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Step one is getting the Six Sigma expertise right at the top of the enterprise, and you will need access to pretty substantial budgets to follow this process. For example, it seems that everywhere the Six Sigma process really begins with the hiring of consultants. Either that, or a combination of consultants and training of your senior people, but both ways involve high costs, at least initially.
The most famous advocate of this approach is Jack
Welch, The legendary former CEO of GE. The first step at
GE was to train executives to "master black belt" stage.
In the second year, GE trained lots of "green belts"
people at the workplace level who carried process change
through. Interestingly, GE proved that Six Sigma was not
just for manufacturing, but also applying six sigma with
success to GE Capital.
In the first year, Six
Sigma saved GE $170 million for a $200 million
investment; in year two savings were $700 million for a
$400 million investment.
Demonstrating how far
the "top down" commitment to Six Sigma needs to be, P O
Mak, the head of General Electric in China, recently
told an Australian audience that in the days Jack Welch
led GE, managers were told that if they did not sign up
for Six Sigma training they could "kiss goodbye" to
promotion.
In
Australia, sixth ranking banking and finance company,
Suncorp Metway, started on the Six Sigma path by sending
senior executives to the Six Sigma Academy in Arizona.
Now it claims to be "way ahead" of other banks in
customer satisfaction due to Six Sigma. Says John
Mulcahy, CEO, Suncorp Metway, "It's more than a process.
It's a way of understanding the needs and voice of
customers." The bank has 60 black belts and 200 green
belts delivering 120 projects.
What are the results
for Suncorp? A decrease in the amount of time waiting in
line, faster credit approvals via one phone call and
tighter commercial lending practices; all customer
focused.
Step two is to define
what customers want and what processes will deliver that
for them. This then creates a benchmark for measurement
of existing processes and defects become obvious through
six sigma.
In
step two it is vital to involve staff because the person
"on the shop floor" often knows both the problem and the
solution. But it takes some training at this stage to
get senior management capable of getting this feedback,
as well as training workplace staff to "green belt"
status. This staff involvement might be in the form of
Six Sigma teams, creating their own program.
As
described by the Six Sigma Academy in the USA: "Focus on
eliminating non-value activities from processes
(manufacturing or services) by applying a robust set of
performance change tools, and emphasise excellence in
operations to deliver superior customer service".
Step three is measurement; the number of defects
happening per unit. This applies to services and to
manufacturing in six sigma. Putting these measurement
processes in place can be costly, and it is vital to
make sure all staff understand what's going on;
otherwise Six Sigma can create hostility.
But
in step three the focus has to remain on the customer.
As Abercrombie says, "It is important to get data from
the customers' perspective, measuring every process and
collecting statistical data about the process."
In
step three this can drill down as far as measuring
customer satisfaction, even in terms of how long does it
take a worker to answer the phone and resolve customer
queries.
Step four is analysis of all the new data being
collected, identifying the difference between
"perfection" and your process, with an aim to
continuously reduce the variation between the two.
But there is a warning
here — the dean of the Rotman School of Management at
the University of Toronto, Roger L Martin, has said,
"Firms have adopted Six Sigma programmes to improve the
quality of their manufacturing processes, but those
initiatives haven not made employees feel that their
work is more meaningful." Others see Six Sigma as a
creative process that can be inclusive.
Step five is
improvement, with the implementation of changes so that
processes and results improve. This is best driven by a
combination of your top sigma practitioners (black belt)
and people in the workplace teams. This step is also a
major cost area of Six Sigma, but as AXA's Abercrombie
points out: "They should translate customer voice into
process, have good analytical skills, be able to collect
the right data from a variety of sources, and have a
good appreciation of how to assess risk and perform
cost-benefit analysis."
Step six of
implementing six sigma is ongoing control, putting in
place monitoring of future variations. The six sigma
ongoing control step also has input into new product and
service design, so that the experience and data
collected here is applied to new developments too.
Birlasoft, one of
India's leading commercial houses, with equity
participation by GE Capital, uses the technique in its
governance framework to increase efficiency, reduce
costs and improve customer satisfaction. Monthly defects
have decreased from 11 per cent to 3 per cent.
A Birlasoft executive
points out, "Six Sigma methodology have been used
extensively to design new processes and upgrade the
current ones as required in this continuous assessment."
Birlasoft has development centres in India, the US and
Australia.
In the US, the Chief
Executive Officer of Dow Chemical, William Savropoulos,
is a Six Sigma fan, "Six Sigma is elevating our company
to entirely new levels of operational performance".
So, what is Six Sigma?
It claims to be a technique and philosophy that grew out
of Total Quality Management and aims to eliminate waste
and improve performance, using statistical analysis and
a customer focused culture. The Greek letter sigma is
used in maths to denote standard deviation from the
mean.
It
has been used to challenge traditional thinking on
economies of scale, instead using lean systems to
produce shorter runs, allowing the company greater
flexibility to change with the market.
Six Sigma aims to
analyse and change processes to reduce defects in
service delivery. To reach Six Sigma status, an
organisation must aim for only 3.4 defects per million
opportunities. Getting there involves training
management to various levels of sigma: called black,
green and master black belts.
Other companies to use Six Sigma include financial
institutions such as JP Morgan, Citibank, American
Express as well as Australia's Suncorp. It has spread
through Boeing, DuPont, Caterpillar and Telstra.
Telstra, for example,
claims it has direct savings of around $300 million in
over three years and has trained 20 per cent of staff in
the approach.
"By eliminating all
the emotive statements people tend to attach to
problems, you can create a statistical solution and turn
that into a practical reality," Telstra's Abercrombie
says.
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