and the identification of parameters responsible for poor performance of the process.

The underlying factorial structure and significance of the Six Sigma difficulties and critical success factors

Purpose

– The purpose of this paper is to determine the underlying structure (latent constructs) of the difficulties and critical success factors (CSFs) of Six Sigma implementation in manufacturing companies. Determining the significance Greek manufacturing companies give to the Six Sigma difficulties and CSFs is also an aim of the present study.

Design/methodology/approach

– A research study was carried out in 91 ISO 9001 certified Greek manufacturing companies through a structured questionnaire. Exploratory factor analyses are applied to determine the underlying structure (latent constructs) of the Six Sigma difficulties and CSFs, while their significance is determined through descriptive statistics.

Findings

– Three latent constructs of Six Sigma difficulties are extracted, namely, “implementation patterns of Six Sigma methodology”, “absence of human interest and support”, and “low quality management level”. These difficulties are not considered very significant by the sample companies. Three latent constructs of Six Sigma CSFs are also extracted, namely, “understanding the implementation patterns of Six Sigma and its interface with the company”, “company culture and organisation”, and “prioritising Six Sigma projects based on stakeholders and company performance”. The role of these critical factors for the success of Six Sigma is very significant, according to the sample companies.

Research limitations/implications

– The small sample of the responding manufacturing companies, the diversity of the business sectors represented in the sample, and the subjective business evidence obtained from the company quality managers are the main limitations of the present study. Based on these limitations, future research studies are suggested.

Practical implications

– By eliminating the negative influence of the difficulties and simultaneously by enhancing the positive influence of the CSFs, a robust internal business environment can be created for the successful implementation of Six Sigma.

Originality/value

– This study fills the literature gap and contributes to the literature by determining the underlying structure and the significance of the Six Sigma difficulties and CSFs. This is the first research study in the field of Six Sigma that has been carried out in ISO 9001 certified manufacturing companies operating in the Greek business environment.