Sustainable Growth:

Efficiency Improvement

Six Sigma

New Approach to Quality Management and Efficiency Improvement

By: Vadim Kotelnikov

Founder, Ten3 Business e-Coach Inspiration and Innovation Unlimited!

  

  

"We want to change the competitive landscape by being not just better than our competitors, but by taking quality to a whole new level.” Jack Welch

 

 

Quality Management Six Sigma

The Five Objectives of Six Sigma

  1. To satisfy the customer

  2. To lift internal performance

  3. To enable better performance by better design

  4. To improve the quality of purchased supplies

  5. To reduce the costs

Six Main Benefits of the Sigma Breakthrough Strategy

Remarkable improvements in:

  1. Processes

  2. Products and services

  3. Investor relations

  4. Design methodology

  5. Supplier relationships

  6. Training and recruitment

 

Six Sigma tells you1

  • Your don't know what you don't know

  • You can't do what you don't know

  • You don't know until you measure

  • You don't measure what you don't value

  • You don't value what you don't measure

The New Warrior Class

  • Green Belts

  • Black Belts`

  • Master Black Belts

  • Champions

Impact of Six Sigma Implementation at GE

Results achieved over the first two years:

  1. Revenues have risen to $100 billion, up 11%

  2. Earnings have increased to $9.3 billion, up 13%

  3. Earnings per share have grown to $2.80, up 14%

  4. Operating margin has risen to a record 16.7%

  5. Working capital turns have risen sharply to 9.2%, up from 1997's record of 7.4

Main Difference Between TQM and Six Sigma

  • Total Quality Management (TQM) programs focus on improvement in individual operations with unrelated processes; as a consequence, it takes many years before all operations within a given process are improved.

  • Six Sigma focuses on making improvements in all operations within a process, producing results more rapidly and effectively.

TPS-Lean Six Sigma

Critical Success Factors

The GE Leadership Effectiveness Survey (LES)

  • Strives to fulfill commitment to Quality in total product / service offering... More

Balanced Organization

5 Basic Elements

Corporate Culture (Earth):

Kaizen Mindset

What Is Six Sigma?

Six Sigma is a long-term, forward-thinking initiative designed to fundamentally change the way corporations do business. It is first and foremost "a business process that enables companies to increase profits dramatically by streamlining operations, improving quality, and eliminating defects or mistakes in everything a company does.

 

While traditional quality programs have focused on detecting and correcting defects, Six Sigma encompasses something broader: It provides specific methods to re-create the process itself so that defects are never produced in the first place."1

 Case in Point  Motorola

Facing stiff competition by Japanese manufacturers, Motorola reversed its fortunes with the Six Sigma strategy instituted by Bob Galvin. These programs were led by corporate and then institutionalized. Motorola's Six Sigma quality program was so radical that it forced managers to think about the business differently. As a result, they smashed the old inspection paradigm.

3 Strategies of Market Leaders

Faster Returns on Investment

While Six Sigma is a long-term strategy, it is designed to generate immediate improvements to profit margins too. Compared to traditional quality management programs such as TQM that project three or more years into the future, Six Sigma focuses on achieving financial targets in twelve-month increments.

Six Sigma's Breakthrough Strategy1

The Six Sigma's Breakthrough Strategy is a disciplined method of using extremely rigorous data-gathering and statistical analysis to pinpoint sources of errors and ways of eliminating them.

 Case in Point  GE

Jack Welch was told that Six Sigma, the quality program pioneered by Motorola, could have a profound effect on GE quality. Although skeptical at first, the GE Chairman initiated a huge campaign - in the GE Way, a way that had never been done before - to infuse quality in every corner of the company. He made quality the job of every employee. Senior manager's bonuses were tied to Six Sigma results. All professional level employees were informed that they had to get Six Sigma training or they would not be considered for a promotion – no belt, no promotion. Welch credits the Six Sigma quality initiative with "changing the DNA of the company", meaning that it has had a greater impact on the productivity of GE than any other program.

25 Lessons from Jack Welch

Integrating Six Sigma with Business Process Management

Source: "Six Sigma and Business Process Management", Andrew Spanyi

Six Sigma is frequently implemented in a traditional departmental  paradigm without much reliance on business process thinking. It is little wonder that many thoughtful Six Sigma practitioners complain of the difficulty in identifying the best opportunities to apply Six Sigma techniques, and of the fact that there are frequently overlapping and redundant Six Sigma projects.

 

The practice of piecemeal thinking with respect to various improvement initiatives is a serious issue and the failure of integrating business process thinking with Six Sigma methods, results in firms incurring such significant opportunity costs that it is downright tragic. It's tragic because there is a better way. Integrating Six Sigma with business process management principles will help you realize significant opportunities versus the traditional methods of implementing a Six Sigma program. Just consider the few examples cited below.

  1. By asking and answering the question 'Which business process would have to be improved by how much, by when, in order for us to realize our strategic objectives?' your firm would have greater clarity on where to apply Six Sigma techniques and for what results.

  2. By structuring the entire improvement initiative according to business processes there would be fewer overlapping initiatives and more cross-departmental collaboration.

  3. Since process ownership relies on managing by influence as opposed to authority, process owners would collaboratively sponsor projects and project progress would be monitored by a 'Steering Team' of executives thereby reducing the frequency of project collapse which sometimes observed when Six Sigma is deployed on a traditional basis due to tribal warfare.

  4. Because of the big picture view, leadership could decide, based on the size of the performance gap that needs to be bridged and the firm's appetite/capability to absorb change, when to deploy DFSS (design for six sigma) methodology – or better yet, process redesign techniques – as opposed to the traditional DMAIC (define, measure, analyze, improve, control).

  5. The application of business process thinking in conjunction with Six Sigma would inject greater sensitivity to the human side of change and help address one of the pervasive criticisms of the Six Sigma in that it is less effective in solving historically "soft" issues.

  6. On the other hand, process improvement methods would benefit from the rigor of Six Sigma measurement techniques and its disciplined training regime.

TPS-Lean Six Sigma

TPS-Lean Six Sigma is like a ‘turbo-charged’ Lean Six Sigma program.

Lean Enterprise: 13 Tips

TPS-Lean Six Sigma is a revolutionary, holistic concept. It actively has human capital embedded in Lean Six Sigma in a manner that not only stimulates commitment, integrity, work-life balance, passion, enjoyment at work and employee engagement but also stimulates individual and team learning in order to develop a motivated workforce and sustainable performance improvement and quality enhancement for the organization... More

 

 

 

 

 

 

 

 

 

 

Free Micro-course

10 slides

TQM

Total Quality Management

 

Free Micro-course

10 slides

Kaizen

 

Bibliography:

  1. "Six Sigma", Mikel Harry and Richard Schroeder

  2. "The Welch Way", Jeffrey A. Krames

  3. "Jack Welch and the GE Way", Robert Slater

  4. "Six Sigma and Business Process Management", Andrew Spanyi

  5. "Business Processes," Vadim Kotelnikov

  6. "The Lean Six Sigma Pocket Toolbook," Michael L. George, John Maxey

  7. "The Six Sigma Way," Peter S. Pande et al

  8. "Leading Six Sigma," Ronald D. Snee, Roger W. Hoerl

  9. "Lean Six Sigma : Combining Six Sigma Quality with Lean Production Speed," Michael L. George

Quality Management

Deming's 14 Point Plan for Total Quality Management (TQM)

8 Rules for Quality Management

Business Processes

Enterprise-wide Business Process Management (EBPM)

8 Essential Principles of Enterprise-wide Business Process Management (EBPM)

10 Commandments of Improvement

6 Sigma Business Strategy vs. Blue Ocean Business Strategy

TPS-Lean Six Sigma – Linking Human Capital to Lean Six Sigma

Lean Production

7 Principles of Toyota Production System (TPS)

5 Elements of Enabling a Lean Approach

9 Waste Categories and 6 Guidelines of the Canon's Suggestion System

Lean Manufacturing Quotes

Case Studies

Six Sigma Implementation at GE

Smart Corporate Leader

Management Function vs. Process Focus

Smart Business Architec