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Six Sigma News Makers
MAKING INFORMED CHOICES
February, 2002
First appearing in The Manufacturer
MANUFACTURING TECHNIQUES (Six Sigma)
What can be expected of Six Sigma, and what kind of commitment does it require? – Robert Pols seeks answers from those in the know...
How, the modern manufacturer might reasonably ask, do you distinguish between quack cure and trustworthy treatment? Does a given management tool really deliver, or is it only a fairytale princess who can discern the pea of productivity through the multi-layered mattress of methodology? But perhaps concepts should be judged by the company that keeps them. If so, six sigma, pioneered by Motorola and since embraced by such organizations as GE, Panasonic, Pilkington and Nokia, seems worth at least a second look.
"Six sigma," explained Dr. Andrew Cave, managing director of Smallpeice Enterprises, "is a structured and demanding long-term business improvement strategy to systematically reduce process variations through the application of powerful statistical tools. It can be applied to any process where you have measurables. Process variation tends to create a lot of waste - unexpected things happen, resulting in nasty surprises and upset customers. But, using these statistical tools, you can establish the actual root cause of a problem. Of paramount importance is the move from opinion-based to fact-based decision making: once you make decisions based on facts, their quality is greatly enhanced, and the problems that you're trying to solve stay fixed."
His point was echoed by Bob Edenboro of Six Sigma Qualtec. "One of the fundamentals of six sigma is to question the assumptions we make. People often work on the basis of tribal knowledge, gut feeling or the consensus view of a meeting. But six sigma is about getting real data and making decisions on the basis of real facts."
The benefits, it becomes clear, are very closely linked to the nature of the process. "Six sigma is a proven problem-solving methodology," argued Andrew Cave, "and once you've followed its sequence (define, measure, analyze, improve, control), you can expect to get payback in terms of better bottom line, the transfer of best practice throughout an organization, and greater customer satisfaction."
Bruce Richardson, managing director (Europe) of Six Sigma Qualtec, also related results to process. "Six sigma works because of the rigour and the methodology. We put in the firm infrastructure and, provided the client doesn't stray from that, the benefits will come. Though the overall aims may be complex, each project is a bite-sized chunk and, by using the rigour and the discipline progressively, the entire process area will come under the spotlight."
This cumulative nature of benefits was emphasized by Philip Tugwell of MCP Management Consultants. "Like most techniques, to be really successful six sigma relies on breaking down barriers between functions. If you can get that right, there are so many synergies between the functions to be discovered."
Theory, of course, needs to be put into practice. Bob Bowen, Flowserve Corporation’s director of continuous improvement process for Europe and Asia, is currently doing just that, and he offered his view on six sigma’s benefits. "There are various types of result. Those which have an impact on the bottom line are the most obvious, and of course you can measure productivity gains - reducing the time needed to do something, and improving response and delivery time to the clients. You may also reduce space (and so increase the potential capacity of a facility), improve cash flow and reduce inventory. But there are some results that are difficult to measure in the short term. It's hard to quantify the reaction of your customers, for example, or the way six sigma affects your market share. I see it in terms of a marketing tool, as well as enhancing productivity and savings: if you're delivering on time, all the time, the customer is more likely to stay loyal."
Though the Flowserve programme is still at the black belt training stage, he has already seen evidence of benefits in the hard-to-measure area of morale. "Because we're making sure that the awareness is being spread and that communication is being made at every level, people are feeling generally encouraged that we're embarking on something that's going to help them meet their targets."
It seems reasonable, however, to wonder how soon such feeling can be expected to produce some return on investment. Andrew Cave challenges clients to aim over the first six months at savings which are twice the cost of the training. "The Smallpeice record so far was a saving of £375,000 by one trainee black belt within three months of a project starting. Generally, though, if you're a fair-sized organization, you should be looking for a black belt to save you between £250,000 and £400,000 a year."
But Peter Tugwell advised against short-term thinking. "You're going to see some benefits early on, yes - but for six sigma gains to become part of everyday living will take time. Perhaps because of the way its own performance is measured, British management tends to look at what can be gained this year, or even this month, seeking the quick fix rather than long-term sustainability. You'll start to see cost savings in months, but, in terms of bedding the methodology in as part of the day-to-day culture, you're looking at two years’ hard work. The flavour-of-the-month syndrome has to be avoided at all costs."
He did acknowledge, though, that a well-timed boost does no harm. "When selecting projects, it can be good to go with a big win early on. Choose to start with something which, by its positive outcomes, will reinforce the understanding of six sigma’s usefulness."
Reinforcement seems wise, for a high level of commitment must be maintained at all levels within the organization, including the highest. Six sigma isn't just something that you designate as good for others; you can't simply wind it up and then let it go. Whilst initial investment in training is necessary, and whilst the appropriate structure must be put in place (with its champion, steering group, and black and green belts), the people at the top of the company should themselves be involved in the process.
"It's not just a manufacturing or operational issue," Peter Tugwell explained. "It will involve people in marketing and design, for instance, and each of these areas has its own agenda. So you need someone at an extremely senior level, ideally the managing director, to drive six sigma, act as its champion, and ensure that it becomes a business tool rather than just a manufacturing tool. Going the whole way and changing the whole business only happens if there's commitment from the top managers."
In describing his own recent experience, Bob Bowen showed how this kind of support translates itself into action. "It needs to be seen at every level that six sigma is important. The starting point for Flowserve was a vision from the chairman, which he communicated to all employees in the form of a short statement, and from there he began to involve more people. He also attended the very first training session, sitting in with his presidents and vice-presidents to receive a full day of training. So they initially demonstrated their involvement in that way. When we started the black belt training, a number of them came in and talked to the class. The people at the top need, as the saying goes, to walk the talk, and they're doing that. They're actively involved and making themselves visible."
Successful implementation also depends on a well-judged choice of activities. "Ensure that the vitally important process of project selection is managed by the senior team, to give clear direction and focus in relation to the objectives," urged Bruce Richardson. "One of the great mistakes in six sigma deployment is trying to do too many projects at once."
Support is needed, too, in maintaining the discipline of the methodology. "The responsibility for ensuring that the rigour is applied lies with the senior team," said Bob Edenboro. "If the rigour disappears, you lose total control of the improvements that you're trying to achieve. There's a real role for leadership here, because the support of the management is vital."
The convincing assumption of that leadership role may entail some new thinking at the top. "There has to be a change from the functional management outlook to seeing things from a holistic business point of view," suggested Philip Tugwell; and Andrew Cave called for strategic thinking: "You're there for the
long haul, and it's not for the fainthearted."
But given the right support and corporate mindset, it appears that six sigma can go on to create its own impetus. "Smoothness of implementation comes from the focus the champion team gives to driving it through," commented Andrew Cave. "As for sustaining the initiative, once the early projects come to fruition and the benefits of these become clear for all to see, management enthusiasm for six sigma tends to escalate, and you find that people start looking for training and putting forward projects for the black belts to tackle.
"At Motorola they're still hard at it 20 years on."
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