PRIMO Limited & 6 Sigma By HKU SPACE 6 Sigma Consultant Firm 30-May-2006

HKU SPACE 6σ Consultant Firm Established in 2004 Established in 2004 Push 6 Sigma concept to Enterprise & SME Push 6 Sigma concept to Enterprise & SME

Agenda Current & Forecast Situations Current & Forecast Situations 6σ 6σ Implementation Plan Implementation Plan 3 month pioneer project 3 month pioneer project Q & A Q & A

Current Situation

Current Telecom Market Challenge Globalize open market & stiff competition Globalize open market & stiff competition High price erosion rate High price erosion rate Aggressive customer service delivery timeframe Aggressive customer service delivery timeframe Short or no customer service contract period (i.e. lead to high churn rate & operation cost) Short or no customer service contract period (i.e. lead to high churn rate & operation cost) Fast technology advancement with relative high CAPEX investment & OPEX, but changing customer requirements & short product life cycle. (i.e. impact on ROI & cashflow) Fast technology advancement with relative high CAPEX investment & OPEX, but changing customer requirements & short product life cycle. (i.e. impact on ROI & cashflow)

Current Financial Performance 2005 EBITA, USD MM

Cost of Quality Vs Sales.. Year Cost of Quality of Sales - % Sales Revenue - %

Year 2010

Market Shares (2000~2010)

怎麼辦 ?

2 Basic Principles Increase revenue Increase revenue Reduce cost Reduce cost

Significant principle PEOPLE PEOPLE

Best Known Methodology * 6 Sigma 六西格瑪 *

6 Sigma Methodology for pursuing breakthrough improvement in customer satisfaction and profit Methodology for pursuing breakthrough improvement in customer satisfaction and profit Business strategy for achieving and sustaining world class performance Business strategy for achieving and sustaining world class performance 3.4 DPMO 3.4 DPMO

Fundamental of 6 Sigma A genuine focus on the customer A genuine focus on the customer Data and fact driven management Data and fact driven management Team based problem solving projects Team based problem solving projects Process focus, management & improvement Process focus, management & improvement Proactive management Proactive management Drive for perfection, tolerance for failure Drive for perfection, tolerance for failure

What 6 Sigma can Achieve? Type of Organization Cost of Quality Of Sales Sigma Level Fair25-40% 3333 Good15-25%4 Excellent5-15%5 Word class <1%6

What Six Sigma can do for your company? Results at other companies have yielded: 20% margin improvement 20% margin improvement Gain 4% in market share each year Gain 4% in market share each year 12%-18% increase in capacity 12%-18% increase in capacity 12% reduction in the number of employees 12% reduction in the number of employees 15%-30% of total sales is the estimated cost of quality 15%-30% of total sales is the estimated cost of quality An average return of $380,000 per project to EBITA An average return of $380,000 per project to EBITA

Costs & Benefits Personnel Personnel 1% black belt 1% black belt 10% green belt 10% green belt Master black belt Master black belt Software Software Total of USD ??? /yr Total of USD ??? /yr Savings in process – USD120 million Savings in process – USD120 million Increase of sales – USD80 million Increase of sales – USD80 million Total of USD200 million/yr Total of USD200 million/yr Cultural change – better decision making & new way to doing things Cultural change – better decision making & new way to doing things

Successful Cases GE, started in 1995, benefits increased 10 times from 96 to 99 GE, started in 1995, benefits increased 10 times from 96 to 99 Bank of America, started in 2000, stock value increased by 52% in 1st 2 yrs Bank of America, started in 2000, stock value increased by 52% in 1st 2 yrs Competitor A, started in 2000, market share grown from 30% to 40% Competitor A, started in 2000, market share grown from 30% to 40%

Implementation

6 Sigma Deployment Start-up Program Define Business Strategy Define Business Strategy Six Sigma Policy Deployment Six Sigma Policy Deployment Project Start up (Deployment of communication plan, promotion program & Six Sigma project monitoring system) Project Start up (Deployment of communication plan, promotion program & Six Sigma project monitoring system) Champion & Black Belt Selection Champion & Black Belt Selection Training & Certification Training & Certification Project Selection, Tracking & Benefit Realization Project Selection, Tracking & Benefit Realization

Critical success factors: Provisioning management: - Improvement on service delivery lead time Provisioning management: - Improvement on service delivery lead time Better vendor management: Establish new partnership and maintain a better commercial deal & closer working relationship (e.g. back-to-back support on customer requirements) Better vendor management: Establish new partnership and maintain a better commercial deal & closer working relationship (e.g. back-to-back support on customer requirements) Business management - Cost reduction, Customer driven product development Business management - Cost reduction, Customer driven product development

Strategic Goals on Provisioning Management Re-aligning resources to support customer focused transformation of the company processes and systems. Re-aligning resources to support customer focused transformation of the company processes and systems. To drive for high quality service delivery at the lowest unit cost. (To reduce Cost of Poor Quality & meet customer target completion date) To drive for high quality service delivery at the lowest unit cost. (To reduce Cost of Poor Quality & meet customer target completion date)

Applying 6 Sigma Framework Process Improvement Process Improvement Process Design / Redesign Process Design / Redesign Process Management Process Management

Process excellence using Six Sigma is about… Process Improvement Process Design Process Management Improve existing processes to better meet customer requirements Design new processes to meet customer requirements or Re-Design existing processes that are not capable of doing so Manage existing processes by continually monitoring performance against customer requirements and identifying opportunities to Improve or Re-Design as required Facilitation Skills A set of tools and methodologies A measure of variation A focus on the Customer Data based decision making QFD (Quality Functional Deployment – House of Quality) DMEDV/I ( Design for Six Sigma) DMAIC & Express Quick-Win DMAIC: D = Define M = Measure A = Analyse I = Improve C = Control DMEDV/I: D = Define M = Measure E = Explore D = Design V/I = Validate / Implement Express quick-win = 1-2 days facilitated workshop to solve everyday business issues

6 Sigma Methodology (D-M-A-I-C) Define the project, the goals & deliverables to customers (internal & external) Define the project, the goals & deliverables to customers (internal & external) Measure the current performance of the process Measure the current performance of the process Analyse the determine the root cause(s) of the defects Analyse the determine the root cause(s) of the defects Improve the process to eliminate defects Improve the process to eliminate defects Control the performance of the process Control the performance of the process

3 month Pioneer Project Objective Objective To improve the service delivery delay problem (average 14 days after expected customer target) which has caused revenue loss HK$ 534k (June 05 – May 06) To improve the service delivery delay problem (average 14 days after expected customer target) which has caused revenue loss HK$ 534k (June 05 – May 06) After the project, it is targeted to have the service be delivered to customer within 3 days from expected Ready for Service (RFS) date. After the project, it is targeted to have the service be delivered to customer within 3 days from expected Ready for Service (RFS) date. Team charter Team charter

Q & A

Thank you!