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EP JOHN
CASE STUDYON
QUALITY IN PRACTICE
FROMLEADERSHIP THROUGH QUALITY
TOLEAN SIX SIGMA
AT
XEROXQUALITY IN PRACTICE
QUALITY IN PRACTICE
CASE BRIEF CONCEPTS PROBLEM ANALYSIS ANSWERS TO QUESTIONS CONCLUSION
CASE BRIEF
CASE BRIEF
1959 - Xerox 914 Introduced
1960 - Sold all it could produce
1970s - Its ROA was as low as 20%
Strong patents
Growing market
Little competition
No focus on customers
CASE BRIEF
1970s - IBM & Kodak entered the high volume copier’s (Xerox) market
1980 - Xerox market share fallen less than 50%
Xerox ignored, which the Japanese companies concentrated
High Quality
Low volume copiers
CASE BRIEF
1983 - was predicted that Xerox will be closed for $2 billion due to
Rework
Scrap
Excessive inspection
Lost business
Other problems
CASE BRIEF
1983 - As compared to competitors, Xerox had
9 times suppliers
2 times employees
Twice the cycle times
10 times rejects
7 times manufacturing defects
REQUIRE RADICAL CHANGES
CASE BRIEF
1983 - David T Kearns, President planned long range quality strategy
Bench marking
Team formation
TQM approach
Wrote TQM policy
LEADERSHIP THROUGH QUALITY
LEADERSHIP THROUGH QUALITY
Objectives
To instill, Quality for all
To ensure, Satisfaction for all
To establish, Quality way of life
Four goals are Customer Employee Business Process
LEADERSHIP THROUGH QUALITY
Brought changes in Product planning Distribution Establishing unit objectives Focus on customer
LEADERSHIP THROUGH QUALITY
Benchmarking, nearly 200 processes from non-competitive companies
Cummins Engine – Production scheduling
LL Bean – Distribution system
American Express – Billing system
Measuring customer satisfaction 40,000 mails surveyed Seeking feedback on
Equipment performance, Sales, Service & Administrative support
LEADERSHIP THROUGH QUALITY
Equal training at all levels world wide, in quality principles, starting from top management In 5 years, 4 million hours with more than
$125 million all employees had received quality related training
In 1988 – 79% were involved in Quality improvement teams
OTHER ISSUES
Xerox worked with suppliers, to give long term contracts
Implementing statistical methods
Total quality process
JIT inventory concept
Employee relations
Being role model
Promoted leadership
Reward & recognition (team work & quality)
Manager become coaches
IMPACTS OF LEADERSHIP
THROUGH QUALITY Reject rates become 300 PPM (10,00,000) Suppliers become defect free (30 US suppliers) Suppliers reduced to 500 (from 5,000) Purchase cost reduced by 45% Manufacturing cost dropped by 20% Product development time decreased by 60% Overall product quality improved by 93%
THE PATH TO TRANSFORMATIO
N Projects will be selected based on value creation
opportunity (ROIC/Economic Profit) with number of projects in process controlled
Adopt a consistent financial results tracking approach as determined by deployment team and the financial organization
Deploy and train resources in roles as defined (Full Time Black Belts, Full Time Deployment Managers, Sponsors, Green Belts)using consistent training
THE PATH TO TRANSFORMATIO
N Assign demonstrated top performers to the full-time
roles
Adopt the defined organizational structure to enable success
Operations leadership will be engaged in the process and will integrate Lean Six Sigma into daily business operations
Commit at least 0.5% of employee population as Black Belts in ‘03 and another 0.5% in ’04 to achieve critical mass towards our transformation
LESSONS LEARNT
CUSTOMER SATISFACTION+
EMPLOYEE MOTIVATION & SATISFACTION=
INCREASED MARKET SHARE & ROA
1989
MALCOM BALDRIGE NATIONAL QUALITY
AWARD
CONCEPTS
SIX SIGMA
as a business process that allows companies to drastically improve their bottom line by designing and monitoring everyday business activities in ways that minimise waste and resources while increasing customer satisfaction by some of its proponents
also be described as an improvement programme for reducing variation, which focuses on continuous and breakthrough improvements.
SIX SIGMA
the major components for a successful six sigma implementation are
Management involvement
Organisation
Infrastructure
Training and
Statistical tools.
Define. Define which process or product that needs improvement. Define the most suitable team members to work with the improvement. Define the customers of the process, their needs and requirements, and create a map of the process that should be improved.
Measure. Identify the key factors that have the most influence on the process, and decide upon how to measure them.
Analyse. Analyse the factors that need improvements.
Improve. Design and implement the most effective solution. Cost-benefit analyses should be used to identify the best solution.
Control. Verify if the implementation was successful and ensure that the improvement sustains over time.
SIX SIGMA METHODOLOGY
LEAN
Lean is about controlling the resources in accordance with the customers’ needs and to reduce unnecessary waste
it is generally understood to represent a systematic approach to identifying and eliminating elements not adding value to the process. Consequences of this are striving for perfection and a customer-driven pull of the process.
A systematic approach to identifying and eliminating waste through continuous improvement, flowing the product at the pull of the customer in pursuit of perfection
LEANMETHODOLOGY
Understanding customer value. Only what the customers perceive as value is important.
Value stream analysis. the next step is to analyse the business processes to determine which ones actually add value. If an action does not add value, it should be modified or eliminated from the process.
Flow. Focus on organising a continuous flow through the production or supply chain rather than moving commodities in large batches.
LEANMETHODOLOGY
Pull. Demand chain management prevents from producing commodities to stock, i.e. customer demand pulls finished products through the system.
Perfection. The elimination of non-value-adding elements (waste) is a process of continuous improvement. “There is no end to reducing time, cost, space, mistakes, and effort”.
LEAN SIX SIGMA In 2003
More than 1000 senior leaders trained
Six Sigma implemented from manufacturing to supply chain into all business areas
LEAN SIX SIGMA IS NOT THE ONLY ANSWER BUT IT’S A SIGNIFICANT
PART OF THE EQUATION
ASSOCIATION
INTEGRATION OF LEAN SIX SIGMA TOOLS
XEROX LEAN SIX SIGMA VIEWED IN
THREE DIMENSIONS Projects and Results Culture Change Leadership Development
Xerox Lean Six Sigma is a significant part of the equation for moving Xerox from a good
company to a truly great company again
LEAN SIX SIGMA PROCESSES AT
XEROX
XEROX VALUE TREE
PROBLEM ANALYSIS
BASIC PRINCIPLE
QUALITY IS THE
RESPONSIBILITY OF EVERY
XEROX EMPLOYEE
CRISIS AND QUALITY RENEWAL
1990 - Xerox grew at steady state At the end of the century
Technological changes Decreased quality focus New quality initiative
Lean Six Sigma Emphasis on behaviors and
Leaderships to achieve performance excellence
LEAN SIX SIGMA 2003 - Established Lean Six Sigma,
includes a dedicated infrastructure and resource commitment to focus on Critical customer opportunities Significant training of employees Black belt improvement specialists Value driven project selection process Customer focus with linkage to
strategies and objectives
BASIC PRINCIPLE
Customer focused employees Team work Alignment with objectives Use of quality tools Benchmarks to enable rapid
changes
BASIC PRINCIPLE
Key components are Performance excellence process DMAIC process Market trends & benchmarking Behaviors & Leadership
BASIC PRINCIPLE Communication of direction Accountability of objectives Statistical methods, Lean flow methods
and other process management skills External perspective includes
Market trends and benchmarking Sharing of information Flexible to changes
BASIC PRINCIPLE
WE DELIVER
QUALITY AND EXCELLENCE IN
ALL WE DO
ANSWERS TO QUESTIONS
QUESTION 1
Contrast Leadership for quality and Lean Six Sigma as quality initiatives
for Xerox. How did their motivations differ? What differences or
similarities are evident in the principles behind these initiatives and the way in which they were
implemented?
TQM LEAN SIX SIGMA
Origin The quality evolution in Japan
The quality evolution in Japan, Motorola & Toyota
Theory Focus on customers
No defects & Remove waste
Process view Improve and uniform processes
Reduce variation and improve processes & Improve flow in processes
Approach Let everybody be committed
Project management
Methodologies Plan, do, study, act
DMAIC & Understanding customer value, value stream, analysis, flow, pull, perfection
TQM LEAN SIX SIGMA
Tools Analytical and statistical tools
Advanced statistical and analytical tools
Primary effects
Increase customer satisfaction
Save money & Reduce lead time
Secondary effects
Achieves customer loyalty and improves performance
Achieves business goals and improvesfinancial performanceReduces inventory, increases productivity and customer satisfaction
Criticism No tangible improvements,resource-demanding, unclear notion
Does not involve everybody, does notimprove customer satisfaction, does not have a system view & Reduces flexibility, causes congestion in the supply chain, not applicable in all industries
QUESTION 2
What lessons might this experience – particularly in responding to the new
crisis – have for other organizations?
The main criticism against TQM is that there is a widespread confusion concerning what TQM really means, a number of failures of organisations trying to implement TQM have been documented.
A number of organisations have put a large amount of resources on implementing TQM, but with no tangible improvements achieved.
ANSWER 2
There is a difficulty in six sigma programmes to exceed the customer’s needs and hence increase the customer satisfaction. To avoid this problem some companies use voice of the customer tools in their define phase.
Six Sigma programmes fail to create conditions in order to involve everyone, which is more emphasised in the TQM literature.
ANSWER 2
In six sigma training programmes, one can only start a project which gives a certain amount of savings. This project is often executed in the department of the project members.
The project normally leads to an improvement in the department of the project members, but due to the performed change another department can experience deterioration. Six sigma is sometimes accused for not having a system view.
ANSWER 2
The main criticism against lean is the lack of flexibility the concept offers and that the concept actually can lead to delays for the customers.
Lean, which was developed for manufacturing and distribution situations, is applicable in all range of areas, including both manufacturing and service industries.
ANSWER 2
QUESTION 3
Discuss the meaning of “Quality is a race without a finish line” What is its significance to Xerox, or
to any organization?
QUALITY
“AS YOU GET BETTER, SO DOES THE COMPETITION”
“IN THE RACE FOR QUALITY, THERE IS NO
FINISH LINE!”DAVID T. KEARNS Quality also has it’s price and managing
talent does mean that one should have best practices in place within your organization - Tall order as many line managers responsible to work with HR on this, do not persist with the process or they procrastinate and miss the opportunity.
“IN THE RACE FOR QUALITY, THERE IS NO
FINISH LINE!”DAVID T. KEARNS
Talent Management starts with attracting and then recruiting the best skill available. We should clearly differentiate between recruiting for potential and / or for skill.
Each person within the organization should have a clearly defined performance balanced scorecard stipulating the expected deliverables of that position.
“IN THE RACE FOR QUALITY, THERE IS NO
FINISH LINE!”DAVID T. KEARNS Individual competencies should be
measured against the deliverables prior to any appointment being made.
A clear career development path should be noted on the balanced scorecard and coaching should take place regularly to ensure growth. It is during these coaching sessions that additional talent will be discovered and explored.
“IN THE RACE FOR QUALITY, THERE IS NO
FINISH LINE!”DAVID T. KEARNS Training is pivotal to developing talent. It is only
when we have developed the talent that we can manage it! In order to manage talent, the leader must be fully aware of the strategic direction of the organization and department.
Developing people should then be aligned with this expected outcome. Should a member of staff be incapable of delivering the expected, it should be addressed immediately and if necessary, a transfer to a more appropriate department should be initiated.
“IN THE RACE FOR QUALITY, THERE IS NO
FINISH LINE!”DAVID T. KEARNS
Should a member of staff be unwilling to deliver the required output, a disciplinary process may be an option
Remember this is also part of managing talent!.
THANK YOU