FOB | Free On Board – Incoterms 2020

FOB (Free on Board) is the most commonly-used trade term but in practice it is used without reference to any version of the Incoterms® rules. In such cases it is then up to the seller and buyer to agree in their contract on what they mean when they use these three letters. This trade

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CFR | Cost and Freight – Incoterms 2020

CFR (Cost and Freight) is one of the most commonly-used trade terms after FOB but in practice it is used without reference to any version of the Incoterms® rules, including Incoterms 2020. In such cases it is then up to the seller and buyer to agree in their contract on what they mean when

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CIF | Cost Insurance and Freight – Incoterms 2020

The CIF – Incoterms 2020 is identical to CFR except in one aspect. Even though the risk transfers to the seller upon loading the goods on board the vessel, in CIF the seller is obliged to take out the minimum level of insurance cover for the buyer’s risk. This will be at Institute Cargo

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Key Six Sigma Concepts

At its core, Six Sigma revolves around the following key concepts: Critical to quality (CTQ): Attributes most crucial for the customer Defect: Failing to deliver what the customer wants Process capability: What one’s process can deliver Variation: What the customer sees and feels Stable operations: Ensuring consistent, predictable processes to improve what the cus­tomer

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The Six Sigma Quality Level

According to Harry and Schroeder,1 Six Sigma quality fundamentally means a breakthrough strategy that can be interpreted as “a disciplined method of using extremely rigorous data gathering and statistical analysis to identify the sources of errors and ways of eliminating them.” Sigma is a letter in the Greek alphabet used by statisticians to measure

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Six Sigma versus Three Sigma

In contrast to Six Sigma quality, the Three Sigma quality standard of 99.73 per cent translates to 2,700 parts per million (PPM) failures, even if we assume zero drift. For processes with a series of steps, the overall yield is the product of the yields of the different steps. For example, if we had

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Shifts and Role of Six Sigma

Six Sigma promotes the idea that the distribution of output for a stable, normally distributed process (voice of the process) should be designed to take up no more than half of the tolerance allowed by the specification limits (voice of the customer). Although processes may be designed to be at their best, it is

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Defects Per Million Opportunities (DPMO)

To achieve Six Sigma quality, a process must produce no more that 3.4 defects per million opportunities. An opportunity is defined as a chance for non-conformance or not meet­ing the required specifications. This means one needs to be nearly flawless in executing key processes. The process and culture is conditioned for zero defects rather

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Six Sigma Strategy

Six Sigma is probably one of the best methodologies to pervade the world of improvements. Its measurement orientation, rigorous training scheme, process centricity and stakeholder involve­ment differentiate it from other quality methodologies. The tools in Six Sigma are not new, but its direct linkages to business objectives and priorities make it a powerful strategy

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Implementing Six Sigma

Six Sigma is a rigorous, focused and highly effective implementation of proven quality prin­ciples and techniques. A company’s performance is measured by the sigma level of their business processes. Traditionally, companies accepted Three or Four Sigma performance levels as the norm, despite the fact that these processes created between 6,200 and 67,000 problems per

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Define, Measure, Analyse, Improve and Control (DMAIC)

DMAIC can be described as follows: D Define the goals of the improvement activity. At the top level, the goals will be the strategic objectives of the organization such as a higher ROI or market share. At the operations level, a goal might be to increase the throughput of the production department. At the

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Define, Measure, Analyse, Design and Verify (DMADV)

There are certain situations where the project team members may feel that a process needs to be replaced by a new process rather than simply improving the existing process. The demands of the customers with regard to quality cannot be satisfied by the existing process. At times, an organization may decide to launch a

Six Sigma Training Programmes

Six Sigma involves changing major business value streams that cut across organizational barriers. It is the means by which the organization’s strategic goals are to be achieved. Six Sigma must be implemented from the top-down. This needs the efforts of the top leaders in the organization particularly the CEO who is responsible for the

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Applications of the Seven Quality Control Tools in Six Sigma

Six Sigma created a renewed focus on process improvement. The seven QC tools are among the many tools that comprise the Six Sigma tool box. They have been used widely to support quality improvement problem-solving efforts. Table 8.12 shows the application of the seven QC tools in Six Sigma. Source: Poornima M. Charantimath (2017),

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The Seven New Management and Planning Tools

In decision making, data needed for problem solving are not available always. Problem solv­ing in the sphere of management calls for collaboration among people from different depart­ments. Hard data are usually scarce and available data are likely to be highly subjective. In such cases, it is necessary to go beyond an analytical approach and

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Concepts of Kaizen

The essence of most “uniquely Japanese” management practices—productivity improve­ment, TQC activities, QC (Quality Control) circles, or labour relations—can be reduced to one word, Kaizen. Using the term Kaizen in place of such words as productivity, TQC, ZD (zero defects) Kanban, and the suggestion system paints a far clearer picture of what has been happening

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Concepts of Lean Management

Lean Management is a business philosophy that was first developed by Taiichi Ohno in the 1990s with par­ticular focus on manufacturing firms. It is applied in various organizations to improve their business and reduce waste. It is a concept applied to remove muda. There are seven types of waste—overproduction, wasting time, resources, transportation, processing,

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What is the 5 S?

The 5 S forms the foundation of Kaizen. A 5-S programme is usually a part of and the key component in establishing a visual workplace. It is both a part of Kaizen and a component of lean manufacturing. The 5-S programme focuses on implementing visual order, organization, cleanli­ness and standardization. The results that can

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Kaizen versus Innovation

Innovation is seen as a major change in the wake of technological breakthroughs. Innovation is dramatic and a real attention-getter. Kaizen, on the other hand, is often undramatic and subtle, and its results are seldom immediately visible. While Kaizen is a continuous process that implies continuous improvement and involves every employee in every company

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Company-wide Quality Control (CWQC)

The avenues through which Kaizen may be pursued are almost endless. However, the “high road” to Kaizen has been the practice of company-wide quality control (CWQC). Hardware, software and human-ware are the three building blocks of business. CWQC starts with human-ware. The hardware and software aspects of business are considered only after the human-ware

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