Supplier Selection Process Improvement through Six-Sigma DMAIC : A case of Lafarge Pakistan Cement Limited

Abstract:   Degree Project Advanced Level - Business Administration, Linnaeus Business School at Linnaeus University, Business Process and Supply Chain Management, 4FE02E, Spring 2010.   Authors: Muhammad Rizwan ul Haque, Ahmed Nawaz Shaikh, Kamonmarn Jaenglom, Zaheer Tariq Tutor: Petra Andersson   Title: Supplier Selection Process Improvement through Six-Sigma DMAIC (A case of Lafarge Pakistan Cement Limited)   Background: Cement industry is considered to be an intensive supplier base industry. Cement manufacturing involves several types of suppliers ranging from general utilities to large plant equipments. Also, supply chain performance is significant topic in many cement organisations. The supply chain department at Lafarge Pakistan Cement Limited (LPCL) wants to inspect and improve their supplier selection process. The intended objective of this inspection is two folded. First, LPCL wants to develop a competitive supplier base out of bulk suppliers available in the market that would result in competitive advantage over its competitors. Second, they want to improve their supplier selection process so that there would be low variance and exclusion of unnecessary activities that would ultimately help in achieving the cost, quality and service enhancement objectives.   Research question: How can the existing supplier selection process at Lafarge Pakistan Cement Limited (LPCL) be improved by applying Six-Sigma DMAIC?   Methodology: This thesis is a descriptive case study and was conducted with a deductive approach. Data was collected through interviews, discussions and questionnaire. The scientific credibility of this thesis was secured by using many sources, avoidance of assumptions, studying a common process and following standardized steps of supplier selection. Conclusion: The existing process of supplier selection at LPCL was defined and mapped to understand the process characteristics and capabilities. The existing process was then analysed to identify problem areas, variations and unnecessary activities. Corrective actions were recommended to deal with problem areas and an improved supplier selection process for LPCL was suggested with process coordination and control measures. Suggestions for future research: Based on the findings of this thesis, we suggest that the further research for LPCL could be done in the area of sourcing and suppliers relationship management. Sourcing; a study could examine the sourcing policy at LPCL on purchasing practises of products. It would also be interesting to focus more on this area which leads to excellent cost reduction. Using scenario method could compare and analyse regional, national and worldwide sourcing. Supplier Relationship Management; a study could investigate supplier relationship management that leads to creating a competitive advantage for LPCL through the development of supplier performance monitoring and supplier development programme. More details could continuously move towards cost reduction, increased reliability and risk mitigation, transparency of supplier costs and quality, and enhanced efficiency of sourcing process.