Energy Control Systems 1 Six Sigma Overview Scott Carcillo 6/8/99

Energy Control Systems 2 Strategic Quality Model Total Customer Satisfaction (Best in Class) Improved Market Share Improved Financial Results Reinvest and Refine It All Starts With The Customer

Energy Control Systems The Cost of Poor Quality “Iceberg” Additional Costs of Poor Quality 25-35% of sales Traditional Quality Costs 4-6% of sales Inspection Warranty Scrap Rework Rejects Tangible -- Measurable Costs Intangible -- Difficult or Impossible to Measure More Setups Expediting Lost Sales Late Delivery Lost Customer Loyalty Long Cycle Times Engineering Change Orders Enormous Opportunity

Energy Control Systems Generation Transmission Distribution Calgary RTUs Substation Automation Feeder Automation Edinburgh Trouble Call Mgmt Switch Order Mgmt SCADA/Network Mgmt Mobile Field Systems Melbourne SCADA Dispatcher Training Simulator Generation & Transmission Applications Bulk Power Scheduling / Accounting GE Harris Product Family

Energy Control Systems What Is Six Sigma? Goal for Competitive Strength Strategy for Running a Business Tool to Eliminate Variation Vision of Product & Service Excellence Value to Our Customers Metric of World Class Companies 6 ... The Way We Run The Business

Energy Control Systems 6 Quality The Classical View of Quality “99% Good” (3.8  20,000 lost articles of mail/hour Unsafe drinking water almost 15 minutes each day 5,000 incorrect surgical operations per week 2 short or long landings at most major airports daily 200,000 wrong drug prescriptions each year No electricity for almost 7 hours each month The Six Sigma View of Quality “ % Good” (6  Seven lost articles of mail/hour One minute of unsafe drinking water every seven months 1.7 incorrect surgical operations per week One short or long landing at most major airports every five years 68 wrong drug prescriptions each year One hour without electricity every 34 years

Energy Control Systems 7 Harvesting the Fruit of Six Sigma Sweet Fruit Design for Six Sigma Bulk of Fruit Process Characterization and Optimization Low Hanging Fruit Seven Basic Tools Ground Fruit Logic and Intuition Process Entitlement We don't know what we don't know We can't act on what we don't know We won't know until we search We won't search for what we don't question We don't question what we don't measure Hence, We just don't know

Energy Control Systems The Focus of Six Sigma n Y n Dependent n Output n Effect n Symptom n Monitor n X1... Xn n Independent n Input-Process n Cause n Problem n Control To get results, should we focus our behavior on the Y or X? f (X) Y= Historically the Y, ………..with Six Sigma the X’s

Energy Control Systems D - M - A - I - C Define Measure Analyze Improve Control 1.Customer expectations of the process? 2. What is the frequency of defects? 3. When and where do defects occur? 4. How can we fix the process? 5. How can we make the process stay fixed? Analyzing and Improving Existing Processes

Energy Control Systems D - F - S - S Define Measure Analyze Design Validate 1.Customer expectations of the new process? 2. What is the frequency of defects? 3. When and where do defects occur? 4. How do we design the process for Six Sigma? 5. Formalize and review with customers? Designing and Validating New Processes

Energy Control Systems Six Sigma Challenge Make the Customer feel Six Sigma CompletionsSavingsTrainingCompletionsSavingsTraining

Energy Control Systems  Overcoming an embedded employee feeling that Six Sigma was the Quality “Flavor of the Month”.  Understanding and dealing with employee pushback to the concept of “Stretch” targets.  Countering organizational pushback to rigorously holding people to their committed numbers.  Focusing on customer CTQs and clear communication instead of a fortress mentality. GE Harris’ Six Sigma Challenge

Energy Control Systems 13 Six Sigma Examples Program Execution Efficiency Gains Standardized Milestones and Testing Sourcing Cost Out Sharing fixes Between Product/Customer Customer Dashboards Operational Dashboards Extranet Applications (including web store) Enternet View/Data

Energy Control Systems  Review previous Quality programs of acquisitions and joint ventures & prepare to deal with pushback.  Install a thoroughly trained and experienced Quality team into new acquisitions and joint ventures.  Aggressive stretch goals in the first year can dilute project impact & weaken program effectiveness.  Customer dashboard activities must be prepared for unhappy customers unaccustomed to responsiveness. JV Quality Lessons Learned Be Patient - Expect Pushback, Coaching Skills Are Critical to Success