six-sigma: breakthrough strategy or management fad?...
TRANSCRIPT
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Six-sigma: Breakthrough Strategy or Management Fad?
55th AQC
May 7, 2001
Charlotte, North Carolina
Sponsored by the Statistics Division
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Six-Sigma: Breakthrough Strategy or Management Fad?
Moderator:
• Roger Hoerl - GEPanelists:
• Steve Bailey – DuPont• Bob Mitchell – 3M• Goeff Vining – Virginia Tech.• Steve Zinkgraf – Sigma Breakthrough
Technologies, Inc.
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Six-Sigma: Breakthrough Strategy or Management Fad?
Steve Bailey’s Prepared Comments
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Six-Sigma: Breakthrough Strategy or Management Fad?
Bob Mitchell’s Prepared Comments
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Breakthrough Strategy?
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Breakthrough Strategy?
• No
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Breakthrough Strategy?
• No– DMAIC methodology built on PDCA
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Breakthrough Strategy?• No
– DMAIC methodology built on PDCA
PLAN
DOCHECK
ACT
Define
Measure
AnalyzeImprove
Control
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Breakthrough Strategy?• No
– DMAIC methodology built on PDCA– Focus is on:
• Improved customer satisfaction• Defect reduction• Cost reduction and cycle time reduction• Engage every employee
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Breakthrough Strategy?
• Yes
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Breakthrough Strategy?
• Yes– Top-down driven
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Breakthrough Strategy?
• Yes– Top-down driven– Disciplined, highly structured approach
• Sequencing of key tools
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Breakthrough Strategy?
• Yes– Top-down driven– Disciplined, highly structured approach– Results tied to the Bottom-line
• Customers feel it• Shareholders see it
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Breakthrough Strategy?
• Yes– Top-down driven– Disciplined, highly structured approach– Results tied to the Bottom-line – Leadership development system
• Statistical Thinking• Project Management• Value Creation
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What would Deming think?
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What might Deming think?Pro
• Management support • Process oriented approach• Statistical Thinking• Addresses all 14 Points
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What would Deming think?Pro
• Management support • Process oriented approach• Statistical Thinking• Addresses all 14 Points
Con• Encourages internal competition
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Management Fad?
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Management Fad?
Certainly could be…
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Management Fad?
Certainly could be…
• Is Six Sigma a building block in the foundation, or just another “Float in the parade” ?
Jim BuckmanCo-Director, Juran Center forLeadership in Quality
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Management Fad?
Certainly could be…
• Float in a Parade• Instant Pudding
– Inconsistent management support and commitment
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Management Fad?
Certainly could be…
• Float in a Parade• Instant Pudding• Variability in consultant experience and
competence
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Management Fad?
Certainly could be…
• Float in a Parade• Instant Pudding• One size fits all• Management’s short attention span
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Future State? The Dream is of a World• Cured of critical maladies• With abundant, affordable, pollution-free energy• Processing and reprocessing nature’s materials cleanly and
sustainable while• Creating employable, enjoyable bountiful wealth• Concurrently diminishing poverty• Driven by universal literacy, higher scholarship• Connected by unimaginably comfortable, efficient
transportation and every imaginable communication• Where people more free to choose and free from terrorism
cooperate more to share in the dream.Bob Galvin, Motorola
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Management Fad?
The Real Issues:
How will Six Sigma evolve?
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Management Fad?
The Real Issues:
How will Six Sigma evolve?
What will replace Six Sigma?
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Six-Sigma: Breakthrough Strategy or Management Fad?
Geoff Vining’s Prepared Comments
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Breakthrough Strategy?
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Breakthrough Strategy?
• No
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Breakthrough Strategy?
• No– Natural Continuation of Earlier Quality
and Productivity Improvement Strategies
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Breakthrough Strategy?
• No– Natural Continuation of Earlier Quality
and Productivity Improvement Strategies
– Nothing Really New in Terms of the Tools Used
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Breakthrough Strategy?
• Yes
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Breakthrough Strategy?
• Yes– Management Attention
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Breakthrough Strategy?
• Yes– Management Attention
– Tie of Results to Bottom-line
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Management Fad?
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Management Fad?
Of Course!!
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Management Fad?
Of Course!!• Terminology
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Management Fad?
Of Course!!• Terminology• Instant Pudding
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Management Fad?
Of Course!!• Terminology• Instant Pudding• Vast Variability in Competence of
Consultants
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Management Fad?
Of Course!!• Terminology• Instant Pudding• Vast Variability in Competence of
Consultants• Management’s Attention Span
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Management Fad?
The Real Issues:
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Management Fad?
The Real Issues:
How will Six-Sigma evolve?
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Management Fad?
The Real Issues:
How will Six-Sigma evolve?
What will replace Six-Sigma?
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Six-Sigma: Breakthrough Strategy or Management Fad?
Steve Zinkgraf’s Prepared Comments
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Sigma Breakthrough Technologies, Inc.
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Purpose of Today’s Presentation
• Case Studies• Six Sigma and Growth• Six Sigma Process• Six Sigma Deployment• Six Sigma Expectations
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A Tale of Two Companies• Company A:
– End of Year 1: $400,000+ per Black Belt Savings
• Company B:– End of Year 1: $65,000- per Black Belt
Savings
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Balancing Long and Short-Term
“You can’t grow long-term if you can’t eat short-term. Anyone can manage short. Anyone can manage long. Balancing these two things is what management is.”
Jack Welch, CEOGeneral ElectricBusiness Week 6/8/98
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Case Study 1: Electronics Company• $1.5 Billion Revenue• Launched June, 1998
– Stock had bottomed out– Negative profit margins
• First Year: $50Million savings– Cost of Deployment: $1.4 Million– 75 BBs; 25 Supplier BBs; 125 GBs– 50 Champions
• Today: Well over $100M saved– 400 BBs/GBs trained– Over $400M cash in the bank
• Executive VP, Six Sigma– Six Sigma: “It’s about results”– “It is not a program for wimps. It takes staying power and follow-
through.”– “It’s the best people development tool we have ever deployed”
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Case Study 2: Automotive Supplier• $6.5 Billion Revenue• Launched Executive Training September, 1999
− Difficult market with severe emphasis on price reduction• First Year: $20 Million savings
− Cost of deployment $3.5 Million − 101 BBs; 125 GBs
− 56 BB and 1 GB projects completed in 2000− 100+ Champions
• Today: 2001• Deploying DFSS• Starting internalization of training and consulting
• VP, Quality− “SBTI showed us how to systematically launch a strategic
initiative.”− “My Six Sigma communication plan is to train 100 BBs and
get $100 M.”
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Case Study 3: Korean Electronic Company• $5.5 Billion Revenue• Launched January 2000
− Changing market (from picture tubes to flat screen displays)− Extreme drops in product pricing
• First Year: $21 Million savings; Revenue increase of over $500M− Cost of deployment $3.3 Million − 175 BBs
− 70 projects completed before 4th quarter of 2000− 130 Champions
• Today: 2001: Budgeted additional $80M benefit from 2000 projects• Fully internalized program• Exploring Six Sigma in Technology launch
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Case Study 4: Company X• $6 Billion Revenue• Launched January 1998
− Top supplier in market− Losing market share to price competition
• First 2 Years: $16 Million savings• Cost of deployment $1.7 Million − 150 BBs− 50 Supplier BBs− 60 Champions
• Today: 2001: Internalized program• No ownership at business level• Majority of BBs report to corporate quality function
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Growth Model
Horizon OneHorizon One: Extend and defend core businesses
Horizon TwoHorizon Two: Build emerging businesses
Horizon ThreeHorizon Three:Create viable options
Six Sigma applies here
Six Sigma also Six Sigma also Applies HereApplies Here
Profit
Time (Years)
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The New View of Six SigmaProvide Value Communicate
the ValueIdentify Value- Product Development - Service Development - Pricing - Sourcing / Making - Distribute / Service
---
- Customer Segmentation - Market Selection - Value Proposition
Sales Force Sales Promotion Advertising
Marketing with Six Sigma
Technology Development Design for Six Sigma
Six Sigma for Services Six Sigma for Operations
Traditional Six SigmaTraditional Six SigmaSupply Chain – Sourcing – Purchasing for Six Sigma
Focused on Growth
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Six Sigma Process in Your Business•• SettingSetting clear expectations
– Aggressive goals – $15 million in income for each $Billion in Revenue
– Bottom line financials•• MeasuringMeasuring progress
– Operational metrics– Quantitative and objective
•• ManagingManaging for results– Disciplined project selection– Rigorous and continuous reviews– Reward and recognition for business results– Intense communication program
Infrastructure to insure program longevity
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A SimpleSimple Approach to Deployment
• Clarify Big Picture using Strategic Plan
• Establish Plant/Area productivity baseline
• Prioritize projects based on value, resources req’d, timing
• Select key projects with leadership buy-in
• Check Accountability: business and personal
• Clarify Big Picture using Strategic Plan
• Establish Plant/Area productivity baseline
• Prioritize projects based on value, resources req’d, timing
• Select key projects with leadership buy-in
• Check Accountability: business and personal
• Ensure the Right Leadership and Ownership
• Develop a training plan
• Dedicate time for training and application
• Ensure the right support resources are available
• Ensure the Right Leadership and Ownership
• Develop a training plan
• Dedicate time for training and application
• Ensure the right support resources are available
• Processes• Measure• Analyze• Improve• Control
•Designs• Concept• Design• Optimize• Commercialize
• Processes• Measure• Analyze• Improve• Control
•Designs• Concept• Design• Optimize• Commercialize
• Stay focused• Frequently
review progress and remove barriers•Check real
business impact•Continuously
communicate progress• Link to
performance management and R&R
• Stay focused• Frequently
review progress and remove barriers•Check real
business impact•Continuously
communicate progress• Link to
performance management and R&R
• Implement effective control plans•Conduct regular
training focused on the process•Review the
system effectiveness quarterly•Continually
identify and launch new projects
• Implement effective control plans•Conduct regular
training focused on the process•Review the
system effectiveness quarterly•Continually
identify and launch new projects
Select and Train the
Right People
Select the Right
Projects
Develop and Implement
Improvement Plans
Manage for Excellence in Operations
Sustain the Gains
Process Output:Make the Numbers
Process OutputProcess Output:Make the Numbers
Process Input:Strategic and Annual Business Goals and Targets
Process InputProcess Input:Strategic and Annual Business Goals and Targets
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The Right PeoplePeople•• ChampionsChampions –– political leaders of the political leaders of the
programprogram
•• Master Black BeltsMaster Black Belts –– technical leaderstechnical leaders
•• Black Belts Black Belts –– strategic resources (eating strategic resources (eating longlong--term)term)
•• Green Belts Green Belts –– tactical resources (eating tactical resources (eating short term)short term)
Critical mass of paradigm shifters
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Premise for Six Sigma Methods
Sources of variation can be– Identified– Quantified and prioritized– Eliminated by control or prevention
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The Nature of Variation
• Not all variation is bad– New products, new features, new services
• All variation degrades performance• Variation buffers
– Inventory– Time– Capacity
• SBTI’s Six Sigma focuses on– Variation due to process– Variation due to flow
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20151050
USLLSL
We meet the customer’s requirement 90% of the
time – is this acceptable?
Actual delivery over a 20 day period
Expected long-term
performance
Customer requires delivery in less than 12 days
Process CapabilityLeadtime
(days)47141111771433485610118969
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Dissecting Process Capability
Defects
Inadequate Product or
Process Design
Inadequate Process
Capability
LSL
USL
Inadequate Measurement
SystemsSupplier Variation
5 15 200 10
Process Capability
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Deployment Approach
• Establish business case first
– Projects identified that link to strategy and P&L
• Let the business case drive the training plan, not quota’s
• Good planning up front yields big results from the training
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A Generic Deployment ApproachMonth –2 Comprehensive pre-assessmentMonth –2 SBTI Project Manager Selected
Month 1 Executive WorkshopMonth 1 Financial Group WorkshopMonth 1&2 Business Team WorkshopsMonth 2&3 Perform business assessments Month 3&4 Initial breakthrough project listMonth 3&4 Select Champions Month 4 Champion WorkshopMonth 4 Finalize Projects and GoalsMonth 4 Black Belt Training Wave #1Month 4 Corporate Communications PlanMonth 4-9 Site Leadership Training
Bus
ines
s C
ase
Dep
loy
the
prog
ram
“Fast Launch to Gain Real $ Results Within Eight Months”“Fast Launch to Gain Real $ Results Within Eight Months”
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Example of a Six Sigma Deployment Plan
Assessments and Leadership workshops
Black Belts
- Operations
- Product Development
- Services
Green Belts - Operations
- Product Development
- Services
Intense Leadership Focus
Quarter 1 Quarter 2 Quarter 3 Quarter 4
J F M A M J J A S O N D
2-4 Day Workshops
Wave 4
Wave 5
Wave 6
Wave 1 Wave 4
Wave 1
Wave 2
Wave 3
Wave 7
Develop Business Case
Wave 2 Wave 5 Wave 8
Wave 3 Wave 6 Wave 9
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Six Sigma Goals
• Aggressive but reasonable Six Sigma Goal– Average $250k$250k per Black Belt project–– $15 Million in pre$15 Million in pre--tax income per tax income per
$Billion in revenue$Billion in revenue within 12 months after the first wave of Black Belts
– Requires approximately 4 projects per 4 projects per $Million in goal$Million in goal in well defined Projects
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Program Summary
• Six Sigma is business focusedbusiness focused
• Six Sigma generates measurable financial resultsfinancial results
• Six Sigma brings your strategy to realitystrategy to reality
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Questions from Statistics Questions from Statistics Division MembersDivision Members
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Questions from Statistics Questions from Statistics Division MembersDivision Members
1. Can we believe the financial results claimed by Six Sigma, and if so, why are they so huge?
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Questions from Statistics Questions from Statistics Division MembersDivision Members
2. Since most of the Six Sigma tools are “old” tools, isn’t Six Sigma just a repackaging of TQM?
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Questions from Statistics Questions from Statistics Division MembersDivision Members
3. Will Six Sigma be a forgotten buzzword in 10 years?
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Questions from Statistics Questions from Statistics Division MembersDivision Members
4. Is there a general consensus on the definition of a Black Belt, and if so, what is it?
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Questions from Statistics Questions from Statistics Division MembersDivision Members
5. What role should academia play in the Six Sigma game?
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Questions from Statistics Questions from Statistics Division MembersDivision Members
6. What would Deming be saying about Six Sigma if he were still alive?
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Questions from the Floor