Cover Story: The Enigma Of Six Sigma Pg 2

In conceptual terms, the primary aim is to identify, within each sub-process, the opportunities for defects. Which can be arrived at through the use of different statistical tools, such as regression analysis, design of experiments, and Chi-square testing. Whatever form a quality problem takes--a wrongly-marked invoice, a defective spare, abnormally-high warranty costs--the Six Sigma strategy is to translate it into a metric named Defect Per Opportunity, or DPO. This is further scaled down to Defects Per Million Opportunities, or DPMO, reducing which becomes the aim of the Six Sigma samurai. Points out Pankaj Munjal, 37, Managing Director, Hero Motors: "If a company can tackle its defects on a war-footing, the Six Sigma exercise can be successful."

SIX SIGMA@RAYTHEON

At Raytheon, Six Sigma is more than a quantitative statistical measure of processes; it embraces every aspect of work, using a disciplined, fact-based approach to problem-solving. It is a new way of thinking about work and customer value. It is also a powerful force to create one corporate culture. Some of it is bureaucracy-busting--pushing down decision-making to the lowest practical levels, empowering employees. At the other end lie more complicated challenges--including lean manufacturing initiatives and variability reduction. For instance, at Raytheon's Tucson (Arizona) plant, an Agile Improvement Process has transformed the Stinger missile-production area. The goals for 1999 are to educate 800 leaders of the company in Raytheon Six Sigma; to complete accelerated training of 75 legacy experts, employees who came to Raytheon with significant Six Sigma experience; to graduate 125 new experts--similar to Black Belts in other Six Sigma programmes; to end the first year of the programme with another 250 experts in the training pipelines; and to graduate 250 specialists--similar to Green Belts. The goal is that, by 2001, Raytheon must have 1,200 trained experts initiating major cost-saving processes and 25,000 trained specialists adding value to their work areas.

Be prepared to follow a precise sequence of well-defined steps in applying Six Sigma, classified into 4 phases, each of them requiring a specific breakthrough. Before that, of course, you must identify the process that you will apply the tool to. With the target established, the actual implementation gets under way thus:

Measurement. The starting-point is the establishment of the metrics that will be improved using Six Sigma. First, the CTQ characteristics of the process have to be identified in order to focus your Six Sigma on areas that will have the greatest impact on customer satisfaction. For instance, design might turn out to contain the crucial CTQ in a manufacturing-process while speed might be more relevant in the case of processing an order.

The output of the process, measured as multiples of its sigma under each CTQ, has to be recorded so that the DPO and DPMO can then be calculated. These will be used as the starting-points for setting new targets, and proceeding with the subsequent steps. Explains Prakash Desai, 56, Director, Parametric Technology Corporation: "Since all measurements are recorded, there is an in-built reliability in the system."

Analysis. This is the stage at which new goals are set, and the route-maps created for closing the gap between current and target performance-levels. It begins with benchmarking key product performance against the best-in-class so that the sigma levels attained by comparable processes can be ascertained as the basis for new targets. Then, a GAP analysis is conducted to identify the factors that distinguish best-in-class processes from those being analysed so that the areas of change can be identified.

Other statistical tools as well as conventional quality techniques--like Brainstorming, Root-Cause Analysis, Fishbone Diagrams, Pareto Charts, and the 5-Why Framework--are used frequently. Says Rahul Dhawan, 41, Executive Director, Eicher Goodearth: "Analysis is a key component of any defect-reduction programme. It's only after you have understood why and where you are going wrong can you rectify your mistakes." The aim is to identify what causes the defects in each sub-process so that they can be rectified, either by redesigning the product or reengineering the process.

Improvement. The objective of this phase is to confirm the key process variables, and quantify their effect on the CTQs; identify the maximum acceptable ranges of the specifications; and then, tackle the capability of the process on the 2 fronts required by Six Sigma: enlarging the design-width to accommodate greater variability in the output, and use the findings of the analysis stage to effect process-improvements. This is the stage where the groundwork is translated into action. Of course, the output must be measured continuously to monitor the extent of improvement along the CTQ parameters.

SIX SIGMA@BOMBARDIER

Launched last year at Bombardier Aerospace, Six Sigma projects are already yielding concrete results. Annual savings of several million dollars will be captured by eliminating defects in manufacturing and administrative processes. As an example, a team involved in a recent Six Sigma project at Bombardier Aerospace looked at customer and Transport Canada requirements pertaining to documentary evidence and traceability. The project objective was to reduce documentation errors by 80 per cent. Actual improvements to date are in the order of 90 per cent, and savings are expected to be $200,000 per year. During the next 2 years, more than 400 full-time Six Sigma agents will be developed across Bombardier. Ultimately, Six Sigma methodologies will become a standard part of every manager's toolkit, and to this end, Bombardier will offer managers an intense two-week training programme. Improvements were made through standardisation of criteria, better document format, training, and improved feedback. In addition, to improve Bombardier's performance, Six Sigma will provide many opportunities to identify and develop a large number of young future leaders within the organisation.

Control. In the fourth and final stage of Six Sigma implementation, the new process-conditions are documented, and frozen into systems so that the gains are permanent. The process is assessed once more after the settling-in period in order to check whether the improvements are being sustained or not. Argues K.R. Kim, 43, CEO, Samsung: "If a quality programme has to achieve meaningful results, the changes have to be put into a formal structure. Otherwise, workers may go back to the earlier processes."

Be prepared to invest time and patience in the journey to Six Sigma. The typical corporation operates at Three Sigma levels--and most organisations believe that it takes one year to move one notch up the scale. So, 3 years might be a bare minimum, especially if you're rehauling old operations.

Only new companies can expect to compress timeframes. Reckons Naresh Chachra, 50, Director (Operations), AlliedSignal India: "Since ours is a new plant, we're at the Three Sigma level. But we should be at least at the Five Sigma level by the end of the year." Adds R. Seshasayee, 50, Managing Director, Ashok Leyland: "Six Sigma is not a miracle worker; to achieve process-efficiency through this technique, you require perseverance."

As with any other management technique, the way you deploy your people to implement Six Sigma is critical. The classic Six Sigma corporation uses 4 categories of people to implement the tool. The objective is to create a hierarchy of ownership in-sync with the line-responsibilities in the organisation. Of course, your company could pick any configuration of people that matches your requirements, but the template is useful because it has delivered results to the companies that apply it.

Obviously, training is central to the process, with upto 4 weeks of theoretical and practical learning. Says Sitanshu Saraf, 36, Principal Consultant, Eicher Consultancy Services: "Since the approach is quantitative, the training has to be specific, and the basics have to be cleared up-front. Otherwise, there could be problems later."

Champions. Senior management leaders--either heads of different businesses or their direct reports--who are responsible for the success of Six Sigma efforts head the initiatives, and act as the bridge with the company's strategic needs. Champions approve projects, bankroll them, and smoothen out the policy- and infrastructural-roadblocks in the path of Six Sigma implementation. Up to them too is the task of monitoring the application of Six Sigma, and asking questions continuously to ensure that it is being used to best effect.

This form of leadership is important because of 2 reasons. First, applying Six Sigma often needs additional resources and management support, which may not have been anticipated up-front, requiring the Champions to make those resources available. And second, all too often, the demands of Six Sigma can confuse people about their operational priorities. That's when the Champions need to step, in and sort out the conflicts.

Master Black Belts. Primarily teachers of the intricacies of Six Sigma and its techniques, they're drawn from the ranks of the early adepts who've gone on to acquire enough expertise to be able to mentor Black Belts, and conduct Six Sigma training-sessions for anyone in the company. Assigned full-time to Six Sigma, Master Black Belts provide all the technical and quantitative skills-building required by your people to apply the technique. At GE Motors, Dutta handpicked 7 engineers, all under 30, as potential Master Black Belts, and packed them off to the US for training. "These are the people who will create the cascading effect in my company. I have no option but to invest in them," he says.

Black Belts. These are the key people in the implementation process who lead the teams that measure, analyse, improve, and control the key processes that influence customer satisfaction. Assigned full-time to Six Sigma, they are the ones who guide other employees in the process of applying the technique, troubleshooting, problem-solving, and achieving breakthroughs. Observes Bajaj: "Black Belt training is not for the faint-hearted. But, once you get there, you know can make a difference in your firm."

Team Members. The workers and managers who combine the application of Six Sigma with their regular responsibilities, these are the people who do the bread-and-butter tasks of process-mapping, analysing, planning and implementing improvements, and then, translating them into systems. Their Six Sigma work is fused with their everyday responsibilities since that is the only way in which the tool can become part of the fabric of all operations.

Unlike TQM organisations, where the human infrastructure starts with the CEO and cascades down in widening circles to small-group activities on the shopfloor, the configuration of people for applying Six Sigma is far more streamlined. The Champions atop the structure represent the top management, while the actual responsibility for applying the tool rests with the head of each business. The Master Black Belts usually report directly to him, and supervise the work of the Black Belts, who also report to the line-manager of the function concerned. And the Green Belts report to the Black Belts, thus completing the squad.

Ironically, its biggest strength may be the greatest weakness of Six Sigma. The sharply mathematical approach and the overwhelming objectivity of its methods, coupled with the rigorous implementation sequence, make it an easy-to-wield tool. You can expect to secure the commitment of your people to it simply on the basis of the powerful results it can generate--without requiring the far tougher task of securing their buy-in for its philosophy. For, it has none. In fact, GE today has 15,000 people involved in Six Sigma projects, one of its reasons being Welch's diktat that no one can expect a promotion in 1999 unless they have been through at least one major Six Sigma project. Cautions R.K. Sinha, 51, Managing Director, SRF: "In organisation-wide quality drives, like TQM, Six Sigma, and BPR, which can easily go wrong, it is important to make it clear up-front that you mean business."

Unfortunately, it is this very characteristic that could rob Six Sigma of a soul, making it impossible for the people of a company to believe in its efficacy with their heart--the way they may had it also offered a philosophical bedrock. While its empirical objectivity appeals to the Left Brain-dominant Occidental mind, its lack of evalengical firepower will leave the Right Brain-led Indian mind dissatisfied. The fallout is that bottom-up conversion of your people to Six Sigma will not be easy to achieve. And conversion of this kind, as CEOs operating in India know, is essential to transform the workforces that companies have.

To compensate for it, be prepared to lead your Six Sigma drive personally. In fact, it needed a Welch at GE and a Bossidy at AlliedSignal to lead the Six Sigma programmes directly. Warns Janak Mehta, 56, CEO, TQM Institute: "Everything looks good in theory. But, remember, most Six Sigma tools are already applied in TQM. And there are few companies who have been successful with TQM in India because of a lack of commitment not only among the workers, but also among the top management and the owners themselves." Without the commitment at the top, the cross-functional co-ordination that Six Sigma projects require is, often, impossible to implement.

Ultimately, Six Sigma will, indeed, purge your processes of the deviant behaviour that customers punish your company for. But first, you, the CEO, must become the Black Belt of black belts in this total quality tool for the Next Millennium.