According to Professor Michael Porter, within an organisation there are primary activities that add value by creating and delivering a product or service and there are support activities such as human resource management and procurement. The primary activities are organised as steps in a sequence or chain. This is the value chain.

The starting point for driving supplier value is to identify whether or not this value chain delivers a consistent result. If it does not your first task is to bring some stability into the way it works so that you get a consistent level of service, quality and cost.

In a Supplier Relationship Management (SRM) programme, Sponsors and Account Managers are nominated for each key supplier. They and their team are responsible for building a map of the value chain for the industry represented by the buying organisation; its customers; the supplying organisation; and suppliers further upstream from them.

This value chain and its performance is a good application for a Six Sigma project. If there is any variability in the quality, timeliness or cost of the processes that support the value chain, then you should start your SRM programme with the objective of stabilising this performance by identifying and eliminating the causes of variability.

Six Sigma is a business strategy that provides organisations with the tools to do this by improving the capability of the business processes in the value chain. In Six Sigma, a process is the basic unit for improvement. A process could be a product or service that a company provides to external customers or it could be an internal process within the organisation, such as a billing process or a production process.

In Six Sigma, the purpose of process improvement is to increase a process' performance and decrease its performance variation. This in turn will lead to a reduction in defects, an improvement in profits, employee morale, quality of product and eventually to business excellence.

The sentence "Do the right things and do things right" best captures the essence of Six Sigma. Doing the right things means that whether it is a product or a service it has to do the right things for the customer.

A typical Six Sigma process improvement project usually follows a flow called DMAIC which stands for define, measure, analyse, improve, control.

The key difference between Six Sigma and other quality initiatives is that it not only applies to product or service quality but to all aspects of business operations by improving key processes. This makes it ideal for SRM in that it can help with improving the "way we do things" as well as.