This paper evaluates the implementation of the lean six-sigma culture in DHL, which operates in the logistics industry. The paper illustrates the company’s history and growth since its inception in a bid to provide the background information on the firm’s operations and success.
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The critical event that motivated the firm to integrate the lean six-sigma culture in its organizational culture is identified. Moreover, the paper identifies the problems facing the firm and the decisions taken in order to resolve the issues by evaluating the current state and the future state.
The effects of adopting lean six-sigma on the firm’s organizational culture and corporate governance are identified. Furthermore, the paper outlines the lean methodology adopted and the process of implementing the lean six-sigma culture in the organization.
Company history and growth
DHL is a private limited company that was founded in 1969 in Bonn, Germany. The firm operates in the Express Logistics industry and it deals with the provision of logistics and communication services. Initially, the firm operated in Europe, the Asia Pacific, and the Americas. However, the company has entered and developed market recognition in other markets over the past few decades.
The firm has four main divisions, which include global forwarding, supply chain, mail express, and freight. The mail division’s operations entail press distribution, philately, franking, delivery of written communications, cross-border parcel and mail delivery, mailroom and printing, mail advertisement, document management, and home delivery.
The express division provides “express services coupled with local and international courier services to individual and corporate customers, while the operations of the global forwarding and freight divisions entail transportation of goods through air, sea, road, and rail” (DHL, 2014, par. 5).
On the other hand, the supply chain division offers, “diverse logistic solutions such as managed transport, warehousing, supply chain management, and business process outsourcing” (DHL, 2014, par. 6). Moreover, the firm also offers end-to-end solutions with regard to corporate communications. The firm also offers marketing services such as packaging, customer correspondence solutions, and lead logistic services amongst other services.
Since its inception, the firm has undergone remarkable growth emanating from integration of effective corporate, business, functional, and enterprise level strategies. The firm has been committed towards exploiting the prevailing market demand in an effort to achieve its profit maximization objectives. The company operates in over 252 countries (DHL, 2014).
The firm has effectively defined its business operations in addition to integrating the concept of strategic partnership in an effort to penetrate the global market. In 2013, DHL announced its desire to collaborate with two oil and energy companies, viz. OEMs and EPC Contractors. This move will further enhance the company’s growth. The firm’s growth has also emanated from its commitment to position itself as the global market leader with regard to provision of logistics.
Critical events that motivated adoption of lean six-sigma
Goldsby and Martichenko (2005) define six-sigma as a “management methodology that attempts to understand and eliminate the negative effects of variation in processes” (p.57). On the other hand, the term lean is concerned with elimination of waste and enhancing flow and speed.
In this light, the concept of lean six-sigma is “the process of eliminating waste by integrating disciplined efforts that contribute to the development of comprehensive understanding on how to reduce variation and enhance speed within an organization’s supply chain” (Goldsby & Martichenko, 2005, p. 63) .
It is critical to logistician as it aids in reducing variations. Customer satisfaction is one of the major challenges facing service companies. The decision of DHL to integrate lean six-sigma was motivated by growth in customer expectations. The firm’s core strengths relate to its ability to position itself as the market leader amongst its employees and clients. This objective is in line with its corporate growth strategy.
In 2007, the firm conducted a customer survey in an effort to understand its touch points. The aim of the survey was to identify the prevailing operational gaps and hence develop insight on the necessary adjustments in order to improve its performance. The survey revealed that customers attach high value on adherence to predetermined specifications on a product or service.
Subsequently, the firm identified adherence to specification as a major factor in the determination of company’s success. The above analysis shows that DHL has managed to nurture a strong competitive advantage in the global logistics industry. The firm has successfully penetrated different markets around the world.
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Ismail (2008) contends that customers are increasingly demanding a high level of efficiency in the delivery of their products and services. Subsequently, it has become critical for firms in the logistics industry to improve their operational performance in order to meet customers’ expectations.
Ismail (2008) argues that improving performance-cycle expectations and meeting customers’ logistical expectations is one of the ways through which logistic firms can build strong customer relationships. Consistency and flexibility are the other critical factors that motivated DHL to consider integrating lean six-sigma in its operations. Customers are increasingly demanding a high level of consistency with regard to delivery of products and services.
Firms in the logistics industry have an obligation to ensure that they are consistent in their delivery services. With regard to operational flexibility, it has become imperative for courier firms to improve their ability to deal with extraordinary customer service requests. It has become critical for courier firms to improve their logistical competency.
Prior to the adoption of the lean six-sigma quality management concept, DHL experienced challenges in its effort to satisfy and meet customers’ expectations. The firm’s service delivery processes had a low level of flexibility and inconsistency hence limiting the firm’s competitiveness in the global logistics industry.
The firm recognized the important of adopting customer focus as its core goal in its lean management processes. In a bid to integrate lean six-sigma in its management processes effectively, DHL conducted a comprehensive value stream mapping, which entailed analyzing the current level of performance with regard to delivery of services.
The firm evaluated its value delivery system based on two main parameters, which include time and quality. Moreover, the firm evaluated the change in consumer behavior with regard to delivery of products and services.
From the analysis, DHL identified a trend whereby customers increasingly prefer quick and reliable levels of service delivery. Subsequently, the firm identified the need to adjust its operations in order to address the changing customer needs. Moreover, the firm identified areas that hindered the firm’s delivery efficiency. One of the aspects identified related to lack of sufficient knowledge on how to deal with dynamic customer needs and demands.
Effects of lean six-sigma on organizational culture and corporate governance
Organizational culture is comprised of the beliefs, assumptions, values, and norms shared by an organization’s employees. The shared assumptions, beliefs, norms, and values bind employees to an organization is such a way that their activities become inclined to achievement of the set organizational goals. Organizational culture has a strong influence on an organization’s ability to implement quality management.
The high rate of globalization coupled with change in consumer behavior is a major motivation for firms to consider when developing a high level of organizational sustainability. Nurturing the lean six-sigma culture is one of the strategies through which an organization can attain long-term growth. In its pursuit to attain a high competitive advantage through integration of the lean six-sigma concepts, DHL experienced a significant change in its culture.
According to Aruleswaran (2009), organizations should integrate the concept of corporate governance in order to improve their performance. The concept of corporate governance entails different ideas some of which include the framework designed by an organization in order to improve utilization of resources. Moreover, corporate governance entails the processes undertaken by an organization in order to address the stakeholders’ desires.
In the course of implementing the lean six-sigma, DHL took into account a number of issues, which in turn affected the organization’s culture and corporate governance. The change in organizational culture emanated from the resulting ‘disruptive change’. DHL’s management team developed and implemented the First Choice Program.
The program aimed at enabling the firm to improve how it conducts its business operations, hence providing customers with sustainable and excellent services. Moreover, the First Choice Program aimed at transforming the employees’ behavior so that they can be more customer-focused and provide unbeatable level of customer service.
In a bid to implement the program successfully, DHL formulated a comprehensive employee-training program. The training focused on ensuring that employees understand the organization’s core competencies (Deutsche Post, 2013). In its pursuit to improve its business processes through the First Choice Program, DHL faced a major challenge emanating from its size.
Currently, the firm operates in over 252 countries and it employs over 500,000 employees with its operations touching over 5% of the global trade. The firm interacts with over 1 million customers every hour. Satisfying such a large customer base is a major challenge. Moreover, the firm ensures that its large workforce understands the significance of the First Choice Program presented a major challenge to DHL.
Despite these challenges, DHL was committed towards ensuring the successful implementation of the lean six-sigma program [First Choice Program]. Subsequently, the firm formulated a continuous training program. The training program focused on ensuring that employees understand the logic behind the First Choice Program.
Prior to implementing the First Choice Program, DHL formulated a project charter. The charter aimed at developing a comprehensive understanding of the project, its scope, participants, and objectives. Aruleswaran (2009) contends that a methodology is paramount for successfully integration of the lean six-sigma paradigm in an organization.
An organization can adopt various methodologies. One of these methodologies includes the DMAIC methodology. This methodology provides organizations with strategies that they should adopt in order to undertake continuous improvement in an organization’s operational routine.
Aruleswaran (2009) further argues that the DMAIC methodology produces rapid results. Therefore, one can assert that the success of lean six-sigma in an organization depends on the thoroughness applied in adopting the DMAIC methodology. DHL adopted the DMAIC methodology. The various issues considered in each step are evaluated herein.
- Define-First, the firm ensured that the problem faced was defined effectively. This stage involved evaluating various customer issues in order to identify the areas in which customers are not satisfied with the firm’s operations. During this phase, the firm evaluated how it would improve its operations in order to deliver optimal satisfaction to its customers.
- Measure- In this phase, DHL established a comprehensive baseline data in order to determine the Critical-To-Customer’s Quality (CTQ) accurately. In the course of measuring its operations, DHL quantified the problem faced by assessing the level of customer satisfaction and evaluating the trend of growth in the size of its customer base. Moreover, the firm mapped out the process through which the problems that hinder its effectiveness in attaining flexibility, consistency, and meeting the customers’ expectations occur. The mapping out process also entailed an evaluation of the firm’s value stream. By assessing the CTQ, DHL was in a position to understand the critical inputs and outputs in its operation.
- Analyze– This phase is concerned with developing a comprehensive understanding of the cause of the problem faced. A thorough analysis is undertaken during this phase in order to determine the real reasons for the challenge faced (Aruleswaran, 2009).
- Improve –During this step, DHL evaluated how the identified issues would be adjusted in order to achieve optimal performance and meet the customers’ expectations. The firm conducted a focus group meeting amongst its top executives. The meeting led to the development of the First Choice Program.
- Control- The control phase entails documenting the plans identified in order to ensure that no issue is left out. All the necessary information is gathered and consolidated in order to ensure that the necessary steps are undertaken in order of priority.
The success of a particular project is dependent on the effectiveness with which it is implemented and controlled. In its pursuit to implement the First Choice Program successfully, DHL sought the support of one of its departments, viz. the Market Research Service Centre. The MRSC enabled DHL to pinpoint the customers’ needs effectively.
Moreover, the firm utilized a wide range of data collection tools such as surveys, questionnaires, and outsourcing in order to understand and analyze the customers’ experiences and expectations effectively (Deutsche Post, 2013).
The firm also undertook brainstorming session in which different support teams were involved. DHL was cognizant of the view that the success of the lean six-sigma culture in the organization was dependent on the extent to which all employees supported the program.
Therefore, the firm ensured that the program was introduced systematically and gradually. In a bid to ensure that the program is implemented successfully in all its subsidiary firms distributed in different parts of the world, the firm developed a toolkit, which outlined the necessary aspects. This move led to minimization of variations and enhanced transparency and continuity of the lean six-sigma concept.
Developing a strong organizational culture is critical in an organization’s pursuit for long-term competitive advantage. DHL’s decision to incorporate the lean six-sigma concepts in its organizational culture has played a critical role in enhancing the firm’s success in the global market.
Formulation and implementation of the First Choice Program, as one of its lean six-sigma management practices, has improved the effectiveness with which the firm offers logistic services to customers. DHL has been in a position to enhance the effectiveness and efficiency with which it offers delivery services to its customers.
Moreover, the program has enhanced the degree of customer focus amongst its employees. Employees ensure that their activities contribute towards a high level of customer satisfaction. Therefore, one can assert that development of the lean six-sigma culture has stimulated DHL’s ability to deliver value to customers as illustrated by the high rate at which the firm is growing. The firm has managed to establish its operation in over 252 countries in addition to increasing its human resource base to over 500,000 employees.
Aruleswaran, A. (2009). Changing with lean six-sigma. Selangar, Malaysia: LSS Academy.
Deutsche Post: International award for the first choice program of Deutsche Post DHL. (2013). Web.
DHL: Company portrait. (2014). Web.
Goldsby, T., & Martichenko, R. (2005). Lean six sigma logistic: strategic development to operational success. Boca Raton, FL: Jossey Ross Publishers.
Ismail, R. (2008). Logistics management. New Delhi, India: Excel Books.