Prospects of Lean Six Sigma in Small and Medium Enterprises Sector of Gujarat

Guide:Dr. Gayatri DoctorFaculty of Management, CEPT University Dr. Sharad PotghanCorporate HeadSubmitted By:Morakhia Sagar ChampakbhaiAM-0912

MBA (Technology Management)Faculty of Management, CEPT UNIVERSITYKasturbhai Lalbhai Campus, University Road, Navrangpura, Ahmedabad 380 009

CERTIFICATE

This is to certify that the thesis titled Prospects of Lean Six Sigma in Small and Medium Enterprises sector of Gujarat has been submitted by Mr. Sagar C Morakhia towards partial fulfillment of the requirements for the award of Masters Degree in Technology Management with specialization in Operations and Project Management. This is a bonafide work of the student and has not been submitted to any other university for award of any Degree/Diploma.

Dr. / Prof: _____________________Guide: ________________________Date: _________________________

UNDERTAKING

Name of Student: ___________________________Code No: ______________________________ __________________________________SignatureI, Sagar Champakbhai Morakhia, the author of the thesis title, Prospects of Lean Six Sigma in Small and Medium Enterprises Sector of Gujarat, hereby declare that this is an independent work of mine, carried out towards partial fulfillment of the requirements for the award of Masters Degree in Technology Management with specialization in Operations and Project Management at the FACULTY OF MANAGEMENT, CEPT University, Ahmedabad. This work has not been submitted to any other institution for the award of any Degree/Diploma.

Date:Place: Ahmedabad

ACKNOWLEDGEMENT

I would like to express my greatest gratitude to my guides Dr. Gayatri Doctor and Dr Sharad Potghan for their continuous support in my Masters study and research, for their patience, motivation, help and their resources to help me get responses in my research thesis, without their support and help, this thesis would not have been possible.

Their guidance helped me in the time of research and writing of this thesis, from initial advice & conceptual inception & through on-going advice & encouragement to this day. I could not have imagined more help for my dissertation.

A special thanks to Mr. Anay Mashruwala, Mr. Milind Desai who helped me in getting contacts of people that could help me in this research thesis and all my respondents who though being busy with their organizations took out their precious time to give inputs in my research

I wish to thank my family for their support and encouragement to go my own way, without whom I would be unable to complete my project.At last but not the least I want to thank my friends Muneek, Mihir, Adit, Krutik and Kevin who appreciated me for my work and motivated for the thesis and finally I want to express my gratitude towards God who made all the things possible.

ABSTRACTLean Six Sigma a philosophical concept that came up with merger of two different concept. Lean and Six Sigma pioneered by Toyota and Motorola respectively, this mix hybrid approach works towards improvement on both the front, i.e. decreasing defects and lessening the process wastages.Since the merger of these two concepts it has been said, that the hybrid approach is more beneficial as it tackles not only productivity but also removal of unnecessary processes and processing. Many organizations since then have implemented and benefited from this philosophy over the globe and in our country.In 2009 MSME department came up with a scheme for deployment of Lean Six Sigma in SME sector, to make them more competitive in terms of international market. The reason for selecting SME sector was the fact that SME sector plays a major role in employment generation of India and one of the major problem with SME sector is fund out to be lack of competitiveness against the international players.This research thesis is aimed at finding out the prospects of Lean Six Sigma in SME sector of Gujarat, which has been fulfilled with the help of primary survey and discussions with the SME owners.

Table of Contents1CERTIFICATE2UNDERTAKING3ACKNOWLEDGEMENT4ABSTRACT5CHAPTER 1: INTRODUCTION71.1Introduction to Lean Six Sigma81.2ORIGINATION OF LEAN SIX SIGMA10CHAPTER 2: TOOLS USED IN LEAN SIX SIGMA PHILOSOPHY112.1 Poka Yoke122.2 Value Stream Mapping162.3 DMAIC-Lean182.4 Five S202.5 Kaizen22CHAPTER 3: SME SECTOR IN INDIA233.1 Introduction to SME sector of India243.2 Functioning mechanism253.3 Problems of Indian MSMEs26CHAPTER 4: NEED FOR LEAN SIX SIGMA IN INDIA284.1 Introduction294.2 Lean manufacturing competitiveness scheme, NMCP30CHAPTER 5: RESEARCH METHODOLOGY335.1 Research objective345.2 Methodology of approach to thesis36CHAPTER 6: ANALYSIS386.1Data Analysis396.2Conclusion546.3 Further Studies54ANNEXURE #155QUESTIONNAIRE ON MICRO, SMALL & MEDIUM ENTREPRISES (MSMEs)55Section A: General information of the company55Section B.57Bibliography60

Figure 1: Contact Type Poke Yoke15Figure 2: Contact type Poka Yoke15Figure 3: Fixed value Poka Yoka16Figure 4: Value Stream Mapping18Figure 5: DMAIC20Figure 6: Type of organization ownership41Figure 7: Type of business operations42Figure 8: Years of operations43Figure 9: Amount of Workforce44Figure 10: Highest Qualification of Management Team44Figure 11: Policy for productivity improvement45Figure 12: Annual Turnover46Figure 13: Practicing Lean Six Sigma47Figure 14: Which Lean Six Sigma Tools48Figure 15: Reason for not using Lean Six Sigma techniques49Figure 16: Policies Awareness50Figure 17: NMCP Awareness50Figure 18: Correlation between Series 1: Awareness about productivity improvement schemes of MSME Series 2: Awareness about NMCP scheme51Figure 19: Perception about highest cost in LSS52Figure 20: Awareness about Kai-Zen53Figure 21: Awareness about subsidy54

Table 1: 5S23Table 2: Most used Lean Six Sigma tools in SME sector of Gujarat49

CHAPTER 1: INTRODUCTION

1.1Introduction to Lean Six Sigma

Lean is a methodology that focuses on elimination and reduction of wastage in process or improvement of the manufacturing processes from older and already existing legendary system without adversely affecting the output quality.

Whereas, Six-sigma is a concept that focuses on reduction of waste production i.e. increasing the productivity of the process without affecting the processing quantity and quality of the final product.Lean is a Japanese concept that evolved as a result of 1973 crisis when a need for a new production process was born, with its foundation laid in Japanese automobile giant Toyota it was first termed as Toyota Production System (TPS).

In the late 1980s a Massachusetts Institute of Technology (MIT) study conducted by a research group in the International Motor Vehicle Program (IMVP) coined the term Lean. The IMVP definition of Lean is:

Half the human effort in the factory, half the manufacturing space, half the investment in tools, half the engineering hours to develop a new product in half the time. Also, it requires keeping far less than half the needed inventory on site, results in many fewer defects, and produces a greater and ever growing variety of products (Wodalski, Thompson, Whited, & Hanna, 2011)

Whereas Six-sigma is a western concept that has its roots in western companies like Motorola and was made famous by GE and Jack Welch.Six Sigma programme was first launched at Motorola in 1986,by the joint efforts of some key persons among which Mikel Harry (Senior Engineer of the Government Electronics Group), BillSmith (VP and Senior Quality Assurance manager) and Bob Galvin (CEO).Motorola invented The Six Sigma quality improvement process in 1986. Six-sigma provided a common worldwide language for measuring quality and became a global standard.(Arunagiri & Babu, 2013)Thus, Six Sigma is an improvisation business strategy that helps organizations to increase their profits by optimizing their operations, improving quality and eliminating defects. Six-Sigma theme pivots on drastic reduction of variability in the processes.

The companies that adopt Six Sigma approach dedicate their resources to reduce the process variation to such a level that the number of defective parts per a million of produced parts would be less than 3.4. Embarking on a Six Sigma program means delivering top-quality products and service while virtually eliminating all internal deficiencies.(Raghunath & Jayathirtha, 2012)Six Sigma implementation uses five step DMAIC (Define, Measure, Analyze, Improve andControl) methodology, somewhat similar to Plan-Do-Check-Act problem solving methodology defined by Deming. DMADV (Define, Measure, Analyze, Design and Verify) methodology is adopted for new product developments. (Raghunath & Jayathirtha, 2012)

Lean and Six Sigma complement each other. Lean accelerates Six Sigma, delivering greater results than what would typically be achieved by Lean or Six Sigma individually. Combining these two methods gives your improvement team a comprehensive tool set to increase the speed and effectiveness of any process within your organization resulting in increased revenue, reduced costs and improved collaboration.(Six & Process, 2012)

1.2ORIGINATION OF LEAN SIX SIGMA

Lean Six Sigma (LSS) is understood as integrating Six Sigma and the lean tools to reap the benefits of both. LSS is fast becoming a buzzword among in industry. It seems to be replacing Six Sigma as the next generation approach to many.While the term Lean Six Sigma is quite commonly used, the definition varies across different sources and doesnt mean the same thing. Some common perceptions about Lean Six Sigma (LSS) are: It is a condensed and less costly version of Six Sigma It is Six Sigma on a fast track (less completion time) It is Six Sigma combined with lean tools for better resultsBecause of these differences in their practice and adaptation, Lean Six Sigma is not having a universally common meaning or implementation procedure. But one thing that is quickly recognized is that Lean Six Sigma takes much less time and other resources so that the results are visible in a shorter span of time. It is this perceived image that has made it popular and attractive to industries. In fact, that is the reason for the order of the perceptions just provided. Most companies are adopting it for the first two reasons, not necessarily the inclusion of the Lean tool.(Gershon & Rajashekharaiah, 2011)

CHAPTER 2: TOOLS USED IN LEAN SIX SIGMA PHILOSOPHY

Lean Six Sigma is a hybrid methodology which is successfully implemented in organizations with the help of tools, few of the Lean Six Sigma tools are explained below in brief:

2.1 Poka YokePoka-yoke is a Japanese quality assurance technique developed by industrial engineer Shigeo Shingo while in Toyota during the 1960s. The aim of poka-yoke is to eliminate defects in a product by avoiding or correcting mistakes as early as possible. Poka-yoke has been used most frequently in manufacturing environments.(Robinson, n.d.) Poka-Yoke is also known as a mistake proofing technique. It was first coined during 1960s by Shigeo Shingo, one of the industrial engineers at Toyota. The term poka-yoke is derived from two Japanese terms poka- which translates to mistakes and yoke- a shorthand form for yokeru which means avoidance. Thus poka-yoke translates to avoidance of mistake.

Poka-yoke helps people and processes work right the first time. Poka-yoke refers to techniques that make it impossible to make mistakes. These techniques can drive defects out of products and processes and substantially improve quality and reliability. It can be thought of as an extension of FMEA.

The use of simple poka-yoke ideas and methods in product and process design can eliminate both human and mechanical errors. Poka-yoke does not need to be costly.(Poka Yoke or Mistake Proofing:: Overview:: The Quality Portal, 2013) Types of Poka-YokeThere are essentially three types of control poka-yoke Contact Type Fixed-value Motion StopContact type poka-yokeThe contact method identifies the defect by whether or not the contact is established between the parts of a machine, or the device and some feature of the products shape or dimension.The most visible poka-yoke of this type is mobile SIM card and the slot for the card in mobile. If you try to insert the SIM card any other way, it will not fit into the slot provided, hence avoids the mistake of wrong insertion of SIM card.

Figure 1: Contact Type Poke YokeSource: http://www.designvsart.com/blog/2009/10/29/poka-yoke-design/#.U3BPsFfJAm0

Figure 2: Contact type Poka YokeSource: http://www.cellfservices.com/store/images/sim-card-slot.jpgDue to the trimmed corner, a SIM Card cannot be put into a cell phone in a wrong way, one of the finest use of contact Poka-Yoke in our day to day life.(Brion, 2009)

Fixed-value Poka-YokeThis method of Poka-yoke uses number of movements/count to keep a tab on the final result, and ensures that there is no mistake in the final product.For example In a car assembly a sensor determines if a pre-set number of bolt heads are there or not, if any single bolt head is found missing the machine will stop and the product would go to a mistake proofing area.This could also be explained with the help of the below diagram

Figure 3: Fixed value Poka YokaSource: http://bestinpackaging.files.wordpress.com/2014/02/140202-poka-yoke-concept05-750x380-72dpi.jpg?w=470&h=140&crop=1

In this packaging material, the manufacturer has provided slots for exact number of parts that are to be fitted in before next step, if a single product is missing the stark contrast between the black background and white material will directly show the presence of error.

Motion Stop Poka-YokeThe motion step method is based on the completion of prescribed steps performed in a sequence by a single person. This method determines whether the established steps or motions of a procedure are followed or not.For example in an airplane Electronic Pilot pre-flight checklist which enables the aircraft when completed in the correct sequence (Brion, 2009)This kind of poka-yoke could also be seen in a software installation, where there are few pre-requisites which if not completed, the installation process of the software will not move forward.Steps for Poka-YokeStep by step process for Poka-Yoke1. Identify the operation or process based on Pareto.2. Analyse the 5-Whys and understand the ways a process can fail3. Decide the right poka-yoke approach, such as:a. Shut out type (preventing an error being made)b. Attention type (highlighting that an error has been made)4. Determine which type of poka-yoke could be used to solve the problema. Contact typeb. Fixed value typec. Motion Stop type5. Trial the method and see if the method works6. Train the operator, review performance and measure success.(Poka Yoke or Mistake Proofing:: Overview:: The Quality Portal, 2013)

2.2 Value Stream MappingValue stream mapping is a lean manufacturing or lean enterprise technique used to document, analyse and improve the flow of information or materials required to produce a product or service for a customer(Value Stream Mapping Definition, 2014)

Figure 4: Value Stream MappingSource: http://upload.wikimedia.org/wikipedia/commons/9/99/ValueStreamMapParts.pngVSM is a lean tool that employs a flow diagram documenting in high detail every step of a process. Many lean practitioners see value stream mapping as the fundamental tool to identify waste, reduce process cycle times, and implement process improvement. Some organizations treat the value stream map as the hallmark of their lean efforts.Value steam mapping can be a crucial tool to document processes and eliminate waste. Every process improvement initiative should begin with a clear understanding of current performance and an idea of the waste minimization you can achieve.

Visible differentiating factors of Value Stream Mapping from Six Sigma are:1) It gathers and displays a far broader range of information than a typical process map.2) It tends to be at a higher level (5-10 boxes) than many process maps.3) It tends to be used at a broader level, i.e. from receiving of raw material to delivery of finished goods.4) It tends to be used to identify where to focus future projects, subprojects, and/or kaizen events.(Value Stream Mapping Definition, 2014)Heres a quick rundown of the creation process:1. Assemble a cross-functional team that has representatives from all areas of your process.2. Consider the customer.3. Draw the customer near the top right of your VSM and capture the events or signals that trigger the start of the process.4. Capture the process steps.5. Add the process time line.6. Summarize the key operational metrics for your process on the VSM.7. Identify improvement opportunities (Gygi, Williams, & DeCarlo, 2012)

2.3 DMAIC-LeanThe DMAIC (Define-Measure-Analyze-Improve-Control) is the classic Six Sigma problem-solving process. Traditionally, the approach is to be applied to a problem with an existing, steady-state process or product and/or service offering.(Define-Measure-Analyze- Improve-Control (DMAIC), n.d.)DMAIC (Lean Six Sigma) is a system of management that results in a steady pipeline of projects that are ready for improvement. There are obstacles to smooth operations in any business, and Lean Six Sigma provides guidelines to help you select the right projects at the right time. Once projects are selected, you and your improvement team(s) can use DMAIC to further refine the projects and deliver quantifiable, sustainable results. (Six & Process, 2012)

Figure 5: DMAICSource: http://www.goleansixsigma.com/dmaic-five-basic-phases-of-lean-six-sigmStep 1. DEFINE the problem and scope the work effort of the project team.The description of the problem should include the pain felt by the customer and/or business as well as how long the issue has existed.Step 2. MEASURE the current process or performance. Identify what data is available and from what source. Develop a plan to gather it. Gather the data and summarize it, telling a story to describe the problem. This usually involves utilization of graphical toolsStep 3. ANALYZE the current performance to isolate the problem. Through analysis (both statistical and qualitatively), begin to formulate and test hypotheses about the root cause of the problem.Step 4. IMPROVE the problem by selecting a solution. Based on the identified root cause(s) in the prior step, directly address the cause with an improvement. Brainstorm potential solutions, prioritize them based on customer requirements, make a selection, and test to see if the solution resolves the problem.Step 5. CONTROL the improved process or product performance to ensure the target(s) are met. Once the solution has resolved the problem, the improvements must be standardized and sustained over time. The standard-operating-procedures may require revision, and a control plan should be put in place to monitor ongoing performance. The project team transitions the standardized improvements and sustaining control plan to the process players (Define-Measure-Analyze- Improve-Control (DMAIC), n.d.)2.4 Five S

Five S is a manageable process that is relatively easy for people to understand and get their arms around. Five S is a reference to five Japanese words that have been transliterated and translated into English. The technique is often characterized, incorrectly, as a standardized cleanup. It is more than that. Five S is a method to organize and manage the workspace and work flow with the intent of improving efficiency by eliminating waste, improving work flow and reducing process inefficiencies.(Taylor et al., 2009)

Table 1: 5SJapanese TermEnglish EquivalentMeaning

SeiriSortThrow away all rubbish and unrelated materials in the workplace

SeitonStraightenSet everything in proper place for quick retrieval and storage

SeisoSweepClean the workplace; everyone should be a janitor

SeiketsuStandardizeStandardize the way of maintaining cleanliness

ShitsukeSustainPractice 'Five S' daily - make it a way of life; this also means 'commitment'

Some of the benefits of 5S Teach everyone the basic principles of improvement. Provide a starting place for eliminating all waste. Remove many obstacles to improvement (with very little cost). Give workers control over their workplace(5S - Seiri, Seiton, Seiso, Seiketsu, Shitsuke, 2004)

Positive impacts of the 5S system Reduced total lead time Elimination of accidents Shorter changeover times Improved worker attendance Value-added activities More improvement ideas per worker(The New Economy Institute, n.d.)

2.5 Kaizen

Kaizen means continuous, incremental improvement of an activity to create more value with less waste(Wodalski et al., 2011)In other words to make continual improvements that may be very small to large change using team or individual creativity in the routine works to make working effective & free of losses.is Kaizen(Riasudeen & Kajal, 2012)

Kaizen are short, intensive projects where a group of people with relevant knowledge are sequestered for four or five days and apply structured improvement methods on a targeted process or activity. The energy generated by such events is legendary, engendering a high degree of creativity by the pressure to rapidly produce tangible results(George, n.d.)

Operation of a Kaizen

In a traditional Kaizen project, the people from a particular work area come together with a few experts for 4 or 5 days straight and complete most or all of a DMAIC cycle on a limited high-priority issue (we need to get materials to the shipping dock faster). Kaizen events are a powerful improvement tool because people are isolated from their day-to-day responsibilities and allowed to concentrate all their creativity and time on problem solving and improvementCompanies who use Kaizens have found they (a) Generate a lot of energy among those who work in the area being improved, and(b) Produce immediate gains in productivity and quality. (George, n.d.)

CHAPTER 3: SME SECTOR IN INDIA

3.1 Introduction to SME sector of India

India drew up its first industrial policy in 1948 with the State assuming the role of both an entrepreneur and a regulatory authority in industrial development. A centralised planning practice was adopted with wide ranging controls on private trade, investment, land ownership and foreign exchange.(Indian, 2007)

The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under:

Enterprises engaged in the manufacture or production, processing or preservation of goodsas specified below:I. Amicro enterpriseis an enterprise where investment in plant and machinerydoes not exceed Rs. 25 lakh;II. Asmall enterpriseis an enterprise where the investment in plant and machinery ismore than Rs. 25 lakh but does not exceed Rs. 5 crore;andIII. Amedium enterpriseis an enterprise where the investment in plant and machinery ismore than Rs.5 crore but does not exceed Rs.10 crore. (RBI, 2013)In case of the above enterprises, investment in plant and machinery is the original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No.S.O.1722 (E) dated October 5, 2006.

Enterprises engaged in providing services are defined by their level of investment in equipment as follows:I. A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh;II. A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore; andIII. A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore. (RBI, 2013)India has a lot of dependence on SME not only for contribution to GDP of the country but also, for the employment of a large number of people. MSMEs in India provides employment to 94 million people with a network of 37 million units.(2011 LEAN SIX SIGMA INTERNATIONAL CONVENTION - REPORT DATE: 26 FEBRUARY 2011 LOCATION: DR . MARRI CHANNA REDDY HUMAN RESOURCE DEVELOPMENT INSTITUTE , 2011)This sector contributed 11% to GDP in 2011. MSME sector contributes to around 45% of the manufactured output and 40% of the exports. (Management Canvas Team, 2013)

3.2 Functioning mechanismThe most basic problems with Indian MSMEs, is that the way of their functioning. Indian MSME sector is dominated by organically grown industries. Organic growth means that management has used its internal resources to expand profits, and has not made any takeovers, acquisitions or mergers. (Investopedia, 2013)Indian MSMSs initiate as a micro-enterprise and then start growing along with time as they start on getting more and more sales, this is what is known as organic growth of industries(Brand, 1986)Many of the employees in SMEs started from the ground up after working with the company for many years. Some of them are often holding supervisory and managerial positions. These employees may not be IT literate and often have high resistance to the changes in the working process that they are comfortable with after many years.(Problems Being Faced by SMEs in India An Attempt to Study MSME Segment Minutely, n.d.)

The problems of Indian MSMEs is not in delivering quality, it lies in not meeting the demands at the right time, which results into shift of a customer to an organized player.Indian MSMEs are capable to deliver the quality

In India, till recently, the Six Sigma has been confined to be the domain of only the largeOEM companies. In recent times a small section of the small and medium size enterprises are opening up to the new challenges and have started thinking of adopting the Six Sigma and lean approach for improving their effectiveness(Raghunath & Jayathirtha, 2012)

3.3 Problems of Indian MSMEsIt has been noticed that units are so engaged in the day to day management issues that they dont have time and resources to dedicate for a strategic understanding of the need and acquiring means of various techniques which would help them in enhancing their productivity and hence being competitive in the world. (Development Comissioner, 2010)

There are many issues that could be improved, modified or changed by adopting simple techniques or tools like "Lean Six Sigma" TQM, TPM, 7 QC tools. All these are no cost tools to implement, some of the common issues faced by these MSME are:a) Higher Manufacturing Costsb) Space Constraintsc) Improper process flowsd) High work and rework times (Government of India, 2013)e) Inventory of RM and finished material.f) Stock of part finished goods and in process hold up.

CHAPTER 4: NEED FOR LEAN SIX SIGMA IN INDIA

4.1 IntroductionLean Manufacturing is a set of techniques, which have evolved over a long period and are based on various minor to major breakthroughs that help in reducing cost and hence increase productivity.The majority of Lean techniques are: 5S Standard Operating Procedures Just in Time KANBAN Systems Cellular Layout Poka-Yoke Single Minute Exchange of Dies Total Productive Maintenance

Pure six sigma approach lacks three desirable lean characteristics: 1. No direct focus on improving the speed of a process2. No direct attention to reduction in the amount of inventory investment3. No quick financial gains due to the time required to learn and apply its methods and tools for data collection and analysis.(Gershon & Rajashekharaiah, 2011)Whereas, a pure lean improvement effort has the following shortcomings:1. Processes are not brought under statistical control 2. There is no focus on evaluating variations in measurement systems used for decisions 3. No process improvement practices link quality and advanced mathematical tools to diagnose process problems that remain once the obvious waste has been removed. (Gershon & Rajashekharaiah, 2011)Lean Six sigma is a combination of well-known waste elimination and process improvement techniques Lean Manufacturing and Six Sigma.(Zhang, Author, Irfan, Aamir, & Khattak, 2012)Thus Lean-Six sigma is balance approached which nullifies the short comings of one approach, and addresses the problems with more robust techniques

4.2 Lean manufacturing competitiveness scheme, NMCPThe Development Commissioner, Ministry of Micro, Small & Medium Enterprises (DCMSME), Govt. of India, announced 'Lean Manufacturing Competitiveness Scheme (LMCS)', for the benefit of Micro. Small & Medium Enterprises (MSMEs) during the year 2004 The basic rationale of the Government support to MSMEs for undertaking lean manufacturing (LM) was to enhance their productivity and competitiveness by reduction of wastages in manufacturing processes, inventory management, space management, energy consumption, etc. The Lean Management techniques also result in reduction in rejection, standardization of processes, better layout of machines resulting in reduced transportation of products during manufacturing, etc. The implementation of LM techniques leads to cost reduction for MSMEs. It also has lot of social benefits in terms of training of labour, creation of knowledge, increased labour productivity, lower input costs to other industries, and introduction of new production equipment / methods in manufacturing and development of work culture in society.

The Government of India recognizes Manufacturing as an important contributor to the national economy besides being a source of employment for the emerging young population. The National Manufacturing Competitiveness Council (NMCC) was set up by the Government of India to serve as a policy forum for credible and coherent policy initiatives in the manufacturing sector. NMCC has prepared a National Strategy for Manufacturing which outlines the policy and strategies to be pursued towards higher levels of growth and employment. One of the long term strategies identified by NMCC is the National Manufacturing Competitiveness Programme (NMCP), aimed at enhancing the competitiveness of micro, small and medium enterprises through a number of interventions that help these enterprises to modernize and become competitive. In the Programme 10 schemes with an outlay of Rs. 956 crores have been drawn up for SMEs are implemented in the Public Private Partnership (PPP) model(MSME, 2013)

4.3 Lean Manufacturing Competitiveness Scheme IntroductionThe Lean Manufacturing Competitiveness Scheme which is one of the ten components of the NMCP, is very important from the productivity perspective of MSMEs. The scheme has been implemented through clusters, initially, for 100 clusters on a pilot basis.

Coverage and EligibilityThe Scheme is open to all the units throughout the country which qualify as Micro, Small or Medium as per the definition of the MSME Act. (The Micro, Small and Medium Enterprises Development Act, 2006). All the participating units must have unique EM no. The units must be located in same geographical location and producing same or similar range of products. Only MSMEs of manufacturing sector are eligible to participate in pilot phase.

Implementation ApproachThe approach involves identification of mini-cluster(s) within clusters, in the form of a Special Purpose Vehicle (SPV), to which Lean Manufacturing Consultants (LMCs) are engaged to assess the existing manufacturing system of member units of the mini cluster(s) and stipulate detailed step by step procedures and schedules for implementing and achieving Lean techniques.

Implementation StructureA three tier structure has been formed for implementation of the scheme: Mini Cluster (MC) Units (8-12 nos) [Which has later been scaled down to a minimum of six units(Department, 2013)] desirous of participating in the scheme would form a SPV (Special Purpose Vehicle) or a DPG (Distinct Project Group) under an existing SPV or Association. The Mini cluster would be assisted by a Lean Manufacturing Consultant.

National Monitoring and Implementing Unit (NMIU) At the next higher level, NMIU would monitor and facilitate implementation of the scheme. The National Productivity Council (NPC) and Quality Council of India (QCI) has been assigned the role of NMIU.

Screening and Steering Committee (SSC) The highest level, SSC, would provide overall direction for the Scheme which was headed DC, MSME and representatives from various Government & professional organizations.

Financial Assistance Financial support by the Government of India up-to a maximum of 80% of the Consultant fees for each Mini Cluster is provided in the first year of implementation. Remaining 20% is to be borne by the beneficiary MSME units. The financial assistance from Government of India under the Scheme is envisaged towards the cost of conducting awareness programme and implementation of Lean techniques.This scheme was up-scaled to INR 300 Cr. In year 2013 following the success of pilot phase(MSME, 2013)

CHAPTER 5: RESEARCH METHODOLOGY

5.1 Research objective

Proposed IdeaIndian MSMEs hold a lot of potential of growth, which is visible from the volume of units existing in MSME sector, which comes to around 104 lakh units (Government of India, 2013). Moreover the common problems of MSMEs, such Backward movements of materials No vertical space utilization Availability of tools at required time and at pre-determined space Loss of time in processes Loss of productive man hours No control over Efficiency The solutions of these problems could be addressed using Lean Six Sigma techniques, as Lean Six Sigma is a tool that can reduce muda (waste) during the manufacturing process. Lean Six Sigma is an integration of Six Sigma and Lean Manufacturing, both quality improvement techniques. Lean and Six Sigma are highly complementary and Six Sigma provides an integrated improvement approach that increases quality by reducing variation, defects, and costs (Arunagiri & Babu, 2013)

Research Gap I have selected Lean Six Sigma as my area of approach instead of Lean or Six Sigma alone.

Moreover the major players in the area of Lean Six Sigma Consultancy in our country are more focused to the organized sectors, or the companies that already have a systemized approach towards organization functions.

The SME sector has left behind in these aspects,(Jha & Saini, 2011). There have been many schemes for promotion of Lean Six Sigma in SME sector of India. The MSME board along with the support of National Productivity Council has drafted a scheme for promotion of productivity improvement in SME sector of the country which is promoted under the name of National Manufacturing Competitiveness Programme in year 2010.(Manufacturing & Scheme, n.d.)

Thus it is visible that: LSS more implemented in organized sector (major industries / Large Enterprises) Need in SME is more, due to un-organized approach towards processes. MSME board and NPC has declared schemes for productivity improvement Need to bridge the gap is visible.

Objective of my research thesisThe primary objectives of my research were: To study the schemes and policies of Central Government and other central nodal agencies, for implementation and promotion of Lean Six Sigma as a part of productivity improvement drive To identify Micro, Small and Medium Enterprises or segments of MSME clusters interested in productivity improvisation and thus better competitiveness. To identify the gaps needed to be addressed by MSME department for better deployment of LSS via National Manufacturing Competitiveness Program To study and form a document which could be used either by an individual or a research consultancy for Lean Six Sigma implementation in SME sector.

5.2 Methodology of approach to thesis Study of various literatures on the topic Selecting thesis topic Study of related literature Forming the questionnaire Pilot Testing of the Questionnaire Modifications in Questionnaire Discussions with MSME owners Interviewing SME owners Understand the needs of SME owners Matching needs of SMEs and offerings of policy Form a process (tool) which could be used by SME owners to benefit from this schemeThe approach to thesis could be properly understood with the help of a flow diagram, explained below

Forming QuestionnaireResultsAnalysis of dataData CollectionModifications in QuestionnairePilot TestingStudy of Related LiteratureLiterature ReviewSelecting Thesis Topic

CHAPTER 6: ANALYSIS

6.1Data AnalysisPART 1Demographic profile of the respondents for the thesis questionnaire. This part was aimed to understand the demographic profile of the industry irrespective of type of product they are in as Lean Six Sigma is a generic philosophy which could be modified according to the type of industry it has to be applied to.

Figure 6: Type of organization ownershipThis question was aimed to understand the mode of ownership of the organization, as in any Lean Six Sigma project the commitment of top management is foremost important, for a successful improvement

Figure 7: Type of business operationsThis question was aimed to find out the number of modes of operations the respondent firms were operating in, as the scheme of central government (MSME Department) is focused towards manufacturing companies only.

Figure 8: Years of operationsThis question was asked to find out the years of operations the organization is into as, the older the organization older are its technologies and less receptive are they to changes.But we found out that those organizations where second generation entrepreneurs have entered into business, the organizations have become more dynamic and are more receptive towards new ideologies and changes.

Figure 9: Amount of Workforce

Figure 10: Highest Qualification of Management TeamThese questions were asked to find out the amount of workforce in the organization and the highest qualification of the management team, so as to understand the level of difficulty a consultant has to face to explain lean six sigma and the NMCP scheme

Figure 11: Policy for productivity improvementThis question was asked to find out whether the company has any existing policy for productivity improvement, and find out whether the organization has a policy to tackle the productivity and quality issues of their operational time.

Figure 12: Annual TurnoverThis question was asked to understand the scale of the business the organizations were into, and to identify the scope of Lean Six-Sigma in the organization, as a larger organization woud have larger scopes of improvement through Lean Six-Sigma.

Figure 13: Practicing Lean Six Sigma This question was asked to understand the amount of awareness about lean six sigma in practicing class of SME, when asked whether they are practicing Lean Six Sigma or not, 39% of the respondents replied to this question positively. It was found out that they were not aware about many terminologies, but they did practiced Lean Six Sigma tools

Figure 14: Which Lean Six Sigma ToolsWhen asked about the tools of Lean Six Sigma to the respondents, who replied in affirmation to the previous question, following were found out the most frequently used toolsTable 2: Most used Lean Six Sigma tools in SME sector of GujaratTQM28.21%

DMAIC7.69%

5S20.51%

kanban10.26%

kaizen7.69%

TPM23.08%

TOC2.56%

TQM, TPM and 5S were found out to be most famous in the SME sector of Gujarat

Figure 15: Reason for not using Lean Six Sigma techniquesThe most dominating reason among those not implementing Lean Six Sigma was found out to be the lack of awareness of the topic, and the second reason was lack of availability of skilled personnel.It was also observed that close to 25% of respondents thought that Lean Six Sigma activities does not pay off the resources they invest in them.

Figure 16: Policies AwarenessSurprisingly around 55% of the respondents were aware about the policies of the government, that are aimed to productivity improvement

Figure 17: NMCP AwarenessBut astonishingly less than 20% were aware about the NMCP scheme

Figure 18: Correlation between Series 1: Awareness about productivity improvement schemes of MSME Series 2: Awareness about NMCP schemeThe correlation between awareness about productivity improvement schemes deployed by MSME Department and awareness among the respondents regarding the NMCP scheme was found out to be +.398 which is a positive value not significant.This correlation explains the responses to our previous two answers, though SME owners were aware about the productivity schemes of MSME department, they were very less aware specifically in the case of NMCP scheme.

Figure 19: Perception about highest cost in LSSWhen asked about various costs involved in Lean Six Sigma and which according to them was the most influencing cost, or which they fund out t be the biggest cost, respondents gave New process setup cost and redesign cost maximum number of hits which shows that though MSME department and NPC are targeting consultation cost among SME owners, the organizations feel differently.

Figure 20: Awareness about Kai-ZenThough many of the SME owners did not selected Kaizen as their known tool, but are aware that little changes in their processes could bring in major changes in their savings pattern, thus MSME department and the Lean Six Sigma consultants should focus on Kaizen more in SME sector of Gujarat.

Figure 21: Awareness about subsidyWhen asked about the subsidy available under the NMCP scheme and confronted with the fact that 80% of consultation fees was available to MSMEs as a part of subsidy, a very low amount of organizations were aware about this and they showed interest in the scheme.

Figure 22When asked about whether they would like to invest into productivity improvement, 74% of the respondents answered affirmatively, which shows the readiness of the SME owners to implement a new change for improvement.

6.2ConclusionThe key findings from this research thesis were as follows: MSME owners 6.3 Further Studies

ANNEXURE #1QUESTIONNAIRE ON MICRO, SMALL & MEDIUM ENTREPRISES (MSMEs)

Dear Respondent,

This is an academic survey questionnaire which is aimed at identifying and collecting data about the awareness in micro, small and medium enterprises (MSMEs) regarding the field of Lean Six sigma.Your kind and objective response will significantly highlight these challenges from your perspective about the initiatives of MSME dept. and enhance my study regarding the same.

This is purely academic exercise and any information given would not be disclosedSection A: General information of the company1. Name of organization/Enterprise: ..2. Nature of Organization. (Please tick as appropriate)a. Private Limited Companyb. Partnershipc. Sole Proprietord. Family Owned Businesse. Others (please specify)3. Nature/Kind of organization (please tick as appropriate)a. Retail tradingb. Exportc. Manufacturing d. Servicese. Other (specify)

4. For how long has your company been in operations (please tick as appropriate)a. Less than one (1) year b. Between 1 and 5 yearsc. Between 6 and 10 years d. Between 11 and 15 years e. Over 15 years5. How many people are employed by your company ..

6. What is the highest qualification of your management team a. SSCEb. HSCEc. Diplomad. Bachelors Degree e. Masters Degreef. Other (Specify)

7. Does your organization have an existing policy for productivity improvement?a. Yes b. No 8. What is the average turnover of your business?a. Less than INR 1Crb. INR 1Cr INR 5Crc. INR 5Cr INR 10Cr d. More than 10Cr

Section B.The following questions relate to the productivity issues of your company: the difficulty in laying productivity initiatives, awareness about the policies for the same, and readiness of the company to adapt to the techniques9. Are you practicing Lean Six Sigma Techniques/Productivity Improvement?Techniquesa. Yes / No10. If Yes, which alla. Poka Yokeb. Value Stream Mapping c. DMAIC/Leand. Total Quality Managemente. 5Sf. Kanban g. Kaizenh. Total Productive Maintenancei. Theory of Constraints/ Management by Objectivesj. Others, please specify..........................................................11. If No, why not?a. Not awareb. Skilled persons are not available c. Initial Cost too highd. These activities does not payoffe. Others (specify)

12. Are you aware about productivity improvement policies of MSME department a. Yesb. No13. Are you aware about the National Competitiveness Manufacturing Program and the schemes available under it?a. Yes b. No14. Which according to you is the biggest cost effective operation of your organisation can consider for Lean Six Sigma implementation?a. Redesign Costb. New Process Setup cost c. Opportunity Costd. Consultation Fees e. Resource costf. Failure /Reprocess or Inventory Cost15. Are you aware that you can generate savings in your expenses, just by implementing few Lean Six Sigma Schemes?a. Yesb. No

16. Are you aware that according to NCMP scheme MSME owners can claim up to 80% of the consultation cost?a. Yes b. No17. Are you aware about the process required to file for the scheme under NCMP programs a. Yes b. No18. Would you like to invest in to productivity improvement drive?a. Yes b. No

Please State if you agree or disagree to the following statements by ticking the appropriate box

StronglyAgreeAgreeNotSureDisagreeStronglyDisagree

19. I would like to employ more hands in future of productivity improvement

20. I would like to establish separate department for productivity improvement

21. I would like to engage consultant for LSS implementation in near future

22. It is todays need to implement new concepts like lean sigma, TQM in All type of industries.

23. NPC should put more effort to popularize the policies

24. Transparency and Definiteness in reimbursement process required

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Sagar C Morakhia, AM0912, Faculty of Management, CEPT University12 | Page