Six Sigma, TQM, Lean?

With all the emphasis today on quality, and studies showing that quality is very important to the leaders of American business, why are so many organizations struggling to achieve and sustain quality systems? The answer is that managers have been inundated for 20 years with a parade of quality initiatives that have promised miraculous results in reducing costs and increasing profits. Consultants have peddled the promise of quality circles, self-directed teams, ISO 9001, theory of constraints (TOC), lean manufacturing, and Six Sigma to the point of near hysteria.

Each new system promises greater rewards. All of these systems have succeeded somewhere. Most have failed and died from neglect. My contention is that many managers do not have the time, knowledge, or resources for in-depth analysis of methods for process improvements. Competition has increased while pricing pressures from low cost countries have decreased profit margins. These lower profits make it extremely important that any money spent be able to show a return on the investment. A wrong decision on where to invest capital can be fatal to a company’s long-term health.

Any half-hearted implementation will probably fail, and every failure makes the next attempt even less likely to succeed. Let’s see if we can simplify the decision making.

What’s a manager to do? Here’s my list of questions to be answered by anyone looking to invest time and money in a quality-improvement system.

• Can the method be introduced to all types of business models?
• Will the method give a good return on investment?
• Is the method affordable?
• Is the method easily understood and assimilated into the company’s culture?

Let’s do a quick review of the heavy hitters in the quality arena.

Six Sigma

Six Sigma methodology involves two essential assumptions. The first is that people understand the ability of numbers to characterize a process. The second assumption is that reducing variation in a process— the cornerstone of Six Sigma—is always good. The goal of a business is to improve at the least possible cost, so the potential exists for savings to be less than the costs of the improvements. In addition, one process can be improved at the expense of another, causing the overall performance of a business to degrade.

Strengths of Six Sigma

• Projects have defined accounts to track money saved.
• Six Sigma can be used in either manufacturing or service industries.
• Because Six Sigma is driven by improvement in profitability, upper management is more likely to support it.
• Six Sigma isn’t viewed as a quality system, but a business system.
• Wall Street has become enamored of Six Sigma because of results reported by large companies. If Wall Street loves Six Sigma, business leaders have more freedom to invest capital without fear of failure.
• Six Sigma projects are intended to prevent defects before they can be created.
Weaknesses of Six Sigma
• Training costs are high. GE invested over $200 million dollars in the first year. Training a Black Belt can cost more than $40,000.
• The belt system can create a division between the “chosen ones” and everyone else.
• Turnover among trained Black Belts is high. Once trained, a Black Belt is valuable to other organizations. It may often be cheaper to hire a Black Belt than to train one.
• The cost savings reported are viewed skeptically by many, and predicted savings may not be tracked closely. Motorola reported in 1996 that it had savings of $16 billion from Six Sigma. From 1998 to 2003, Motorola gained no market share or improved stock value (Schniederman, Arthur M. (2004 March). Question: When is Six Sigma not Six Sigma, Answer: When it’s the Six Sigma Metric, posted on www.schneiderman.com). Where did the savings go? Schneiderman contends estimates don’t recognize that many costs are fixed or semi-fixed and don’t go away but show up elsewhere in the organization.
• The statistics involved are difficult for many employees to understand, and even experts cannot agree on the correct interpretation of the statistics. Try to figure out the argument about the 1.5 sigma shift and I guarantee your head will hurt!

Even if cost savings are accurately computed, eventually the big projects are completed and a cadre of highly trained specialists have fewer and smaller projects to work on, which may not justify full-time Black Belts.

Total Quality Management

Taguchi embraced the ideas of Deming and added to them. Kanbans, quality circles, just-in-time manufacturing and other concepts were combined to create the total quality control (TQC) system of continuous improvement that contributed to the rapid improvement of quality and productivity in the Japanese economy. The TQC concepts were Americanized to become TQM.
Strengths of TQM

• TQM organizations are typically flatter and Leaner than non-TQM companies
• TQM has worked in Japan, and benchmarking and training opportunities abound.
• TQM organizations are more customer-oriented than non-TQM companies.
• TQM stresses employee participation.
• TQM is adaptable to manufacturing or service industries.
Weaknesses of TQM
• TQM projects tend to focus on optimizing processes, rather than the whole system.
• TQM does not focus on bottom-line results to the extent other systems, like Six Sigma, do. Companies increasingly need to tie any investment to bottom-line improvement.
• Managers can be resistant to give up power. In a TQM organization, delegation is necessary for the system to succeed.
• Organizations may be hesitant to commit to the training necessary for employees to understand TQM concepts. Training can be viewed simply as a cost, not as an investment.
• TQM relies heavily on the team concept. Teams fail in organizations because of insufficient training and competing interests.
• Goals must be carefully established and communicated so everyone is working toward a common outcome, not individual achievement.

TQM typically seeks to optimize each process without considering the effect on the other processes in a system.

For example, if a team improves the efficiency of a piece of machining equipment by 20 percent, is that a good thing? Maybe. Improving a single piece of equipment may produce no savings at all. If the output of that equipment is waiting at the next process, inventory and waiting time have increased, and costs have actually risen. The entire process must be viewed as a whole. Many executives believe they “did quality” in the 1980s and it didn’t work. So TQM has fallen out of favor, and other initiatives, such as lean manufacturing and Six Sigma, have become more popular.

So far, neither TQM nor Six Sigma can answer our four questions with a yes. What about lean?

Lean
Lean is the reduction of waste. How do the types of waste factor into lost profitability? All waste can be classified as nonvalue-added. Nonvalue-added refers to some function or task the customer is not willing to pay for. Any overproduction uses labor, utilities, and space that might be used more profitably in other areas. Production that can’t be sold builds up inventory, and defective product is scrapped or reworked, causing lost productivity. Waiting time can never be recovered. Wasted motion is one of the most overlooked types of waste. Needless walking, turning, bending, and lifting are all nonvalue-added. Transportation waste is also often overlooked. A company that doesn’t use all its employees’ talents and ideas wastes possibly good ideas for improvement.

Extra inventory may have to be stored until it can be used. At some point in the process, the inventory has to be moved again when the next process is ready for it. To be successful in the global economy, where some countries such as China and Mexico have much lower labor rates, companies must do everything possible to cut costs and improve quality. Lean emphasizes teamwork, producing according to demand, smaller batches, quick setups, and cellular production.

Lean is the only methodology with which all four questions can be answered yes. Waste is present in all business models, whether they are service or manufacturing. Initial and ongoing training costs are low, and the concepts are easily understood. Many improvements can be made with little or no capital expenditures. Lean can be implemented on a small or grand scale. Departments from accounting to shipping can utilize lean techniques. The size of the business isn’t an issue, lean works just as well in a small business as a large one.

Six Sigma has too many negatives to be the first choice of a business as a methodology for continual improvement. Even proponents of Six Sigma admit that it’s not a good tool for small businesses. Because of the training cost and people resources required, a small company likely won’t have enough cost-reduction opportunities available to justify the investment. According to Got Six Sigma on the Brain, in the November 2004 Quality Digest, more than 66 percent of the companies using Six Sigma have more than 500 employees. In addition, the article points out that after three or four years companies abandon Six Sigma because the major cost savings have been realized. The math required in Six Sigma makes it difficult for everyone to understand the concepts. The tools of Six Sigma can be valuable for reducing variation in processes. The training to use these tools is readily available at local community colleges, on internet sites, and through other sources at much less cost than through the belt hierarchy.

Lean techniques should be investigated by any business interested in improving profitability and competitiveness. The principles translate to almost any business model. Results can be gained quickly and don’t require large expenditures at the beginning of the process. Many resources are available to gain the knowledge necessary to implement the methodology.

No one knows where the next quality guru will come from, but one thing is certain—the next “silver bullet” is just around the corner.

Article Written by Allen Huffman
posted by qualityguru at 2:51 PM 0 comments
Tuesday, November 06, 2007
“Buy American“? How about “Buy Quality” and then live up to expectations?
From: Quality Digest Magazine, Nov 2007
Written by Dirk Dusharme, Editor

“Made in the USA.” What does it mean? What should it mean? To tell the truth, I’ve never thought all that much about it. My inclination has always been to buy the best product, with the features that I want, at a price that I can afford. Frankly, I’ve gotten used to those products being foreign-made, to the point that I just automatically gravitate toward Honda or Bosch or Zeiss.

But this month’s cover story by Nathalie Mitard (“Made in the USA,” beginning on page 26) made me think about it. I even posed the question to my wife. I asked her, “Everything else being equal, if you had the choice to buy a U.S.-made product or a foreign product of the same quality, which would you choose?”

Without hesitation, she said, “The U.S.-made product, because it supports our economy.”

“What if the foreign product was of slightly better quality?” I asked.
“Still U.S.,” she replied.

“Is there a point at which the better quality of a foreign product would persuade you to buy foreign rather than U.S?”

She had to think about that for a bit, but then acknowledged that, sure, at some point the quality of a product wins out over origin.

So, again, what should it mean to only buy products that are “Made in the USA”? Should I buy a U.S. product out of a sort of patriotism, or should I buy a U.S. product only if it’s better? I think it’s the latter. There’s just a little bit of hypocrisy tied up with how some U.S. manufacturers want me to blindly buy domestic. They want me to “Buy American,” but they definitely don’t want their Japanese customers to “Buy Japanese” or their Mexican customers to only buy products with a “Heche en Mexico” label.

I live in the rice-growing region of Northern California. This relatively small area exports more than 40 percent of its annual rice production to Asian countries; in fact, half of Japan’s total rice imports come from here. The total value of California’s 2002 rice exports was around $183 million. The industry creates more than 5,000 rural jobs.

Can you imagine what would happen to this area if Japan decided to embark on a “Buy Japanese Rice” campaign? “Buy [country here]” sounds good except when the shoe is on your customer’s foot.

Even with all that said, Mitard is right. There’s a trade deficit and it’s partially up to us as consumers to do something about it—but we shouldn’t do it blindly. We should buy from those U.S. producers, like Mitard’s, that put out a quality product—and, I would argue, only those. The others will learn the hard way, like our consumer electronics industry did as it crumbled beneath the onslaught of better and less-expensive Japanese-made products. Some industries, like the auto industry, learned, barely, and are now producing comparable products at comparable prices.

So I agree that maybe its time that we… I… take another look at U.S. products. The next time I get ready to make a purchase, I’ll evaluate whether the U.S. product (if it exists) is of comparable quality to the foreign. If it is, well, why not “Buy American”?

This isn’t just a blind allegiance to U.S. products, but rather an allegiance to quality U.S. products. So how about this? Let’s change the slogan from “Buy American” to “Buy Quality.” If we do that, eventually the “Made in the USA” label will mean more than just the place of manufacture.

QUALITY GURU IS ASKING FOR YOUR OPINION
We all know that many U.S. consumer products are made in other countries (example – no such thing as a Made in America automobile anymore). Does “Made in the USA” determine your buying experience or do you purchase solely on the best quality and price available?

Share your thoughts and purchasing decision process!
posted by qualityguru at 2:01 PM 1 comments
Friday, August 03, 2007

Internal Auditing: A Tool for Effective Process Mapping

Internal audits are often scheduled, and therefore conducted according to the ISO 9001:2000 clause structure. Most organizational audit systems start with a formalized checklist where auditors ask questions to ensure employees know their jobs, check for available procedures, and determine if documents and records are being utilized. These audits are mostly focused on judging conformity than evaluating effectiveness. Looking clause by clause, the quality management system may appear conforming, yet be fragmented and ineffective.

Auditors must adopt the process approach and assess the quality management and operational system through its natural workflow. Of course, this requires understanding the business, its processes and the integration of linkages that drives effective auditing and process mapping. Audit planning and interviews should identify for each process:

• Inputs: What, when, and from whom?
• Resources: With what people, materials, equipment?
• Methods: How done (procedures and instructions)?
• Controls: How monitored and controlled?
• Measures: What are performance indicators?
• Outputs: What is delivered, when, and to whom?

Auditors should view the quality management system as a set of integrated processes (by understanding the interfaces and interactions). Adopt the process approach for your audits. Add value by looking at more than just conformity. Evaluate the linked processes for their “effectiveness”. Verify their controls and identify any process risks. Also, determine opportunities for improvement. Auditors can promote the process approach through their own audit methods.

Share with us and our readers what method you and your company use to identify and document the Six “Process Based” outcomes identified above.

We will post all examples and discuss best practices next month!
posted by qualityguru at 2:20 PM 0 comments
Tuesday, May 22, 2007
Effective Procedure Writing

When writing a procedure, keep in mind these questions:

• What is the objective of process? Know its purpose before starting.
• Which activities are part of scope? Agree on coverage of activities.
• Who is responsible for these activities? Identify key process players.
• What are inputs and who are suppliers? Identify inputs and providers.
• What are outputs and who are customers? Identify outputs and recipients.
• What is referenced as an information source? Identify related documents.
• What is the logical series of steps? Organize the steps in a logical sequence.
• How are the activities performed? Interview users and observe operations.
• Which departments use the process? Know readers and users of the process.
• What reports or records are generated? Identify records for the process.
• What forms are used? Don’t overlook forms used to collect information.
• When and where is the work performed? Identify timing and location
of work.
• What products are covered by the process? Define its applicability.
• What process documentation already exists? See if documents can be adapted.
• What are the requirements of the process? Know user and organization needs.
• What are the quality criteria? Identify the acceptance criteria.
• What are the related procedures? Ensure compatibility with other processes.
• Which tasks have or need instructions? Add or refer to needed instructions.
• How might the process be audited? Be able to demonstrate conformity.
posted by qualityguru at 4:46 PM 0 comments
Monday, April 23, 2007

Receive A Tax Deduction for ISO 9001

The Internal Revenue Service issued a ruling in 2000 that allows businesses to take a tax deduction for the costs of implementing and maintaining ISO 9001 registration. Several organizations had petitioned the IRS to permit firms to deduct ISO 9001-related costs in a single year instead of spreading the expenses over several years. The IRS ruling stated, “Although ISO 9000 is voluntary, it increasingly is a contractual requirement for doing business with many organizations, both public and private, worldwide.” A prior unofficial IRS position paper had concluded all ISO 9000 costs had to be capitalized over a three year period.

The costs of ISO 9001 are now viewed as satisfying the conditions for applying section 162 of the Income Tax Regulations: it is an expense, ordinary, necessary, paid or incurred during the tax year, and made to carry out a trade or business. The ruling that ISO 9001 registration is necessary was, in part, responsible for this policy change. “ISO 9000 certification does not itself result in the creation of an asset having a useful life substantially beyond the taxable year,” according to the IRS ruling.

For more information, see: Internal Revenue Bulletin 2000–4. It states, “Cost incurred by a taxpayer to obtain, maintain, and renew ISO 9000 certification are deductible as ordinary and necessary business expenses under section 162 of the Code, except to the extent they result in the creation or acquisition of an asset having a useful life substantially beyond the taxable year (e.g., a quality manual).”

In addition, see: Internal Revenue Bulletin 2004- 7. It states in Example 4 for business process certification, “Z corporation, a manufacturer, seeks to obtain a certification that its quality control standards meet a series of international standards known as ISO 9000. Z pays $50,000 to an independent registrar to obtain a certification from the registrar that Z’s quality management system conforms to the ISO 9000 standard. Z’s payment is an amount paid to obtain a certification of Z’s business processes and is not required to be capitalized under this paragraph (d) (4).”
posted by qualityguru at 4:31 PM 0 comments
Monday, January 08, 2007
Quality Systems 2006 Customer Satisfaction Results

The Independent Association of Accredited Registrars (IAAR) is an association of accredited management system registrars operating in North America. The data results of their satisfaction survey cover reasons for implementation, benefits, ROI, and other important QMS metrics.

When asked if their present certification had been a positive experience, 96% responded with Yes. More than 2,500 customers responded to questions such as:

What internal benefits have you realized from your current quality management system?

Reduced scrap/rework costs – 728 Yes Responses

Increased efficiency – 936 Yes Responses

Greater quality awareness – 1,861 Yes Responses

Positive cultural change – 845 Yes Responses

Enhanced communications – 880 Yes Responses

Better documentation – 1,869 Yes Responses

Improved customer satisfaction – 1,391 Yes Responses

Competitive advantage – 922 Yes Responses

What benefits has your organization gained? Let us
know and we will publish the results next
month.
To see the complete survey results go to IAAR Website

posted by qualityguru at 1:01 PM 2 comments
Friday, November 17, 2006
In Search of the Perfect Process

In an article in 6L, a journal for Six Sigma and Lean Manufacturing professionals, Jim Womack states, “Unless you have defined from the customer’s perspective what specific value is required, it is premature to begin thinking about building or improving processes to deliver it.” Womack defines a perfect process as one that is:

1. Valuable
2. Capable
3. Available
4. Adequate
5. Flexible

The perfect process is valuable because it creates and adds value for customers. Start by drawing a Value-Stream Map to visualize the process. Then remove the non-value-adding steps. Don’t begin by asking if a process step is valuable. First, see if the step is even needed. In other words, would the customer miss it? If the answer is “no”, don’t try to fix it, just eliminate it.

A capable process performs the same way with the same result every time. Improving the capability of a process is the starting place of Six Sigma. An available process can be performed every time it needs to be performed and in the standard cycle time. Availability depends on equipment reliability and uptime; therefore, it is the starting place for Total Productive Maintenance.

An adequate process has enough capacity to perform every time when it needs to be performed, without waiting. This is the concern of Theory of Constraints, Right-sized Tooling, and Lean Manufacturing System Design.

A flexible process can change over quickly from one member of a product family to another one. Perfect processes have very low setup and changeover times. These flexible processes allow small amounts of parts for different products to be made frequently, resulting in high throughput and low inventory. This is the concern of the Toyota Production System.

In addition to being valuable, capable, available, adequate, and flexible, a perfect process also has its steps linked and coordinated by:

1. Continuous flow,
2. Customer pull, and
3. Leveled production.

Continuous flow is the quickest way to get materials from point A to point B, while allowing customers to pull products out of the value stream to prevent the waste of overproduction. Leveling the volume and mix of product flow through the process permits a steady consumption of resources and minimizes the work-in-process inventories associated with batch-and-queue production.

Womack says a perfect process is waste-free. Every step is completely valuable, perfectly capable, perfectly available, exactly adequate, and highly flexible. And, every step is connected by continuous flow, noiseless pull, and maximal leveling.

God made relatives. Thank God we can choose our friends

Money glitters, beauty sparkles, and intelligence shines

.

Keep a very firm grasp on reality, so you can strangle it at any time.

Life is like a box of chocolates, you never know what you’re getting.

People may not always believe what you say, but they will believe what you do.

I’ve always wanted to be somebody, but I should have been more specific.

You can’t have everything – where would you put it?

Laugh and the world ignore you. Crying doesn’t help either.

God is not moved or impressed with our worship until our hearts are moved and impressed by Him.

Life is like a mirror, if you frown at it, it frowns back; if you smile, it returns the greeting.

Never trust a person who isn’t having at least one crisis.

Goodness is the only investment that never fails.

The only thing lazy people do fast is get tired.

Never deprive someone of hope; it may be all they have.

Silence is the only thing that can’t be misquoted!

If we don’t control our money, it will control us.

Life Insurance: A contract that keeps you poor all your life so that you can die rich..

Some drink at the fountain of knowledge. Others just gargle.

Everyone has a photographic memory. Some don’t have film.

If you r living on the edge, make sure you’re wearing your seat belt.

A classic is something that everybody wants to have read and nobody wants to read.

Minds, like parachutes, only function when they are open.

The shortest distance between two points is under construction.

Learn from other people’s mistakes, life isn’t long enough to make them all yourself.

On the road, never argue with a vehicle heavier than yours.

One thing you can give and still keep is your word.

Life is funny if you don’t think about it.

Life is like a grammar lesson. You find the past perfect and the present tense.

There are two kinds of lawyers, those who know the law and those who know the judge.

More doors are opened with ‘please’ than with keys.

2 Tell the telemarketer you are busy at the moment, and ask him/her, if he/she will give you his/her home phone number so you can call him/her back.

3 Ask them to repeat everything they say, several times.

4 Tell them it is dinnertime, BUT ask if they would please hold. Put them on your speaker phone while you continue to eat at your leisure. Smack your food loudly and continue with your dinner conversation.

5 Tell them that all business goes through your agent, and hand the phone to your five year old child.

6 Tell them you are hard of hearing and that they need to speak up…. louder… louder… louder!

7 If they start out with, “How are you today?”, say “I’m so glad you asked, because no one these days seems to care, and I have all these problems…. ……… ”

8 Tell them to speak very slowly because you want to write every word down.

9 Cry out in surprise, “Helen, is that you? I’ve been hoping you’d call! How is the family?” When they insist they are not Helen, tell them to stop joking. This works especially well if the telemarketer is really MALE.

10 Tell the ICICI call centre guy to call on your office number – and give him the HSBC call centre number.

STROKE: Remember The 1st Three Letters… S.T.R .

My friend sent this to me and encouraged me to post it and spread the word. I agree. If everyone can remember something this simple, we could save some folks.

STROKE IDENTIFICATION:
During a BBQ, a friend stumbled and took a little fall – she assured everyone th at she was fine and just tripped over a brick because of her new shoes. (they offered to call ambulance)

They got her cleaned up and got her a new pl at e of food – while she appeared a bit shaken up, Ingrid went about enjoying herself the rest of the evening. Ingrid’s husband called l at er telling everyone th at his wife had been taken to the hospital – ( at 6:00pm , Ingrid passed away.)

She had suffered a stroke at the BBQ. Had they known how to identify the signs of a stroke, perhaps Ingrid would be with us today.

Some don’t die. They end up in a helpless, hopeless condition instead. It only takes a minute to read this…

STROKE IDENTIFICATION:

A neurologist says th at if he can get to a stroke victim within 3 hours he can totally reverse the effects of a stroke…totally. He said the trick was getting a stroke recognized, diagnosed, and then getting the p at ient medically cared for within 3 hours, which is tough.

RECOGNIZING A STROKE

Remember the “3″ steps, STR .. Read and Learn!

Sometimes symptoms of a stroke are difficult to identify. Unfortun at ely, the lack of awareness spells disaster.

The stroke victim may suffer severe brain damage when people nearby fail to recognize the symptoms of a stroke.

Now doctors say a bystander can recognize a stroke by asking three simple questions :

S * Ask the individual to SMILE .

T * = TALK.. Ask the person to SPEAK A SIMPLE SENTENCE (Coherently) (eg “It is sunny out today”).

R * Ask him or her to RAISE BOTH ARMS .

If he or she has trouble with ANY ONE of these tasks, call the ambulance and describe the symptoms to the disp at cher.

NOTE : Another ‘sign’ of a stroke is

1. Ask the person to ‘stick’ out their tongue.

2. If the tongue is ‘crooked’, if it goes to one side or the other th at is also an indic at ion of a stroke.

A prominent cardiologist says if everyone who gets this e-mail sends it to 10 people; you can bet th at at least one life will be saved.