An Empirical Study on Lean Six Sigma in Saudi Arabian Organisations

An Empirical Study on Lean Six Sigma in Saudi Arabian Organisations Saja Albliwi (s.albliwi@hotmail.co.uk), Jiju Antony and Norin Arshed Department of Business Management, School of Management and Languages, Heriot-Watt University, Edinburgh, UK Abstract This paper presents the results of a study undertaken in Saudi Arabian organisations with respect to critically assessing the current status and implementation of Lean Six Sigma. In order to address the current status and the implementation of LSS in Saudi Arabian organisations descriptive survey questionnaire were distributed online using Qualtrics software. The survey investigated the history of quality practices utilised by Saudi organisations, LSS organisational infrastructure, number of projects completed, years of deployment of LSS, Critical Success Factors (CSFs) of LSS, benefits gained from LSS deployment, common challenges for LSS and least commonly used tools and techniques of LSS. Keywords: Lean Six Sigma, Saudi Arabia, Empirical Research Introduction Snee (2010, p. 10) defined Lean Six Sigma (LSS) as “a business strategy and methodology that increases process performance resulting in enhanced customer satisfaction and improved bottom line results.” LSS methodology aims to improve capability in an organisation, reduce production costs (Lee and Wei, 2009; Chen and Lyu, 2009) and maximise the value for shareholders by improving quality (Antony et al., 2003; Laureani and Antony, 2012). According to Albliwi et al (2015), many organisations have implemented LSS strategy in the new millennium to improve their business performance and operational efficiency, especially because of the growth in global markets (Maleyeff, 2012; Jayaraman et al., 2012). Other reasons are to improve product quality (Vinodh et al., 2012), reduce production costs and to enhance customer satisfaction (Chen and Lyu, 2009; Snee, 2010). Snee (2010) stated that LSS is a powerful strategy for process management and process excellence aims to eliminate defects, reduce variation in the process of service and product manufacturing, and leads to business process excellence. Although, LSS has been deployed in organisations in the western countries for more than two decades, its implementation and popularity in eastern countries has only just begun to emerge and is in its infancy. Furthermore, there is a dearth of empirical studies in the area of understanding and exploring the current status of LSS in these countries. Hence, the purpose of this paper is to empirically assess the current status of LSS in one of the wealthiest countries in the world due to oil producing, Saudi Arabia (Tuncalp, 1993). This research has investigated LSS from many angles using survey method. 1 In order to address the above, the following research question has been formulated: What is the current status of Lean Six Sigma implementation in Saudi Arabian organisations? The objectives of the research include are to investigate:  History of quality practices utilised by Saudi Arabian Organisations (SAOs), LSS organisational infrastructure, number of projects completed, years of deployment of LSS, and financial benefits.  Critical Success Factors (CSFs) for the deployment of LSS.  Benefits gained from LSS deployment.  Common challenges for LSS deployment.  Most commonly and least commonly used tools and techniques of LSS. Research Methodology For the purpose of this research descriptive survey questionnaire was chosen (Forza, 2009) with closed questions (to understand background information about the organisation, Lean/Six Sigma projects, training and so on) and multiple-choice questions (to determine CSFs, benefits, challenges and so on) whereby the respondents could tick as many boxes as applicable. The survey questions were derived from a systematic literature review undertaken by Albliwi et al (2015) which was published in a peer reviewed journal within the field of operations management and LSS. The survey was distributed to more than 120 organisations in Saudi Arabia using Qualtrics software. The surveys were sent via emails addresses of the organisations which were available online, accessible in “The Council of Saudi Chambers” database and through professional networks. Specific people (who have deep knowledge in Lean and Six Sigma methodology) in the organisations were asked to participate in the survey. Only 20 organisations in different geographical locations in Saudi Arabia (west, middle and east) responded to the survey. Response Rate Since this research was targeting the Saudi organisations who had implemented Lean and/or Six Sigma as a strategy to improve their business, the authors were expecting very low response rate as this methodology is very advanced and may not to be found in developing countries such as Saudi Arabia according to literature. However, 141 responses were returned and 97 were completed with 43 responses being excluded from the analysis as they were incomplete. This mean that the there was a high response rate of 68.7% (Forza, 2009). Survey Findings and Analysis By analysing the survey, the researchers have built a clear picture of the nature of LSS implementation in the participated organisations. In addition, this will guide the following stage of data collection in the future which involves a case study approach (semi-structured interviews). Demographic Information The results shows that 20 organisations participated in the survey, most of them were large organisations from different sectors including tractors manufacturing, steel 2 manufacturing, electrics manufacturing, construction, oil producers, banks, airlines, petrochemicals, internet solutions, public and service organisations. The oldest organisation was established in 1930 and the newest was established in 2013. Four organisations out of 20 were SMEs (Less than 500 employees) and the remaining were large organisations with total number of 1000 employees and above. The participants were asked about annual turnover, and the results illustrate that 11 organisations have over $50m, 1 organisation has between $25- $50m, 2 organisations have between $15-$25m, 2 organisations have between $5- $15m, 2 organisations have less than $1m and there was 2 public organisations. The respondents were working in different business units such as IT, quality, production, project management, customer service, business excellence, engineering and others. They were also occupying different positions and levels of organizational hierarchy including CEOs, senior managers, middle managers, assistant managers, supervisors, staff and even members of an LSS team. Regarding LSS certified people, around 81% of the respondents were holding LSS belts including 5 Champions, 5 MBBs, 22 BBs, 34 GBs and 13 YBs. The rest of the respondents were ether in training (9 respondents) or quality managers (8 respondents) who had no training or LSS. Some of the respondents (6 respondents) did not disclose this information. History of Quality Practices The respondents were asked if there is a quality department in their organisations, 72.5% answered yes and 27.5% answered no (Figure 1). One of the manufacturing organisation’s had a quality department and Six Sigma department. However, it highlighted that the two departments are working in isolation which is not recommended by LSS scholars. Availability of Quality Department 27.5% Yes No 72.5 % Figure 1: Availability of Quality Department Analyzing the history of CI methodologies shows that 13 organisations started with TQM or Kaizen or both as a foundation for Lean Six Sigma program while 2 organisations went straight to Lean and Six Sigma programs without deploying any previous CI initiatives in the organisation as shown in table 1. 3 Table 1: History of CI Methodologies Continuous improvement methodology Kaizen, Lean, Six Sigma and TQM Lean, Six Sigma and TQM Six Sigma and TQM Lean and Six Sigma Kaizen, Lean and Six Sigma Kaizen, Six Sigma and TQM Kaizen, Lean and TQM Kaizen and TQM Kaizen and Six Sigma Lean and TQM Six Sigma Total Number of organisations 5 3 2 2 2 1 1 1 1 1 1 20 Sector Private Private Service and University Service and University Private and Public Private Private Public Private Service Public The background analysis shows that most of the organisations begun with ISO 9000 as a starting point for other continuous improvement methodologies such as TQM, Lean and Six Sigma. Surprisingly, 85% of the participated ogranisations were using ISO 9001 as a quality system where 50% of these organisations were using other ISO standards beside ISO 9001 such as ISO 14001, ISO 13053 (Six Sigma), OHSAS 18001. In addition, one of the multinational manufacturing organisations was using multiple ISO standards plus ISO 50001 following their base organisation in France. Current Status of Lean Six Sigma in the participated organisations In order to assess the current status of LSS in any organisation, it is important to investigate many issues including:  Years of deploying Lean, Six Sigma, LSS  Number of people trained for LSS belts (infrastructure)  Benefits gained from LSS implementation  Critical Success Factors for LSS  Common Challenges for LSS implementation  Tools and techniques used under LSS  Financial benefits (Chakrabarty and Chuan Tan, 2007; Antony and Desai, 2009; Nonthaleerak and Hendry, 2008). Years of deploying Lean, Six Sigma, LSS The participants were asked about the number of years that their organisations have been deploying Lean and/or Six Sigma. The maximum years of implementation were: 12 years Six Sigma in tractors manufacturing organisation, and 10 years Lean in oil producing organisation. In addition, 6 organisations out of 20 have started with Lean for a number of years (1-10 years Lean) then Six Sigma was adopted to support Lean. While 1 organisation has started with Six Sigma deployment for 7 years then Lean was injected 3 years ago. However, LSS as one approach has deployed in 5 organisations including private and public sector. The rest of the organisations were deploying either Lean or Six Sigma initiatives in isolation. 4 Number of people trained for LSS belts (LSS infrastructure) Six Sigma training should be delivered for at least 50% of the organisations staff in order to make change in the business and increase profits (Harry and Schroeder, 2000). However, this is not the case in Saudi organisations. Most of the participants believe that training and education is very critical for LSS success. Yet, the percentage of trained people shown in table 2 is considered very low compared to literature and western organisations. Table 2: Percentage of trained People for LSS belts Champions 13 co. have 1 1 co. has more 6 co. have no to 5 than 15 champions champions champions Master 11 co. have 1 1 co. has 6 to 1 co. has more Black Belts to 5 MBBs 10 MBBs than 15 MBBs Black Belts 16 co. have <15% trained as BB 3 co. has 1630% trained as BB Green Belts 14 co. have <15% trained as GB 2 co. has 1630% trained as GB 1 co. has no idea about number of trained BBs 2 co. has 3145% trained as GB Yellow Belts 15 co. have <15% trained as YB 2 co. has 1630% trained as YB 2 co. have 4660% trained as YB 6 co. have no MBBs 1 co. has no idea about number of trained MBBs 1 co. has 4660% trained as GB 1 co. has no idea about number of trained GBs 1 co. has no idea about number of trained YBs Investigating the ratio of the number of Black Belts to the total number of employees shows that 18% of the participants were having one BB for every 50 employees (1:50), 26% of the participants were having one BB for every 300 employees (1:300), 8% of the participants were having one BB to every 1000 employees and the rest of the participants highlighted that either they did not have a BB in their organisation or there was only a couple within their organisations. Others said that BBs were still in the training stages or the organization had very little adoption of LSS as ad-hoc projects. In some cases, once employees received LSS training they left the company causing a financial loss for the company. Benefits gained from LSS implementation In a Saudi Arabian context, the most benefits gained from the implementation of LSS are shown in table 3. These benefits were similar to what has been sighted in the literature in western countries (Albliwi et al., 2015). However, increased customer satisfaction was top for benefits instead of increased profits and financial savings in the western countries. 5 Table 3: Comparing the top 5 benefits Saudi Organisations 1. Increased customer satisfaction 2. Reduced cycle time 3. Improve product and process quality 4. Reduced cost of quality (defects, scrap, rework, repair, etc.) 5. Reduce waste in the process 1. 2. 3. 4. 5. Literature Increased profits and financial savings Increased customer satisfaction Reduced cost Reduced cycle time Improved key performance metrics It was observed that financial benefits and increasing the bottom line is not a priority for many organisations in Saudi Arabia. It is clear that organisations are paying much attention to customer satisfaction, quality and time - an area of interest for future research. Critical success Factors The CSFs used in this study were derived from an existing literature review in the field of LSS (Antony et al., 2003, Snee and Hoerl, 2003, Snee, 2010). Analysing the CSFs is evident in table 4. Despite the country development or the level of LSS implementation, training and education, management commitment and support are always come in the top of LSS- CSFs list. The CSFs such as linking LSS to HR reward system and linking LSS to supply chain performance were less important from Saudi organisations point of view. Table 4: Comparing the top 5 CSFs Saudi Organisations 1. Training and education 2. Top management commitment and involvement 3. Availability of resources 4. Communication 5. Project selection and prioritization Literature 1. Training and education 2. Communication 3. Top management commitment and involvement 4. Organisational culture 5. Project selection and prioritization Common Challenges for LSS implementation The top challenges for LSS in Saudi organisations included the implementation time, leadership and awareness of LSS benefits. Whilst the less challenges cited by Saudi participants were national regulations, unmanaged expectations and competing projects. Compared to the findings from literature, the challenges provided by employees in Saudi organisations were slightly different than what have been founded in the literature as shown in table 5. Table 5: Comparing the top 5 challenges Saudi Organisations 1. Time-consuming 2. Lack of leadership 3. Lack of awareness of LSS benefits to the business 4. Convincing top management 1. 2. 3. 4. Literature Time-consuming Lack of resources Unmanaged expectations Lack of awareness about benefits in business LSS 6 5. Internal resistance 5. Lack of training or coaching Investigating the challenges in the literature shows that lack of resources is one of the barriers for LSS to be successful. However, in Saudi Arabia, resources do not cause obstacles for LSS deployment but even when resources are available, organisations are still facing challenges to deploy LSS. Tools and techniques used under LSS The survey results show that the top 5 tools and techniques used under LSS in Saudi organisations did not include any statistical tools or techniques such as SPC, DOE and others. The most common were simple tools or techniques as shown in table 6. 1. 2. 3. 4. 5. Table 6: Comparing the top 5 tools and techniques Saudi Organisations Literature Root-cause analysis 1. Cause and effect analysis Brainstorming 2. Value stream mapping SIPOC 3. 5S Process mapping 4. DOE Value stream mapping 5. Pareto analysis This finding is very different from studies who found in the literature in developed countries (Albliwi et al., 2015). Given this, it could be a plausible reason for LSS to have failed in Saudi organisations. Using simple tools and techniques shows that an LSS statue in Saudi organisations is behind the western countries who have reached advanced levels in this methodology. The authors are keen to understand more details about this issue in future work. Number of Projects completed successfully According to LSS literature and benchmarked organisations, Xerox executed 700 LSS projects in 20 months with 400 BBs who were trained by Xerox (Fornari and Maszle, 2004). Moreover in 2002, GE announced that there were 50,000 Six Sigma projects completed successfully (Antony, 2006). In this study, 16 organisations out of 20 have shared information about the number of completed projects which are considered very low in comparison to the years of implementation. For instance, one of the oil organization’s has completed an estimated of 15 Lean projects in 10 years. This may be because of the focus on LSS projects in this organisation, as the number of completed LSS projects in 8 years was around 300 projects with total investment between $15 and $20 million for both Lean and Six Sigma. The other participated organisations had an average of 3 to 15 Lean projects completed between 2 and 6 years highlighting a very low number compared to literature. The authors observed that many respondents including quality managers, LSS champions, MBBs have no idea about the number of the completed projects in their organisations. It seems that these organisations were not recording data about the 7 previous Lean and Six Sigma projects undertaken by them. Other reasons could be due to lack of communication between people in the organisation. Financial Benefits and return on investment (ROI) Investment in the initiative and return on investment was also investigated. The results collected from 20 organisations regarding the ratio of investment to benefits are shown in figure 2. In 6 organisations the ROI was not available highlighting that there are issues related to measuring benefits from CI initiatives in some Saudi organisations. The authors believe that in some cases, information security and confidentiality were the main reasons behind not sharing the financial information. The Ratio of Investment to Benefits 1:3 to 1:5 6 1:6 to 1:8 11 1:9 to 1:10 1 2 Don't Know Figure 2: The Ratio of Investment to Benefits In terms of the total investment in the implemented initiative to date, most of the participants had little knowledge about the amount invested on the initiative in their organisations. However, it is clear that the large organisations were allocated huge budgets for CI initiatives in Saudi. From 20 organisations, only 1 organisation shared the return on investment which amounted to $150 million from Lean and LSS initiatives to date. The rest of the participants have either refused to give the exact amount of ROI because of the confidentiality or they answered ’don’t know’ because they did not have access to the data. Other reason could be the lack of measure the financial benefits from the CI methodologies. However, lack of measuring financial benefits is against the literature which emphasizes the need for understanding the financial benefits to evaluate if the initiative is successful or not. Discussion To present the current status of Lean and/or Six Sigma in more understandable manner, the authors have grouped the participated organisations as follows: Multinational organisations In this study, 3 multinational organisations have participated in the questionnaire and all refused to share financial information including investment and ROI. Participants from those organisations were very aware about LSS benefits to the business. However, the main challenge they faced was changing organisational culture and changing people’s mind-sets. The current status of LSS in those organisations was higher than local 8 organisations in terms of the levels of training and education, number of LSS belts holders, number of completed projects, LSS awareness, the value of organisational learning and open culture. Local organisations Local organisations were the majority in this study with a number of 14 participated organisations out of 20. Those organisations were struggling and much more than other organisations that have joint venture with leading multinational organisations (2 participated organisations) such as shell and caterpillar. They were facing problems in training, leadership and using advanced tools and techniques. Two of the private organisations have joint ventures with leading multinational organisations and were following their way in Lean and Six Sigma implementation. They also sent a committee to check and evaluate the implementation process from time to time. The LSS training curriculum, exams and certificates were also provided by them. Public and Private organisations Analysing the differences between public and private organisations in term of Lean and/or Six Sigma adoption shows that there were very little differences between the two sectors. The challenges related to people awareness, people mind-set and leadership were similar. However, the private sector very much encouraged the CI improvement initiatives compared with the public sector. This can be evident by the number of completed projects to date and the number of trained people for LSS. In general, the current status of LSS implementation in Saudi organisations is far behind the western organisations. Yet, it is clear that the awareness about LSS is increasing in the country. However, this will take time and organisations need years to be on the right track. GE believes that all employees should be trained for GB, most of the participated organisations has less than 15% employees trained for GB (Hoerl, 2001). In future research, the authors will investigate the vague issues such as lack of measuring financial benefits, lack of training, lack of completed projects etc. by interviewing people in 5 organisations in Saudi Arabia. The interviews will target CEOs, Senior Managers, quality managers, HR, Finance, and LSS team including Champions, MBBs, BBs and GBs. This paper provides value to researchers, practitioners and LSS consultants who are interested in the application of LSS in SAOs. The theoretical contribution of this research is to test hypothesis by comparing LSS implementation characteristics (success factors, benefits, challenges etc.) in SAOs to literature. This research contributes to knowledge by approaching the current status of Lean Six Sigma in Saudi Arabian organisations by investigating many issues and comparing the results to literature and western countries. Future work will also link organisational theories such as organisational learning and motivational theory to LSS implementation as well as the effect of organisational culture on LSS implementation in SAOs. Conclusion Analyzing the current status of LSS in the participated organisations in general shows that there is a lack of awareness about LSS level of implementation by participants. Many of the participants hold LSS belts and undertake projects but they are not aware of the ‘bigger picture’ with respect to LSS in their organisations. They can provide information about what they have done and what they feel but not what other people are doing. This could be as a result of lack of communication and lack of sharing data about 9 what is happening around them. This work is a starting point for developing a maturity model for LSS to be used by SAOs. The purpose of the model is to assist and support organisations in assessing their current maturity level of LSS implementation and developing a roadmap for future improvements. Acknowledgment This study was sponsored by a grant from King Abdulaziz University, Jeddah, Saudi Arabia. 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