Six Sigma in Transactional and Service Environments

Hasan Akpolat

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351899833
• Edition: 1
• Topic: Business
• Subtopic: Gestione
• Index: Business

In 1987, Motorola developed Six Sigma out of a need for improvement in their pager manufacturing processes. Since then, Six Sigma has been implemented by a number of manufacturing companies, predominantly in the USA. In the late 1990s, however, Six Sigma gained wider and international popularity due to successful implementation at General Electric. Six Sigma has now become one of the integral aspects of manufacturing, as well as non-manufacturing businesses worldwide. In recent years, many books have been published on Six Sigma, mainly on its application in manufacturing and product development. This book, by contrast, focuses specifically on the application of Six Sigma in service and transactional environments. The book comprises two parts. Part One provides the necessary knowledge for understanding the Six Sigma methodology and its underlying concepts. Part Two consists of practical examples of Six Sigma application to transactional and service environments which have been provided in the form of real world case studies written by internationally successful companies, to complement the reader's knowledge of Six Sigma and to increase comprehension of issues surrounding Six Sigma implementations. It has been written for newcomers as well as for experienced practitioners who are interested in improving processes in everyday business operations. The focus is on the implementation of the Six Sigma methodology rather than on the statistical tools and techniques. The aim of this book is to provide the reader with some practical and useful guidelines for Six Sigma deployment and its application to transactional and service processes.

PART I
Six Sigma Methodology

1
Six Sigma Overview

Introduction

In recent years, much has been published about Six Sigma in the business and academic press and on the Internet. Despite this fact, there is still confusion among many people, particularly those who work in the transactional and service environments, about the nature of Six Sigma. Two of the fundamental questions often asked are: ‘What is Six Sigma?’ and ‘What is its relevance?’ Other questions frequently asked include: ‘Is it just a fad like some other management programmes before?’ ‘Is it only applicable to selected industries and businesses?’ ‘What are the benefits for my business?’ ‘How practical is the concept and how easily can it be adapted to my business?’ In this chapter, we attempt to provide answers to these and other commonly asked questions not outlined above.

This chapter focuses on what Six Sigma is and what it isn’t. After a brief definition of Six Sigma, it provides a historical context and tracks the benefits of Six Sigma to business from its inception until now. It also provides some guidelines on the use of Six Sigma as a business strategy and how it can be integrated with other management practices to suit the preferences and culture of an organization.

What is Six Sigma?

Simply put, Six Sigma is a business improvement concept that is built upon a well-defined and robust infrastructure which directly involves personnel from several management levels targeting quality and process improvement projects to drive a company’s continual improvement efforts.

It is used by many companies not only to improve the quality of their products and services but also to achieve quantifiable financial results, improve management style and communication, and achieve customer and employee satisfaction.

The Six Sigma methodology is a result of the evolutionary process of quality innovations over the past five decades. It combines quality improvement tools with strategic management processes to achieve substantial bottom-line results and improve the overall performance of an organization.

The main characteristics of the Six Sigma methodology include:

• strategic alignment
• top-down approach
• customer focus
• management and staff involvement
• project management
• measurement and improvement.

For some sceptics, Six Sigma is another quality improvement fad primarily used by manufacturing companies. It mainly focuses on defect reduction and as a consequence will soon disappear.

There are two misconceptions inherent in this view. The first is about the nature of the Six Sigma methodology being only suitable to manufacturing, as it traditionally focused on defect reduction and as a result cannot be directly applied to the transactional and service environments. It is true that Six Sigma, like the other quality improvement frameworks ISO 9000 and Total Quality Management (TQM) before it, was used first in the manufacturing environments. However, many corporations, including General Electric and Sony, have successfully applied Six Sigma to their transactional and service processes as well and achieved substantial financial benefits.

The second misconception that Six Sigma will soon disappear is countered by the fact it has been almost two decades since Six Sigma was launched by Motorola and is presently preferred by many organizations as the best methodology to drive their quality and process improvement initiatives.

In the 1980s, when Six Sigma was launched, larger manufacturing companies were already using quality improvement programmes or models such as the ISO 9000 standards or TQM. However, in the early 1990s, many of these organizations started to realize that ISO 9000 or TQM initiatives did not achieve the expected process improvements across the company or provide substantial financial savings. Thus, many companies looked for a more flexible and robust programme, which led to Six Sigma.

Within this context, the electronics giant Sony is an interesting study. Sony enjoys a worldwide reputation for the excellence of its products. So, what was the reason for Sony deploying Six Sigma across its entire corporation and what were the characteristics of its Six Sigma implementation programme? According to the CEO, Mr Nobuyuki Idei, Sony was undergoing a fundamental change in its operations that would transform Sony from an electronics manufacturer into a ‘personal broadband network solution’ company. This effectively meant that Sony was determined to combine its already strong electronics business (hardware) with personalized solutions (content) and make them available to consumers via the Internet so that they can be accessed wherever and whenever needed. To achieve this corporate strategic goal, Sony used three core strategic initiatives:

• Value Creation Management
• Supply Chain Management and
• Sony Six Sigma.

Although generally adopted from General Electric’s implementation, Sony has customized Six Sigma to suit to its corporate direction and company culture. For Sony, the main purpose of its customized Six Sigma model was not only to further improve product quality but also to improve management quality. By using the Sony Six Sigma (SSS) methodology, Sony managers learned how to lower risk when making decisions and to reduce costs in daily operations. According to Mr Idei, Sony Six Sigma enabled the company to realize more than 30 billion yen in financial benefits within the first three years of its implementation. Like many other larger companies, Sony is implementing Six Sigma not only in its manufacturing plants but also in the transactional and service processes. A corporate memorandum was distributed to all Sony operations around the globe to highlight the importance of the implementation of Sony Six Sigma (see Figure 1.1).

Figure 1.1

Six Sigma implementation as a corporate directive

Six Sigma is a long-term initiative although it has been proved by many organizations that it can also generate immediate improvements in profitability and the bottom line. In contrast to other quality improvement methodologies used in the past, Six Sigma provides a very well-defined specification for how to train and involve staff from several management levels (a top-down approach), how to carry out the improvement projects, and how to use statistical tools and techniques for process improvement.

The Sony experience showed that Six Sigma can be customized by any organization to suit its cultural and strategic preferences, without loss of its essential robustness, and deliver substantial financial benefits.

The advent of Six Sigma

As mentioned in the previous section, Six Sigma is a result of the evolutionary process of quality innovations. During 50 years in the history of quality, there were various milestones which shaped the modern view of quality (Figure 1.2). The first real quality innovation was the use of statistics in manufacturing processes. The use of tools such as control charts goes back to the 1930s. However, quality became an important strategic element during World War II when the US military started to use military standards as a means of assuring the quality of its critical machinery and weapons systems, particularly those manufactured by numerous subcontractors. After World War II, as part of the reconstruction process of its economy, Japan adopted many of the American statistical quality control techniques and blended them with Japanese thought, culture and tradition to create a new quality concept called ‘Total Quality Control’ (TQC).

Figure 1.2

The evolution of quality innovations

In the 1960s and 1970s, the TQC methodology proved to be an effective way of producing high quality and reliable products, which helped Japanese companies gain impressive market share in some industries, including electronics, automobiles and shipbuilding. In the 1980s, Western companies responded to the Japanese challenge with two parallel developments: the ISO 9000 quality assurance system model predominantly favoured by the European Union and the adoption of the Japanese TQC concept under the banner of Total Quality Management.

Both ISO 9000 and TQM assisted many organizations in improving product and service quality. However, at the same time many companies recognized that ISO 9000 and TQM were inadequate in improving processes further and achieving substantial bottom-line results. It is the author’s view that the current quality era can be defined by two significantly different, but parallel, developments: Six Sigma and Quality Awards. In fact, Motorola was not only the first company applying Six Sigma but also was among the recipients of the first American Quality Award in 1988. A Qual...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• Preface
• PART I Six Sigma Methodology
• PART II Part 2 Case Studies: Applying Six Sigma to Transactional and Service Environments
• Glossary
• Index