How has the introduction of Six Sigma improved service quality by John Jinkner.

How has the introduction of Six Sigma improved service quality

by

John Jinkner

Project Scope • My term paper studies the history of quality control in

an attempt to understand the factors that make Quality Control Programs in a service setting either a success

or a failure

• Special emphasis is placed on the probability of a successful Six Sigma implementation.

The question that this paper attempts to answer is…

"How has the introduction of Six Sigma improved service quality."

Introduction

• All firms should be looking to improve the quality of their product or service.

• The Six Sigma objective uses a comprehensive approach to improve product quality and consistency in an attempt to increase the profits of the firm.

• Six Sigma is a quality control program that has recently reached fad status

History

• Six Sigma began in the early 1980’s as Motorola’s response to a manufacturing plant failure in the early 1970's.

• When a Japanese firm took over, they were able to produce the same product without changing equipment or people.

• Motorola’s realized that their Quality Control program was ineffective

• Walter Shewhart of Western Electric, in 1924, first applied statistics in Quality Control.

• Deming is most widely known for introducing Total Quality Control in Japan in 1950.

• Total Quality Management became popular in the U.S. in the 1980’s as a response to Japanese competition

Six Sigma Quality Control

• Walter Shewhart became known as the Father of Statistical Control

• Edwards Deming became known as the father of the Total Quality Management movement

Shewhart

Deming

History

How does Six Sigma Work

Top management• Establishes a Leadership Team.

• Identifies key business issues.

• Assigns resources.

• Set aggressive goals.

• Incorporates the reward system.

• Direct finance & validate ROI.

• Finds intellectual capital

• Evaluate Six Sigma process and make changes if necessary.

Six Sigma uses a top down approach to quality control.

Training

• Executive Sponsor Training

– Senior leadership learn principles, tools, and techniques needed to become Six Sigma.

– Leaders apply Six Sigma through hands-on experience, mapping processes.

• Black Belt Training

– Training includes principles, problem-solving tools, project planning and management, exploratory data analysis tools, quality control and quality management tools, process mapping and simulation, and advanced statistical analysis.

• Green Belt Training

– Training is a one week course covering meeting facilitation, project management, quality management and control tools, problem solving, and exploratory data analysis.

TQM PROJECT STRATEGY (Applied to 6 DMAIC)Define Measure Analyze

1) Gather and InterpretData Types of Variables Examples of

Variables Check Sheets Incident Charts Sun Diagram Customer

Questionnaires,Surveys andInterviews

Focus Groups

2) Gather, Interpret andPresent1. Control Charts2. X&MR Charts3. Individual Sample

Chart4. Attribute Control

Chart5. Special Causes6. Single Sample Lots

(3) Process documentation andAnalysis1. Flow Charts2. Work-Flow Diagrams3. Activity Diagrams4. S.I.P.O.C, Suppliers-Inputs-

Process-Outputs-Customers5. Detailed Process Analysis6. Tree Diagrams

(4) Data Analysis and Presentation1. Pareto Charts/Analysis 80/20 Vital/Few/Trivial/Many ABC Analysis2. Run Charts3. Scatter Diagrams4. Useful Statistical Thoughts

(5) Make Sense of Data,Change Data toInformation

Affinity Diagrams Cluster Verbal Data Relational Digraphs Stratify Data Matrix Diagrams Synthesis Matrix

(6) Project Selection,Prioritization andDevelopment

Failure Mode and EffectAnalysis

Prioritizing HazardReduction

Cost of Non-Quality Analysis Project Selection Judging Each Project Cost/Benefit Analysis

Improve Control7) Improvement Strategies Four "Res" Repair, Refine, Refurbish and

Reinvent

8) Team Optimization Stages of Team Growth Ground Rules/Code of Conduct Meetings, Agendas, and Reports

9) Generate Soft Data and New Ideas Silent Brainstorming Reverse Brainstorming Fishbone/Improvement Cause and Effect Random Stimulation Indirect Analogy Choice of Entry Point or Shift In Attention Area

10) Problem-Solving and Process Improvement Systematic Approach Problem-Solving and Process Improvement Eight Step Process for Teams Sign-off Process for Teams Eight-Step Problem-Solving Approach for

Individuals

(11) Dig Out Root Causes Separate Special and Common Causes Control and Run Charts, Five "Whys" Cause and Effect Diagrams (Ishikawa,

Fishbone) Reporter's Six, Five W's and an H

(12) Optimize Decisions Decision Matrix Multi-voting Approaches Force Field Analysis Return on Improvement Investment

(13) Test Root Causes and Solutions Test Identified "Root Causes" Test of Optimum Solutions Improvement Strategies and Tactics

(14) Learning and Improvement Plan, Do, Study, Act (PDSA) Shewhart Cycle, Deming Cycle

The “DMAIC” approach

Define - The problem is defined and the metrics used to measure success is established as a base line

Measure - Current process data is gathered and measured against customer requirements (defects) to ensure the measurement is quantifiable and accurate

Analyze - Data is analyzed to validate the base line, identify root causes of defects, and measure the impact on the process

Improve - The process is changed to reduce variability and defect levels - design of experiment

Control - Includes monitoring critical metrics though the use of attribute, variable, run charts, or other automated measurement tools

Quality Tools

Control ChartsF

l

o

w

Multiple

regression

1920's

Cause & effect diagram

1943

C

h

a

r

t

s

Unknown

1893-1912

Today’s statisticians

have powerful new tools

Quality Tools

Today…• Increased customer

service expectations• Developing technologies• National and...• International

competition

What makes a company aware of the need for quality control?

Awareness of the problem

• In the 1980’s…

Quality control initiatives were in response to competition from Japanese manufacturing firms

Six Sigma will save the firm $300,000 to 400,000 per project

• Strategic advantages include:

– Identifying customer needs– Increasing compliance of standards– Striving for zero defects– Reducing outcome variability– Identifying and monitoring processes– Continually working for improved quality

Impact of quality on the Organization

Why choose Six Sigma as your quality control program(what the experts say)

Consequences of no Change

• Competitive conditions in are in a state of continuous change:

– Technology

– Demographics

– Societal priorities

– The economic environment.

It’s us or them

• Innovation can transform companies allowing them to cope with the increasing complexity of their environment.

• Survival depends on:

– Cutting response time

– Training multi-skilled employees

– Redesigning work processes

– Cutting waste and reducing cycle time

• McDonnell Douglas - TQM was highly successful in turning the company around.

• Hospitals - Doctors have thwarted nearly all quality control initiatives

• Even College Professors - may become apathetic when unnecessary or inconsistent quality controls measures are unproductive and lacking in substance and meaning.

TQM - Success or Failure?

Successful in some manufacturing but difficult to start in service industries

• Motorola - 1987-1994 – Reduced defect levels by 200.%

– Reduced manufacturing costs by $1.4 billion

– Increased production 126%

– Increased stockholder value by 400%

• AlliedSignal - 1992-1996

– $1.4 Billion cost reduction

– 14% growth per quarter

– 520% price/share growth

– Reduced new product time by 16%

– 24% bill/cycle reduction

Six Sigma - So far?

• General Electric - 1995-1998

– Company wide savings of over $1 Billion.

– Annual savings $6.6 Billion by year 2000.

• Polaroid -1995-1998 – Saved over $10 Million in first year

– Reduced inspection costs by $200,000

– Plans to reduce inception to market time by 50%

• Six Sigma as a Statistical Tool

• Research has found improper application of techniques, producing inadequate results.

• Improper application of techniques occurs because of lack of specific statistical knowledge & skill

• Poor understanding is due to the generalized training given by consulting firms

• Consulting firms give generalized training because they are unfamiliar with the organizations processes.

Schools of Thought

• Six Sigma Management

• Six Sigma, like all TQM, requires management direction, motivation, and a sense of structure

• Low employee acceptance rates threaten program’s existence

• Low morale & enthusiasm occur because of poor supervision, management style, and insufficient interdepartmental communication

• Six Sigma encourages leaders to communicate progress frequently and to provide

a sense of purpose

Heavy reliance on new information technology systems is not necessary

Six Sigma authors recommend putting technology upgrade plans on hold until a Six Sigma program is fully implemented.

Six Sigma does require manipulation of statistical data. A quality information system can play a decisive role in the success of the program.

Information Technology

• Six Sigma is another in a long list of quality control tools that can help firms develop a commitment to total quality control

• More important than information technology is management commitment and a burning desire to win

• Firms not committed to quality improvement will continue to flounder

Conclusion "How has the introduction of Six Sigma

improved service quality."

Answer: Six Sigma is merely another quality control tool

• In the 1950’s, Japanese factories were in shambles and through the Deming theory of quality control they found a way to compete with the world.

• In the early 1980’s American industry’s wake up call was the phrase “Made In Japan,” which became synonymous with high quality, survival reaction

• Today’s environment finds firms slashing it out for market share. Only those firms with top management commitment to a quality program are succeeding.

• Throughout my research I found that management’s failure to commit to a quality program was the major reason for failure. When management is unable to rally the troops and demonstrate an urgent need for quality improvement, quality programs just fade away

Proof

Managerial Implications

Passion

Passion and not the latest technology will get the firm where it needs to be.

Firms that assume the “consultants” can train away their quality control problems are mistaken.

The latest technology is a requirement, but only as a secondary consideration for a quality control program.

My personal objective was to learn more about the quality control movement and Six Sigma since I will be working in the Six Sigma initiative.

– Determine how Six Sigma has improved Service Quality

– Determine technology’s role quality programs

– Understand how Six Sigma may be implemented in my firm

Personal Objectives

Thank you

Any questions?