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Excerpt HOW SIX SIGMA COMPARES TO OTHER QUALITY INITIATIVES As the competition gets tougher, there is more pressure on organizations to improve quality and customer satisfaction while decreasing costs and increasing work output. This becomes an increasingly difficult challenge when there are fewer resources available. Peter Senge (1990) writes, "Learning disabilities are tragic in children, but they are fatal in organizations. Because of them, few corporations live even half as long as a person--most die before they reach the age of forty." "Learning organizations" defy these odds and overcome learning disabilities to understand threats and recognize new opportunities. Six Sigma can help organizations learn and excel at the challenges they encounter--if it is implemented wisely .     A question we frequently hear from executives is "How does Six Sigma fit with other company initiatives?" We believe that Six Sigma should not be considered just another initiative but should integrate other programs and initiatives at a higher level as part of an overall business strategy. Six Sigma should not replace other initiatives, but instead offer a tactical methodology to determine the best approach for a given situation/process.     Our Smarter Six Sigma Solutions (S 4 ) business strategy offers a road map for changing data into knowledge that leads to new opportunities. The major components to consider during Six Sigma implementation are "metrics" and "strategy," as shown in Figure 1.1. The upper half of the figure involves the measurement of how well business processes meet their goals. The success of Six Sigma is linked to a set of cross-functional metrics that lead to significant improvements in customer satisfaction and bottom-line benefits. Organizations do not necessarily need to use all the measurements listed (often presented within typical Six Sigma programs). It is most important to choose the best set of metrics for a situation, metrics that yield insight into a situation or process.     Our S 4 approach advocates the development of cross-functional teams to provide a holistic approach to problem solving, encompassing all levels of complex processes. We often describe the methodology as a murder mystery, where practitioners are determining "who done it?" or, equivalently, "what is the major cause of defects in a process?" By following a structured methodology, project teams can determine the "biggest hitters" and make substantial areas for improvement that provide real benefits to an organizations bottom line.     Subsequent chapters of this book will provide the details of effective Six Sigma metrics and the importance of implementing Six Sigma as a business strategy. In this chapter, we first discuss current myths surrounding Six Sigma. We then provide a brief history of quality leaders and other quality systems that preceded the creation of Six Sigma. Last, we answer a few of the more frequently asked questions (FAQs) about Six Sigma. 1.1 WHAT IS SIX SIGMA? Some people view Six Sigma quality as merely a rigorous application of basic and advanced statistical tools throughout an organization. There are a number of Six Sigma consultants and training organizations that have simply repackaged the statistical components of their previous TQM programs and renamed them "Six Sigma." These groups would define Six Sigma quality in terms like those in the upper half of Figure 1.1.     Others view Six Sigma as merely a sophisticated version of Total Quality Management (TQM), as represented by the lower half of Figure 1.1. They see it as an advanced form of TQM in which various continuous improvement systems must be put in place with a small amount of statistical analyses added in for good measure.     The S 4 view of Six Sigma emphasizes an intelligent blending of the wisdom of the organization with proven statistical tools to improve both the efficiency and effectiveness of the organization in meeting customer needs. The ultimate goal is not improvement for improvement's sake, but rather the creation of economic wealth for the customer and provider alike. Our Smarter Solutions approach recommends that Six Sigma be viewed as a strategic business initiative rather than a quality program. This implies, not that Six Sigma replaces existing and ongoing quality initiatives in an organization, but that senior management focuses on those processes identified as critical-to-quality in the eyes of customers. Those critical systems are then the subject of intense scrutiny and improvement efforts, using the most powerful soft and hard skills the organization can bring to bear. The success of each and every Six Sigma initiative is linked to a set of multidimensional metrics that demand world-class performance, which, if achieved, lead to significant improvements in market share, new product development, customer satisfaction, and shareholder wealth.     Later in this chapter and in subsequent chapters, we will spend more time explaining what Six Sigma is. But first we will explain what it is not. We will start by dispelling the 10 myths of Six Sigma (Snee, 1999b) listed in Table 1.1. TABLE 1.1 The 10 Myths of Six Sigma Six Sigma Myths • Works only in manufacturing • Ignores the customer in search of bottom-line benefits • Creates a parallel organization • Is an add-on effort • Requires massive training • Requires large teams • Creates bureaucracy • Is just another quality program • Requires complicated, difficult statistics • Is not cost-effective Works only in manufacturing Much of the initial success in applying Six Sigma was based on manufacturing applications; however, recent publications have addressed other applications of Six Sigma. Breyfogle (1999), Implementing Six Sigma , includes many transactional/service applications. In GE's 1997 Annual Report (GE, 1997), CEO Jack Welch proudly states that Six Sigma "focuses on moving every process that touches our customers--every product and service [emphasis added]--toward near-perfect quality." Ignores the customer in search of profits This statement is not myth, but rather misinterpretation. Projects worthy of Six Sigma investment should (1) be of primary concern to the customer, and (2) have the potential for significantly improving the bottom line. Both criteria must be met. The customer is driving this boat. In today's competitive environment, there is no surer way of going out of business than to ignore the customer in a blind search for profits. Creates a parallel organization An objective of Six Sigma is to eliminate every ounce of organizational waste that can be found and then reinvest a small percentage of those savings to continue priming the pump for improvements. With the large amount of downsizing that has taken place throughout the world during the past decade, there is no room or inclination to waste money through the duplication of functions. Many functions are understaffed as it is. Six Sigma is about nurturing any function that adds significant value to the customer while adding significant revenue to the bottom line. Requires massive training "Valuable innovations are the positive result of this age [we live in], but the cost is likely to be continuing system disturbances owing to members' nonstop tinkering.... [P]ermanent white water conditions are regularly taking us all out of our comfort zones and asking things of us that we never imagined would be required.... It is well for us to pause and think carefully about the idea of being continually catapulted back into the beginner mode, for that is the real meaning of being a continual learner.... We do not need competency skills for this life. We need incompetency skills, the skills of being effective beginners." (Vaill) Is an add-on effort This is simply the myth "creates a parallel organization" in disguise. Same question, same response. Requires large teams There are many books and articles within business literature declaring that teams have to be small if they are to be effective. If teams are too large, the thinking goes, a combinational explosion occurs in the number of possible communication channels between team members, and hence no one knows what the other person is doing. Creates bureaucracy A dictionary definition of bureaucracy is "rigid adherence to administrative routine." The only thing rigid about wisely applied Six Sigma methodology is its relentless insistence that customer needs be addressed. Is just another quality program Based upon the poor performance of untold quality programs during the past three to five decades (Micklethwait and Wooldridge, 1997), an effective quality program would be welcome. More to the point (Pyzdek, 1999c), Six Sigma is "an entirely new way to manage an organization." Requires complicated, difficult statistics There is no question that a number of advanced statistical tools are extremely valuable in identifying and solving process problems. We believe that practitioners need to possess an analytical background and understand the wise use of these tools, but do not need to understand all the mathematics behind the statistical techniques. The wise application of statistical techniques can be accomplished through the use of statistical analysis software. Is not cost-effective If Six Sigma is implemented wisely, organizations can obtain a very high rate of return on their investment within the first year. 1.2 THE QUALITY LEADERS Numerous individuals have had a significant impact on the Six Sigma quality movement in the United States and abroad. Unfortunately, we don't have time or space to acknowledge them all. The six we have chosen to give a diverse perspective are W. Edwards Deming, William Conway, Joseph Juran, Philip Crosby, Genichi Taguchi, and Shigeo Shingo. This brief review is more than a historical perspective. At the conclusion of this section, we will discuss how Six Sigma relates to the previous generation of quality programs. W. Edwards Deming Dr. W. Edwards Deming was born on October 14, 1900. By 1928, he had earned a B.S. in engineering at the University of Wyoming in Laramie, an M.S. in mathematics and physics at the University of Colorado, and a Ph.D. in mathematical physics at Yale. He is best known for revitalizing Japanese industry after the end of World War II. In 1950, he visited Japan at the request of the Secretary of War to conduct a population census. While there he was invited by a member of the Japanese Union of Science and Engineering (JUSE) to lecture on statistical methods for business at a session sponsored by the Keidanren, a prestigious society of Japanese executives. Deming told the Japanese leaders that they could "take over the world" if they followed his teachings. The rest is history. Today the the most prestigious quality award in Japan is called the "Deming Prize." Deming, who has been heralded as the "founder of the Third Wave of the Industrial Revolution," often sounded like a quality crusader when he issued statements such as "It is time to adopt a new religion in America." He gained national recognition in 1980 when he was interviewed for the NBC television "white paper," "If Japan Can, Why Can't We?"     Dr. Deming is equally well known for his "Fourteen Points" (Table 1.2) and "Seven Deadly Diseases" (Table 1.3) (Deming, 1986). He made numerous modifications to the first list throughout his life as he grew in knowledge and wisdom. Additional references that provide commentary on Deming's Fourteen Points are provided in the references section of this book (Breyfogle, 1999; Neave, 1990; Scherkenbach, 1988; Gitlow and Gitlow, 1987). TABLE 1.2 Deming's Fourteen Points 1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and stay in business and to provide jobs. 2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change. 3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place. 4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust. 5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs. 6. Institute training on the job. 7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers. 8. Drive out fear, so that everyone may work effectively for the company. 9. Break down barriers between departments. People in research, design, sales, and production must work as a team to foresee problems of production and in use that may be encountered with the product or service. 10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversary relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force. 11a. Eliminate work standards (quotas) on the factory floor. Substitute leadership. 11b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership. 12a. Remove barriers that rob the hourly worker(s) of their right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality. 12b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of managing by objective. 13. Institute a vigorous program of education and self-improvement. 14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job. TABLE 1.3 Deming's Seven Deadly Diseases 1. Lack of constancy of purpose to plan product and service that will have a market and keep the company in business, and provide jobs. 2. Emphasis on short-term profits: short-term thinking (just the opposite from constancy of purpose to stay in business), fed by fear of unfriendly takeover, and by push from bankers and owners for dividends. 3. Evaluation of performance, merit rating, or annual review. 4. Mobility of management: job hopping. 5. Management by use only of visible figures, with little or no consideration of figures that are unknown or unknowable. 6. Excessive medical costs. 7. Excessive costs of liability, swelled by lawyers that work on contingency fees.     Deming's basic quality philosophy is that productivity improves as variability decreases. Since all things vary, he says, statistical methods are needed to control quality. "Statistical control does not imply absence of defective items. It is a state of random variation, in which the limits of variation are predictable," he explains.     There are two types of variation: chance and assignable. Deming states that "the difference between these is one of the most difficult things to comprehend." His "red bead experiment" (Walton, 1986) revealed the confusion generated by not appreciating the difference between the two. It is a waste of time and money to look for the cause of chance variation, yet, he says, this is exactly what many companies do when they attempt to solve quality problems without using statistical methods. He advocates the use of statistics to measure performance in all areas, not just conformance to product specifications. Furthermore, he says, it is not enough to meet specifications; one has to keep working to reduce the variation as well.     Deming is extremely critical of the U.S. approach to business management and is an advocate of worker participation in decision making. He claims that management is responsible for 94% of quality problems, and he believes that it is management's task to help people work smarter, not harder. There is much in common between Dr. Deming's teachings and the Smarter Six Sigma Solutions (S 4 ) methodology. William E. Conway William E. Conway (Conway, 1999) is the founder, chairman, and CEO of Conway Management Company. He attended Harvard College and is a graduate of the United States Naval Academy.     In 1980, after viewing the NBC television broadcast of "If Japan Can, Why Can't We?", he invited Dr. W. Edwards Deming to Nashua Corporation, becoming one of the first American executives to approach Deming for help. The visits went on for three years. Because of his close and early association with Deming, Conway is sometimes described as a "Deming disciple," but he has developed his own philosophy of and approach to quality.     Conway has created a system of management that lets organizations achieve lasting, bottom-line improvements. That system is called "The Right Way to Manage." Much of the content of this two-day course is also presented in one of Mr. Conway's quality books (Conway, 1992). In this book he discusses the impact of variation on quality, and introduces his approach to using the seven simple tools (including control charts) to eliminate waste. The core activity of the Conway System is eliminating waste in all processes. While most executives are familiar with the waste associated with manufacturing operations, it actually exists throughout all functions of an organization. This approach has been adopted by diverse organizations in a wide range of industries: wholesale, retail, service, manufacturing, distribution, health care, and government.     Conway notes that it takes more than just a critical eye to spot the hidden or "institutionalized" waste. Training and education are needed, as well as the right tools and techniques. He reports a solid return on investment (ROI) in his firm's education and training programs; ROIs of 4:1 to 10:1 are not uncommon.     In his most recent book (Conway, 1994), Mr. Conway delves into some of the infrastructure and implementation issues involved in eliminating organizational waste across the board. Joseph M. Juran Joseph Moses Juran (Juran, 1999a) was born December 24, 1904, in Braila, Romania. In 1920, Juran enrolled at the University of Minnesota. In 1924, he graduated with a B.S. degree in electrical engineering and took a job with Western Electric in the Inspection Department of the Hawthorne Works in Chicago. In 1926, a team from Bell Laboratories (including Walter Shewhart and Harold Dodge) made a visit to the factory with the intention of applying the laboratory tools and methods they had been developing. Juran was selected as one of 20 trainees, and he was subsequently chosen as one of two engineers to work in the newly created Inspection Statistical Department. In 1928, Juran authored his first work on quality, a pamphlet that became an input to the well-known AT&T Statistical Quality Control Handbook , which is still published today.     In 1937, Juran conceptualized the Pareto principle. In December 1941, he took a leave of absence from Western Electric to serve in Washington with the Lend-Lease Administration. It was here that he first experimented with what today might be called "business process reengineering." His team successfully eliminated the paper logjam that kept critical shipments stalled on the docks. In 1945, Juran left Washington and Western Electric to work as an independent consultant. In 1951, his standard reference work on quality control, Quality Control Handbook (Juran, 1999b), was first published.     In 1954, the Union of Japanese Scientists and Engineers (JUSE) and the Keidanren invited the celebrated author to Japan to deliver a series of lectures. These talks addressed managing for quality, and were delivered soon after Dr. W. Edwards Deming had delivered his lectures on statistical quality methods.     Dr. Juran has been called the father of quality, a quality guru, and the man who "taught quality to the Japanese." He is recognized as the person who added the "human dimension" to quality, expanding it beyond its historical statistical origins to what we now call total quality management. Says Peter Drucker, "Whatever advances American manufacturing has made in the last thirty to forty years, we owe to Joe Juran and to his ... work." A few of Juran's important quality books are listed in the reference section of this book (Juran, 1964, 1988, 1989, 1992). Philip B. Crosby Phil Crosby (Crosby, 1999) was born in Wheeling, West Virginia, on June 18, 1926. He started work as a quality professional on an assembly line at Crosley in 1952 after serving in World War II and Korea. He took it upon himself to try to convince management that it was more profitable to prevent problems than to fix them. He worked for Crosley from 1952 to 1955; Martin-Marietta from 1957 to 1965; and ITT from 1965 to 1979. As quality manager for Martin-Marietta he created the Zero Defects concept and program. During his 14 years as corporate vice president for ITT, he worked with many industrial and service companies around the world, implementing his pragmatic philosophy.     In 1979, Crosby founded Philip Crosby Associates, Inc. (PCA), and over the next 10 years grew it into a publicly traded organization with 300 employees around the world. In 1991, he retired from PCA and founded Career IV, Inc., a company that provided lectures and seminars aimed at helping current and prospective executives grow. In 1997 he purchased the assets of PCA and established Philip Crosby Associates II, Inc. Now his "Quality College" operates in more than 20 countries around the world.     Philip Crosby's lectures provide a thoughtful and stimulating discussion of managements' role in causing their organizations, their employees, their suppliers, and themselves to be successful. He has published 13 books, all of which have been best-sellers. His first business book, Quality Is Free (Crosby, 1979), has been credited with beginning the quality revolution in the United States and Europe. A few of his other titles are included in the references section of this book (Crosby, 1984, 1992).     Philip Crosby's books are easy to read and explain his program for quality improvement and defect prevention. He emphasizes the importance of management's role in making quality happen. His approach is team based but is not highly statistical, as are some of the competing approaches to TQM. He does teach the use of the simple tools and statistical quality control, but in a very generic, non-mathematical sense. He is an interesting and knowledgeable speaker who both entertains and educates his audiences. He has certainly had an impact on the quality revolution over the years. Dr. Genichi Taguchi Dr. Genichi Taguchi's (Taguchi, 1999) system of quality engineering is one of the great engineering achievements of the twentieth century. He is widely acknowledged as a leader in the U.S. industrial quality movement. His philosophy began taking shape in the early 1950s when he was recruited to help correct postwar Japan's crippled telephone system. After noting the deficiencies inherent in the trial-and-error approach to identifying problems, he developed his own integrated methodology for designed experiments.     Systematic and widespread application of Dr. Taguchi's philosophy, and of his comprehensive set of experimental design decision-making tools, has contributed significantly to Japan's prowess in rapidly producing world-class, low-cost products.     The experimental procedures developed and taught by Genichi Taguchi (Taguchi and Konishi, 1987; Ross, 1988) have met with both skepticism and acclaim. Some nonstatisticians find his techniques highly practical and useful. Most statisticians, however, have identified and published evidence that use of some of his techniques can lead to erroneous conclusions.     We avoid these and other controversies, and instead make use of Taguchi Methods where they are of benefit and where they avoid known pitfalls and weaknesses. The two major areas where Dr. Taguchi's contributions to quality are recognized are (1) variance-reduction strategies and (2) robust design techniques. Shigeo Shingo Shigeo Shingo was born in Saga City, Japan, in 1909. In 1930, he graduated with a degree in mechanical engineering from Yamanashi Technical College and went to work for the Taipei Railway Factory in Taiwan. Subsequently he became a professional management consultant in 1945 with the Japan Management Association. It was in his role as head of the Education Department in 1951, that he first heard of, and applied, statistical quality control. By 1954 he had studied 300 companies. In 1955, he took charge of industrial engineering and factory improvement training at the Toyota Motor Company for both its employees and parts suppliers (100 companies). During the period 1956-1958, at Mitsubishi Heavy Industries in Nagasaki, Shigeo was responsible for reducing the time for hull assembly of 65,000-ton supertankers from four months to two months. In 1959, he left the Japan Management Association and established the Institute of Management Improvement, with himself as president. In 1962, he started industrial engineering and plant-improvement training at Matsushita Electrical Industrial Company, where he trained some 7,000 people.     Shingo's supreme contribution in the area of quality was his development in the 1960s of poka-yoke (pronounced "POH-kah YOH-kay"). The term comes from the Japanese words "poka" (inadvertent mistake) and "yoke" (prevent). The essential idea of poka-yoke is to design processes so mistakes are impossible to make or at least easily detected and corrected.     Poka-yoke devices fall into two major categories: prevention and detection. A prevention device affects the process in such a way that it is impossible to make a mistake. A detection device signals the user when a mistake has been made, so that the user can quickly correct the problem. Shingo's first poka-yoke device was a detection implement he created after visiting Yamada Electric in 1961. He was told of a problem in the factory that occasionally led to workers' assembling a small, two-push-button switch without inserting a spring under each push-button. The problem of the missing spring was both costly and embarrassing, but despite everyone's best effort the problem continued. Shingo's solution was simple. The new procedure completely eliminated the problem: • Old method: a worker began by taking two springs out of a large parts box and then assembled a switch. • New approach: a small dish was placed in front of the parts box and the worker's first task was to take two springs out of the box and place them on the dish. Then the worker assembled the switch. If any spring remained on the dish, then the worker knew that he or she had forgotten to insert it.     Although Shigeo Shingo is perhaps less well known in the West, his impact on Japanese industry has been immense. Norman Bodek, president of Productivity, Inc., stated: "If I could give a Nobel Prize for exceptional contributions to world economy, prosperity, and productivity, I wouldn't have much difficulty selecting a winner--Shigeo Shingo." Shingo died in November of 1990 at 81 years of age. Copyright (c) 2001 John Wiley & Sons, Inc.. All rights reserved.