Six Sigma Tools for Improving Profits in an Edible Oil Industry – A Case Study

Abstract

Edible oil processing industry is more of a local industry due to high transportation cost. It is always operating on a wafer thin margin and survives only on volume of business. The approach of this paper is focused on improving margins in this industry through deployment of six sigma tools. Six sigma methodology, a proven concept, is a process oriented, customer driven tool focused on reduction in variations and process controls. Tools used are CP (Process Capability), CPK (Process Capability Index), DMAIC (Define, Measure, Analyse, Improve, Control), process yield and poka yoke (mistake proofing) to improve the process. Deployment of the above tools has in turn improved the yield and improved the profitability in the edible oil processing industry. Detailed analysis of the data obtained has been done and statistical methods adopted to explain the savings in the industry. Having implemented six sigma project it is translating into savings of oil at 1.5 per cent per bottle and cost savings are of Rs 4.05 crore/annum. This paper also suggests saving approaches in similar industries other than edible oil, involving packing such as milk, cement, sugar, fertilisers, chemicals, and beverages such as Coke, Pepsi, Limca. Limitation of the study is that it is focused on only one industry and extensive studies on other industries not only in manufacturing but service sector are not covered.