How has the introduction of Six Sigma improved service quality by John Jinkner

Project Scope My term paper studies the history of quality control in an attempt to understand the factors that make Quality Control Programs in a service setting either a success or a failure Special emphasis is placed on the probability of a successful Six Sigma implementation. The question that this paper attempts to answer is… " How has the introduction of Six Sigma improved service quality."

Introduction All firms should be looking to improve the quality of their product or service. The Six Sigma objective uses a comprehensive approach to improve product quality and consistency in an attempt to increase the profits of the firm. Six Sigma is a quality control program that has recently reached fad status

History Six Sigma began in the early 1980’s as Motorola’s response to a manufacturing plant failure in the early 1970's. When a Japanese firm took over, they were able to produce the same product without changing equipment or people. Motorola’s realized that their Quality Control program was ineffective Walter Shewhart of Western Electric, in 1924, first applied statistics in Quality Control. Deming is most widely known for introducing Total Quality Control in Japan in Total Quality Management became popular in the U.S. in the 1980’s as a response to Japanese competition Six SigmaQuality Control

Walter Shewhart became known as the Father of Statistical Control Edwards Deming became known as the father of the Total Quality Management movement Shewhart Deming History

How does Six Sigma Work Top management Establishes a Leadership Team. Identifies key business issues. Assigns resources. Set aggressive goals. Incorporates the reward system. Direct finance & validate ROI. Finds intellectual capital Evaluate Six Sigma process and make changes if necessary. Six Sigma uses a top down approach to quality control.

Training Executive Sponsor Training –Senior leadership learn principles, tools, and techniques needed to become Six Sigma. –Leaders apply Six Sigma through hands-on experience, mapping processes. Black Belt Training –Training includes principles, problem-solving tools, project planning and management, exploratory data analysis tools, quality control and quality management tools, process mapping and simulation, and advanced statistical analysis. Green Belt Training –Training is a one week course covering meeting facilitation, project management, quality management and control tools, problem solving, and exploratory data analysis.

The “DMAIC” approach Define - The problem is defined and the metrics used to measure success is established as a base line Measure - Current process data is gathered and measured against customer requirements (defects) to ensure the measurement is quantifiable and accurate Analyze - Data is analyzed to validate the base line, identify root causes of defects, and measure the impact on the process Improve - The process is changed to reduce variability and defect levels - design of experiment Control - Includes monitoring critical metrics though the use of attribute, variable, run charts, or other automated measurement tools

Quality Tools Control Charts Flow Flow Multiple regression 1920's Cause & effect diagram 1943 ChartsCharts Unknown

Today’s statisticians have powerful new tools Quality Tools

Today… Increased customer service expectations Developing technologies National and... International competition What makes a company aware of the need for quality control? Awareness of the problem In the 1980’s… Quality control initiatives were in response to competition from Japanese manufacturing firms

Six Sigma will save the firm $300,000 to 400,000 per project Strategic advantages include: –Identifying customer needs –Increasing compliance of standards –Striving for zero defects –Reducing outcome variability –Identifying and monitoring processes –Continually working for improved quality Impact of quality on the Organization Why choose Six Sigma as your quality control program (what the experts say)

Consequences of no Change Competitive conditions in are in a state of continuous change: –Technology –Demographics –Societal priorities –The economic environment. It’s us or them Innovation can transform companies allowing them to cope with the increasing complexity of their environment. Survival depends on: –Cutting response time –Training multi-skilled employees –Redesigning work processes –Cutting waste and reducing cycle time

McDonnell Douglas - TQM was highly successful in turning the company around. Hospitals - Doctors have thwarted nearly all quality control initiatives Even College Professors - may become apathetic when unnecessary or inconsistent quality controls measures are unproductive and lacking in substance and meaning. TQM - Success or Failure? Successful in some manufacturing but difficult to start in service industries

Motorola –Reduced defect levels by 200.% –Reduced manufacturing costs by $1.4 billion –Increased production 126% –Increased stockholder value by 400% AlliedSignal –$1.4 Billion cost reduction –14% growth per quarter –520% price/share growth –Reduced new product time by 16% –24% bill/cycle reduction Six Sigma - So far? General Electric –Company wide savings of over $1 Billion. –Annual savings $6.6 Billion by year Polaroid –Saved over $10 Million in first year –Reduced inspection costs by $200,000 –Plans to reduce inception to market time by 50%

Six Sigma as a Statistical Tool Research has found improper application of techniques, producing inadequate results. Improper application of techniques occurs because of lack of specific statistical knowledge & skill Poor understanding is due to the generalized training given by consulting firms Consulting firms give generalized training because they are unfamiliar with the organizations processes. Schools of Thought Six Sigma Management Six Sigma, like all TQM, requires management direction, motivation, and a sense of structure Low employee acceptance rates threaten program’s existence Low morale & enthusiasm occur because of poor supervision, management style, and insufficient interdepartmental communication Six Sigma encourages leaders to communicate progress frequently and to provide a sense of purpose

Heavy reliance on new information technology systems is not necessary Six Sigma authors recommend putting technology upgrade plans on hold until a Six Sigma program is fully implemented. Six Sigma does require manipulation of statistical data. A quality information system can play a decisive role in the success of the program. Information Technology

Six Sigma is another in a long list of quality control tools that can help firms develop a commitment to total quality control More important than information technology is management commitment and a burning desire to win Firms not committed to quality improvement will continue to flounder Conclusion " How has the introduction of Six Sigma improved service quality." Answer: Six Sigma is merely another quality control tool

In the 1950’s, Japanese factories were in shambles and through the Deming theory of quality control they found a way to compete with the world. In the early 1980’s American industry’s wake up call was the phrase “Made In Japan,” which became synonymous with high quality, survival reaction Today’s environment finds firms slashing it out for market share. Only those firms with top management commitment to a quality program are succeeding. Throughout my research I found that management’s failure to commit to a quality program was the major reason for failure. When management is unable to rally the troops and demonstrate an urgent need for quality improvement, quality programs just fade away Proof

Managerial Implications Passion Passion and not the latest technology will get the firm where it needs to be. Firms that assume the “consultants” can train away their quality control problems are mistaken. The latest technology is a requirement, but only as a secondary consideration for a quality control program.

My personal objective was to learn more about the quality control movement and Six Sigma since I will be working in the Six Sigma initiative. –Determine how Six Sigma has improved Service Quality –Determine technology’s role quality programs –Understand how Six Sigma may be implemented in my firm Personal Objectives

Thank you Any questions?