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Lean Sourcing: The first step: Define
 
In the last newsletter, we introduced the concept of Lean Sourcing, based on the Lean Six Sigma methodology. The objective of many organization nowadays is to accelerate the exit from the crisis and fuel the growth by making the organization more agile. In this way, it is possible to avoid some pitfalls of the recent past.

The best methodology to reach the target of more agility is Lean Six Sigma and its tools. Lean Six Sigma combines the best of two distinct methodologies:
- Six Sigma, which helps in reducing the number of defects and the variation of the outputs; and
- Lean Thinking which helps in reducing the cycle times and the lead times.

The methodology is based on the application of DMADV, one of the tools in Lean Six Sigma. DMADV allows companies to obtain drastic improvements in their business processes. The name DMADV derives from the initials of the phases in the application of the methodology: Define, Measure, Analysis, Develop and Verify.

In an organization, before DMADV, there would be a Preparatory phase. Giving for defined the Context, Vision and Strategy of the organization, the main activity in the Preparatory phase would be the prioritization on which process we want to start. In the case of Sourcing, it could be the Request for Information, the Request for Quotation, the Order to Pay and so on. At the end of this preparation, it would be important to set up a Lean Six Sigma committee. It is necessary to submit the proposal of the process to tackle to the committee for its approval. In the Lean Six Sigma jargon, this step is called Tollgate 0.

Once decided the process for the DMADV, the first phase of the methodology would be the Define, the main activities in this macro step are:
- Define the process and the problem which we want to improve;
- Definition of the macro-objectives for the initiative;
- Decision on the Project leader;
- Set up the team which will go through the application of the methodology:
- Kick off the project and communicate to the entire organization (and in some cases also to the vendors);
- Assess current environment (suppliers, organization, process);
- Define Product/Service requirements (current and expected);
- Identify opportunities and quantify potential benefits;
- Build implementation plan (Analyze and Develop).

The deliverables of this phase are:
- Current process documentation, from an organization, physical and Information Systems point of view. In the latter case, it is important to define also the interfaces with the other processes in the organisation;
- The SWOT (Strengths, Weaknesses, Opportunities, Threats), Stakeholder and risk analysis;
- The stakeholder requirements;
- The project plan through the development phase;
- A rough and initial Cost Benefit Analysis.

All these aspects can be summarized in a document that normally is called Project Charter. This document is submitted to the Lean Six Sigma committee for approval. In Lean Six Sigma jargon, this step is called Tollgate 1*  
 

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