Phase IV—Implementing the Six Sigma System
“Six Sigma has forever changed GE Everyone...is a true believer in Six Sigma, the way this company now works.”
—Jack F. Welch, former GE Chairman
Phase IV Implementation is divided into seven activities:
• Activity 2: Defining the Six Sigma Roles
• Activity 3: Training the Six Sigma Team
• Activity 4: Selecting the Six Sigma Projects
• Activity 5: Forming the SST’s
• Activity 6: Executing the Six Sigma Projects
• Activity 7: Internalizing the Six Sigma Culture
Activity 1—Organizing
“I don’t give a damn if we get a little bureaucracy as long as we get the results. If it bothers you, yell at it. Kick it. Scream at it. Break it!”
—Jack Welch, former GE Chairman
Now that the decision has been made to implement the Six Sigma initiative within the organization, its time to establish the Six Sigma organizational structure. Although we will be talking about a special Six Sigma organizational structure, we must be careful it is not a stand-alone structure. It should be an integrated part of the total organization. The people who make up this Six Sigma structure will report into the normal organization structure. (For example: a Black Belt, who is working on accounting problems, will report to the Accounting Manager.)
“Six Sigma System is about creating a culture that demands perfection...and gives employees tools to enable them to pinpoint performance gaps and make the necessary improvements.”
—William S. Slovropoulos, Dow President and CEO
A Six Sigma system is designed to increase profits and customer satisfaction. It is an organized, documented, and understood approach to eliminate root causes of errors throughout the organization by reducing variation and developing streamline processes that are more effective and efficient. The Six Sigma organizational structure is the key part of the Six Sigma System. Figure 11.25 shows a typical Six Sigma structure.
Figure 11.25. Six Sigma structure
Figure 11.26 is a top-level Six Sigma organizational structure for one of the HCPs we have worked with. You will note that, due to the organizational structure and the size of the operation, they divided the Six Sigma initiative into to four different parts. All four initiatives are brought together and coordinated by the SS (Six Sigma) Steering Committee.
Figure 11.26. Six Sigma HCP organizational structure
Activity 2—Defining the Six Sigma Roles
Each level of management and every employee plays an important role in the Six Sigma System. Each is dependent on each other, and each role adds value to the Six Sigma System.
The Executive Team/Six Sigma Steering Committee
“The company cannot buy its way into quality—it must be led into quality by top management.”
—Dr. W. Edwards Deming, Out of Crisis (1986)
The Executive Team sets the direction and priorities for the organization. As a result, it must be the owner of the Six Sigma System. It is responsible for managing the system to ensure that it is operating effectively. It needs to be the role model by including Six Sigma thinking into the way it functions. It is responsible for developing the organization’s strategic plan that will be the basis for selecting the Six Sigma projects. It needs to understand the Six Sigma System well enough to be able to justify redirecting resources from other day-to-day, business-as-usual work to attack the waste that is causing less-than-perfect performance.
The Executive Team will appoint the Six Sigma Champion and Black Belts. It will also conduct periodic reviews of the Six Sigma System’s progress and make the required adjustments when the system is not as effective as it should be.
“In fact, not only did Nasser (Ford’s CEO, Jacques Nasser) go through the Six Sigma training, but he also regularly champions Six Sigma projects.”
—Louise Goeser, Vice President of Quality, Ford Motor Company
Figure 11.27 shows a typical Six Sigma infrastructure.
Figure 11.27. Six Sigma HCP organizational structure
Six Sigma Champion/Six Sigma Sponsor
The Six Sigma Champion is the Six Sigma Project Manager. He/she is responsible for developing and implementing the Six Sigma System. The Six Sigma Champion ensures that all functions are supporting the Six Sigma System by providing the properly skilled people for the required time and maintaining the Six Sigma activities as a high priority within the function. The Six Sigma Champion will also ensure that there are adequate funds in the annual budget to cover the cost of the Six Sigma process. Management must realize that they cannot assign employees to the Six Sigma activities without removing at least a portion of the workload they previously had. Expecting employees to do Six Sigma projects, in addition to what they were doing, is the major cause for Six Sigma and TQM failures around the world. A Green Belt will be expected to spend between 20 to 60 percent of his/her time working on the assigned projects during the problem-solving and implementation cycle.
The Six Sigma Champion will work with the Executive Team to define the improvement opportunities that are necessary for supporting the strategic plan. The Six Sigma Champion will set the goals and expectations for the Six Sigma Team and approve all projects before they are started. The Six Sigma Champion normally is a senior vice president of the organization. Often during the startup phase of the Six Sigma System, a consultant is assigned to this position due to the amount of time and sophisticated problem-solving experience that is required to justify and organize the first year’s Six Sigma activities.
“Effective delegation is perhaps the best indicator of effective management simply because it is so basic to both personal and organizational growth.”
—Steven Covey
Business Unit Sponsor (BUS)
Often Business Unit Sponsors’ (division, function, and sector) people will be assigned to the Six Sigma process. The BUS provides a local view of the problems that are affecting the business unit’s performance and how the business unit needs to react in order to support the strategic plan. He/she is often held accountable for the success of the Six Sigma System in the business unit. The BUS is responsible for ensuring that the business unit provides the required Six Sigma resources. He/she also provides input into the Six Sigma Champion related to the business unit’s priority improvement needs. The BUS is typically a business unit executive.
Master Black Belt (MBB)
One Master Black Belt for every 15 to 20 Black Belts is the standard practice. A MBB is a highly-skilled Project Manager who should be Project Management Institute Certified. MBBs are the heart of the organization’s Six Sigma process. The MBB must be a higher-skilled and more-experienced individual than a Black Belt. This person should be an experienced teacher and mentor who has the wisdom gained from experience in using the Six Sigma tools. The MBB is responsible for
• Certifying Black Belts and Green Belts
• Training Black Belts
• Developing new approaches
• Communicating best practices
• Taking action on projects for which the Black Belt is having problems in defining the root causes and implementing the change
• Conducting long-term Six Sigma projects
• Identifying Six Sigma opportunities
• Reviewing and approving Black and Green Belt project justifications and project plans
Typically, an MBB will interface with 15 to 20 Black Belts to provide mentoring and development service in support of their problem-solving knowledge.
Most organizations, when they start a Six Sigma process, do not have people who possess the experience to take on the role of an MBB even when they have completed the four-week Black Belt training program and the two-week Master Black Belt training. Training alone does not provide the required experience that is needed to function as an MBB. As a result, organizations normally hire a consultant to serve as the Master Black Belt for the first 6 to 12 months, and then they select one of their Black Belts who has performed the best, to gain the additional Master Black Belt training and experience for the following years.
Black Belts (BB)
“Black Belts are the work horses of the Six Sigma System.”
—H. James Harrington
One Black Belt for every 100 employees is the standard practice. Black Belts are highly skilled individuals who are effective problem-solvers and have a very good understanding of the most frequently used statistical tools that are required to support the Six Sigma System. Their numberone priority is to define and develop the right people to coordinate and lead the Six Sigma projects (Green Belts). Candidates for Black Belts should be experienced professionals who are already highly respected throughout the organization. They should have experience as a change agent and be very creative. Black Belts should generate a minimum of $1 million in savings per year as a result of their direct activities.
Black Belts are not coaches. They are specialists who support the Green Belts. They may be used as SST leaders of complex and important projects. They do manage the projects that they are assigned to lead. The position of Black Belt is a full-time job; he/she is assigned to train, lead, and support the Six Sigma problem-solving teams. They serve as internal consultants and instructors. They normally will work with four to six problem-solving teams at a time. The Black Belt assignment usually lasts for two years. It is recommended that the organization have one Black Belt for every 100 employees. A typical Black Belt spends his/her time as follows:
25 percent Running projects that he/she is assigned to lead
20 percent Helping Green Belts who are assigned to lead projects
20 percent Teaching either formally or informally
25 percent Doing analytical work
10 percent Defining additional projects
The Black Belt must be skilled in five areas:
• Project Management
• Leadership
• Analytical thinking
• Adult Learning
• Organizational Change Management
Based upon our experience, most of the Six Sigma Black Belt training has been directed at analytical skills. Even the selection of the Black Belts is based upon their analytical interests. This is all wrong. Traits to look for in selecting a Black Belt are
• Trusted leader
• Self-starter
• Good listener
• Excellent communicator
• Politically savvy
• Has a detailed knowledge of the business
• Highly respected
• Understands processes
• Customer-focused
• Passionate
• Excellent planner
• Holds to schedules
• Gets projects done on schedule and at cost
• Understands the organization’s strategy
• Excellent negotiation skills
• Embraces change
Black Belts should be specialists and not have coaches. It is incredibly important to build a cadre of highly skilled Six Sigma Black Belts. However, they must not be placed in charge of the management of the improvement process. Black Belts are sometimes responsible for managing individual projects, but not directing the overall improvement process; that should be the job of management. Don’t just keep management engaged in the process—keep them in charge of the process.12
Green Belt (GB)
Being a Green Belt is a part-time job. A Green Belt is assigned to manage a project or work as a member of an SST by the Six Sigma Champion and his/her manager. Sometimes a Green Belt is the manager of the area that is most involved in the problem, although we prefer that it is a highly skilled professional who has a detailed understanding of the area that is involved in the problem. Green Belts should be people who could be candidates for future Black Belt assignments, if they excel in the way they manage the project on which they are assigned to work.
The primary responsibility for the Green Belt is to form the project’s SST and manage (coordinate) its activities during the entire product cycle. The Black Belt will support the Green Belt by providing Just-In-Time training to the project team when the Green Belt feels it is necessary. Green Belts are also expected to identify other Six Sigma opportunities and bring them to management’s attention.
Yellow Belts (YB)
Yellow Belts are the people who have served on an SST and completed one successful cycle. They will have a practical understanding of some of the basic problem-solving tools and the DMAIC. They are usually classified as the Yellow Belts when management accepts the project and the SST is dismantled. During the project, they will work part-time on the project and still remain responsible for a reduced quantity of their normal work assignments.
Process Owner
All major cross-functional processes should have a process owner assigned to them. This is not a full time job. The Process Owner is the individual appointed by management to be responsible for ensuring that the total process is both effective and efficient. This is a key concept that must be understood to make the process management strategy work. Conventional-functional management has worked well for a number of years, and it is probably the best type of organization, but it has its shortcomings. Functional competition, although healthy in some cases, can be self-defeating because it puts all the functions in competition for limited resources. Frequently, the organization that puts on the best show gets the most resources, but it may not have the biggest need. In other cases, resources are allocated to part of a critical process by one function, but interfacing functions have different priorities and, as a result, only minor improvements are made.
What needs to be done is to stop looking at the business as “many large functions” and start looking at it as “many business processes that flow across functions.” (Figure 11.28 shows a view of how the process manager looks at processes). This allows the organization to select the process it wants to improve, obtaining the maximum return on its investment. It is very evident that the process is the important element, and that the process owner plays a critical role in making the total process mesh together. The process owner concept provides a means by which functional objectives can be met without losing sight of the larger business objective.
Figure 11.28. Business Process Management
The Process Owner must be able to anticipate business changes and their impact on the process. The owner must be at a high enough level to understand what direction new business will take and how it will impact the process.
Blue Belts
“Blue Belts keep the Six Sigma culture alive in the organization year after year.”
—H. James Harrington
The Blue Belts are the normal population that may never be assigned to an SST, but need to be part of the Six Sigma culture. They need to be able to apply Six Sigma concepts to their day-today activities. They will receive two to three days of training covering the following subjects:
• How teams function
• What the Six Sigma processes are about
• How Six Sigma applies to them
• How to define who their customers are
• The seven basic problem-solving tools
• How to flowchart their process
• Area Activity Analysis
Activity 3—Training the Six Sigma Team
“No company can escape the need to re-skill its people, reshape its product portfolio, redesign its processes, and redirect its resources... The real issue is whether transformation happens belatedly—in a crisis atmosphere—or with foresight—in a calm and considered atmosphere...whether transformation is spasmodic and brutal or continuous and peaceful.”
—Hamel and Prahalad, Competing for the Future
One of the basic Six Sigma beliefs is that the employees are an investment and not a cost. The accountants classify equipment and buildings as investment, but they treat their employees as a cost. Management requires the oil to be changed regularly in their cars and trucks because it costs less to maintain them than burn out their motors.
They require their measurement equipment to be re-calibrated, but when it comes to maintaining our most valuable assets (our people), managers are misers. Training of all our employees is required maintenance if they are going to perform at the Six Sigma level. Effective training is one of the most important investments that organizations can make. The Six Sigma System is based upon providing the organization’s employees and management with many new skills that makes the total organization more competitive and profitable. Without good training, the Six Sigma System will fail. The following are the typical training program timelines for the various Six Sigma assignments:
• Executive Training: 16 hours
• Sponsor/Champion Training: 5 days
• Master Black Belt Training: 5 days
• Black Belt Training: 20 days
• Green Belt Training: 10 days
• Yellow Belt Training: 3 days
• Blue Belt Training: 2 to 3 days
Six Sigma Executive Training
“If it isn’t important to the executives, it isn’t important to the organization.”
—H. James Harrington
The objective of these two eight-hour-day classes is to prepare the Executive Team to understand and participate in the Six Sigma System. It is very important that the executives understand and can talk the Six Sigma language. They must have, at a minimum, a basic working knowledge of the Six Sigma methodology, concepts, and tools in order to ask the correct questions and get relevant answers to their questions. It is recommended that the first class be held during Phase I. This first training session should answer questions such as
• What are the Six Sigma theory and methods?
• What is the history of Six Sigma?
• What is “Six Sigma Thinking”?
• What are the Six Sigma roles and responsibilities?
• Why should we spend our efforts doing Six Sigma?
• How is this different than TQM and ISO 9000?
• What is the difference between 3 Sigma and 6 Sigma, and why is it important?
• What are the basics of the DMAIC approach, and what are its major tools?
• How will it be applied in my area?
• How will we manage the change it will bring?
• What is the implementation strategy?
• How will benchmarking be used?
• Will it work on business processes as well as manufacturing activities?
• What lessons can we learn from other organizations?
• What will it cost and how much will it save?
• Who will do it and how much of our time is required?
Implementing a successful Total Six Sigma program requires a change in the corporate culture that starts with Executive Management. During these two eight-hour sessions for executives the following subjects will be discussed:
• Maximizing Customer Satisfaction
• Increasing Quality Levels
• Business Measures (KPIs)
• Six Sigma Business Strategy
• Organizational Six Sigma
• Business Measurements
• Process Capability
• Critical Roles and Responsibilities
• Overview of Six Sigma Tools
• Six Sigma Deployment
• Implementation Strategy
• Measuring Success
• The Executive’s Role in Six Sigma Systems
• Defining and Improving Executive Processes
• How to Select People for the Six Sigma Program
• Basic Six Sigma Tools
• Selection of Six Sigma Projects
The second eight-hour class should be held after the pilot is complete and the Executive Team has made the decision to implement a Six Sigma system. During this class, the executives will work on developing a solution to one of the executive improvement opportunities that was identified during the first class. They will also select the projects that will be assigned to SST as well as naming the individuals (Black Belts) who will lead these projects.
“The executives need the training more than anyone else, because in most cases they need to make the biggest change.”
—H. James Harrington
Six Sigma Sponsors/Champion
The Six Sigma Sponsor/Champion plays a key role in the Six Sigma System. This person is responsible for developing and implementing the Six Sigma System, and provides the interface on the day-to-day Six Sigma operations to the CEO. He/she is ultimately responsible and accountable for the success of the projects sponsored. That places a great deal of pressure on this person to identify the best possible opportunities and to push for very creative solution to these opportunities.
The Six Sigma Sponsor/Champions should attend the Six Sigma Executive Training. In addition, they should attend a five-day class. The Six Sigma Champion/Sponsor course includes quantitative analysis and data manipulation exercises and should only be considered for participants who are comfortable with such activities. A typical course would include the following subjects:
• Overview
• Overview of Six Sigma
• Why Six Sigma?
• Random variation
• Data collection
• Basic data analysis
• How to deploy Six Sigma
• Basic Six Sigma tools
• Problem-solving approaches
• Process mapping
• Project Management
• Return on investment (ROI)
• Risk management
• Project planning
• Organizational change management
• DMAIC: Define
• Voice of the Customer
• Project definitions
• Project financials
• Matrices and deliverables
• Project scheduling
• Change management
• DMAIC: Measure
• Process definition
• Poor-quality cost
• Process matrices
• Establishing process baseline
• Control charts for variables and attributes
• Analyzing sources of variation
• Lean thinking
• Sampling
• Hypothesis testing
• Linear regression
• Multiple linear regression
• DOE Introduction
• Design Selection
• DMAIC: Improve
• Tools
• Models
• Transformations
• Response surface
• DMAIC: Control
• Tools
• Serial correlation
• Multivariate control charts
• Design for Six Sigma
• Control plan
• Process characterization and capability
• Project guidelines and selection
• Deploying Six Sigma
• System for management
• Business planning
• Balance scorecard
• Strategic planning
• KPIs
• Leading Six Sigma
• Process scorekeeping
• Process management
• Process redesign
• Process reengineering
• Fast Action Improvement Teams (FAST)
• Interpreting data
• Developing business cases
• DMADV
Master Black Belt Training
“The Master Black Belt is the guru of the organization. He/she knows all, sees all and can do all.”
—H. James Harrington
The MBB training is the ultimate class for Six Sigma professionals. It is a one-week training program directed toward those professionals who are Six Sigma Corporate Leaders. (The prerequisite is Green Belt Training and Black Belt Training.) The program focuses on applying Six Sigma to the entire organizational model, and when striving for organizational excellence, each Six Sigma role must contribute to the total effort every day and in a different way.
The Master Black Belt Certification program targets those professionals who will oversee the corporate Six Sigma effort in various organizational “Domains of Influence.”
The powerful tools, techniques, and software that are used in this course allow those individuals who attend the course to provide immediate value to their company.
Points of interest include the following:
• Lessons learned analysis
• Advanced leadership skills
• Advanced topics, tools, and applications:
• ANOVA
• DOE
• Confidence intervals
• Continuous data
• Control charts
• Correlation analysis
• Discrete data
• Gage R&R
• Hypothesis testing
• Measurements
• Metrics
• Multicollinearity
• Probability distribution
• GFD
• Sampling
• Serial correlation
• Taguchi methods
• Tools analysis
• Transformations
• TRIZ
• Advanced facilitation skills
• Advanced topics in technology
• Advanced project management skills
• Advanced Lean tools and techniques
Course Outline
Day One
I. Introduction and Overview
• Introduction
• Course Overview
• Minitab or QI Macros Overview (package provided with course materials)
• Minitab or QI Macros Overview and Exercises
II. Advanced Leadership Skills
• Getting the Most from a Position of Leadership Without Direct Authority
• Leadership Techniques—Achieving Results and Why Leaders Fail
• Leadership and Personality Analysis—How to Use That Information to Influence
• Consulting Leadership—Important Elements and Why They Have Been So Successful
• A Tactical Leadership Approach—The Identification and Elimination of Roadblocks
• Understanding Organizational Models and the Associated Impact on Process Leadership
• Executive Leadership, Expectations on MBBs and Alignment for the Greatest Gain
• Cost Reduction Leadership—Delivering the $$ That the CEOs Have Come to Expect
• Value Chain Leadership and How to Use It for Customer and Internal Innovation
• Organizational Excellence Leadership—What It Is and How to Achieve It
• Technical Leadership—Harnessing Technology to Reduce Defects and Reduce Cycle Time
• Knowledge Management Leadership, System Integration, and Data Intelligence
• Root Cause Analysis Leadership—Making Change Last
• Thinking “Out of the Box”—Skills or Process Leadership
• Project Selection Leadership—Moving the Big Ys on the Corporate Radar Screen
• Performance Leadership—How to Put the Right Equations Together for Total Optimization
• Change Agent Leadership—Know Who Can and Can’t Change Corporate Culture
• Metrics Leadership—The Best Metrics, and How Many Metrics Are Too Many
• Collection and Analysis of Metrics for the Entire Business—Packaging Content Counts
• Team Leadership—How to Make Team Output Greater Than the Sum of Its Parts
• Benchmarking Leadership—The Best and the Worst Cases and How to Apply the Best
• What Is Lean Leadership and How Do You Best Approach Tough Decisions
• Review the Most Fruitful Areas for MBB focus
• Internal Tools to Best Enable MBB Success
• Advanced Leadership Case Study
Day Two
III. Advanced Concepts, Topics, and Tools
• DOE Revisited
• Advanced Business Examples
• Advanced Topics in Quality Function Deployment
• Advanced Business Examples
• Advanced Topics in Total Six Sigma
• Advanced Business Examples
• Advanced Case Study with Minitab or QI Macros
IV. Advanced Facilitation Skills
• What Makes a Great Facilitator?
• When to Facilitate
• How to Facilitate
• What Should the Results Look Like from a Great Facilitation Session?
• Advanced Facilitation Tools and Techniques
• Advanced Business Examples
• Exercises
Day Three
V. Advanced Concepts, Topics, and Tools
• Full-Factorial Designs
• Advanced Business Examples
• Fractional Designs
• Advanced Business Examples
• Advanced Topics in Discrete Data Analysis
• Advanced Business Examples
• Control Charts Revisited
• Advanced Business Examples
• Advanced Case Studies with Minitab
VI. Advanced Technical Skills
• 15 Ways Technology is Transforming Corporate Strategy and Processes
• Data Warehousing
• Creating Centers of Excellence
• Business-to-Business Internet Marketing and Sales
• Building a Successful Extranet
• E-Commerce Leadership and How to Create a Portfolio of Transactional Processes
• Customer Relationship Management Tools and Techniques
• Supply Chain Management Tools and Techniques
• Business Online
• Leading Digital Change
• Making the Most of Digital Value
• Area Activity Analysis
• Seamless Organizational Processes
• Advanced Business Examples
• Exercises
Day Four
VII. Advanced Concepts, Topics, and Tools
• Advanced Transformation Topics
• Advanced Business Examples
• Advanced EWMA Topics
• Advanced Business Examples
• Advanced Case Studies with Minitab
VIII. Advanced Project Management Skills
• DMAIC Advanced Project Topics
• DFSS Advanced Project Topics
• BPMS Advanced Project Topics
• Tools and Techniques to Manage Multiple Six Sigma Projects
• Multi-tasking
• Coaching—Professional Teams Have Coaches, So Why Is a 50 Percent Season a Success?
• Mentoring—The Areas that Black Belts Request the Most
• Escalation Policies and Pulling the Plug on Bad Projects
• Communications Planning
• Complete Project Management Process Review—Inputs and Outputs
• Software Development Models and When to Use Each
• How DMAIC Maps to the Project Management Life Cycle and System Development Life Cycle (SDLC)
• The CMM (SEI) Model—What It Is and What the Levels of Certification Are
• Risk Analysis Models—Contingency and Disaster Recovery Planning
• DMAIC Project Template (best practices)
• DFSS Project Template (best practices)
• Quality Management and Variance Analysis for Project Managers
• Advanced Business Examples
• Exercises
Day Five
IX. Advanced Concepts, Topics, and Tools
• Multiple Regression Analysis and Forecasting Models/Advanced Business Examples
• Taguchi Concepts
• Advanced Business Examples
• TRIZ
• Advanced Business Examples
• Advanced Case Studies with Minitab or QI Macros
X. Master Black Belt Certification Exam
• Certification Exam
• Final Certification Assessment
Black Belt Training
Six Sigma initiatives should be customer-focused and project-driven. Research shows, however, that even the most efficient Six Sigma organizations launch process improvement projects without aligning deliverables with “Customer Critical to Quality Requirements” (CTQs), focus too much on statistical packages that are not completely understood by Project Managers, and many projects fail because of a distinct lack of project management skills. This four-week course covers the critical aspects of how to align customer CTQs and analyze data results with “easy-to-use” Microsoft Excel packages, and also covers the most important aspects of leading projects in a Six Sigma environment.
The Black Belt Certification program targets those professionals who will implement projects in a Six Sigma environment. The average cost to train a Black Belt is between $30,000 and $40,000.
The powerful tools, techniques, and software which are used in this course will allow those individuals who attend the course to provide immediate value to their operation.
This four-week training program is directed toward those professionals who will lead Six Sigma Projects (pre-requisite is Green Belt Training). The classes are typically held for five days and then the attendees go back to their organization for three weeks to apply what they learned. The total program covers four months.
Points of interest include the following:
• Enterprise Deployment
• Focusing on the Customer
• Business Process Improvement
• Project Management Topics
• Define—Complete Review
• House of Quality
• Quality Function Deployment
• Probability Distributions
• Measure—Complete Review
• Sampling Techniques
• Analyze—Complete Review
• ANalysis Of VAriance between groups (ANOVA)
• DOE
• Simple Regression
• Improve—Complete Analysis
• Hypothesis Testing
• Control—Complete Analysis
• Control Charts
• Close Out—Complete Analysis
• Introduction to “Lean” Thinking
Course Outline
I. Enterprise-Wide Deployment
• Why Companies Initiate Six Sigma
• How Companies Initiate the Six Sigma Effort
• The Evolution of Six Sigma
• Six Sigma as a Gauge for Corporate Success
• Six Sigma Roles and Responsibilities
• Six Sigma Deployment Models
• Poor Quality Cost
• Introduction to DMAIC and DMADV
• Six Sigma Implementation Methodology Five Absolutes
• Preparing Leaders to Launch and Guide the Six Sigma Effort
• Green Belt, Black Belt, and Master Black Belt
• Political Challenges
• Healthcare Industry—Six Sigma Case Study
II. Process Improvement
• What Is Process Improvement?
• What Does Process Improvement Have to Do with Six Sigma?
• Business Processes and Six Sigma
• Process Flow Structures
• Process Disruption in Large Organizations
• Process Measures of Capability
• Process Mapping
• Process Tools and Techniques
• Processes in Virtual Organizations
• Suppliers Inputs Process Outputs Customer (SIPOC)
• Case Study
III. Project Management
• The Project Management Life Cycle
• Project Management Process Analysis
• Roles and Responsibilities Reviews
• Project Management Variance Analysis
• Earned Value and How to Use It Successfully
• Project Initiation Analysis and Six Sigma
• Project Planning Analysis and Six Sigma
• Project Implementation Analysis and Six Sigma
• Project Control Analysis and Six Sigma
• Project Closeout Analysis and Six Sigma
• Risk Analysis and the WBS
• Contingency Planning
• DMAIC Project Template Review
• Reengineering Project Template Review
• Case Study
IV. Define
• Define Model
• Tools and Concepts
• Process Mapping
• Voice of the Customer
• SIPOC
• Kano Model
• CTQ Matrix
• Quality Function Deployment
V. Measure (Laptop Required)
• Measure Model
• Discrete and Continuous Data
• Definition of Defect Opportunity
• Calculating Process Sigma
• Descriptive Statistics
• Measures of Central Tendency
• Measures of Dispersion
• Run Charts
• Sampling Techniques
• Data Collection Approach
• Introduction of Statistical Software
VI. Analyze (Laptop Required)
• Analyze Model
• Application of Discrete Data
• Chi Square Test
• Binomial Distribution
• ANOVA
• Poisson’s Distribution
• Uni-Variate and Bi-Variate Analysis
• Hypothesis Testing
• T-Tests
• Relevant Tools and Concepts Using Control Charts
• Pareto Analysis
• Cause and Effect
• Root Cause Analysis
• Affinity Diagrams
• Regression Analysis
VII. Improve
• Relevant Tools and Concepts
• Design of Experiments
• Introduction
• Terminology
• Planning and Organizing Experiments
• Randomized and Randomized Block Designs
• Full Factorial Experiments
• Fractional Factorial Experiments
• Taguchi Robustness Concepts
• FMEA Risk Model
VIII. Control
• Control Model
• Control Analysis
• Control Charts
• Control Charts for Variable Data
• Control Charts for Attributes Data
• Interpreting Data
• Closeout Model
• Post Process Audits
X. Design for Six Sigma (DFSS)
• DFSS Explained
• When to Use DFSS
• DFSS Process
• Paradigm Analysis
• Idealized Design
• Prototype
XI. Green Belt Training
• Adult Learning Methods
• Preparing to Teach Potential Green Belts
• Five-day Green Belt Training Course Materials and Schedule
• Developing Exercises
CERTIFICATION EXAM (Black Belt)
• Certification Exam—120 minutes
• Final Certification Assessment
Green Belt Training
“They call them Green Belts because they save lots of greenbacks (dollars).”
—H. James Harrington
Global competition, cost-cutting, outsourcing, customer turnover, changing technology, global competition, and a challenging economy have battered many companies to the brink of bankruptcy. Time waits for no one, and only those organizations best adapted to these changing conditions survive in today’s tough business environment. From the optimization of operational efficiencies to shorter cycle time to value-added customer partnerships, the philosophy and application of Six Sigma best practices are optimizing the very nature and culture of successful businesses around the world. Green Belts, too, have the opportunity to significantly contribute to the success of the company.
The Green Belt Certification training is targeted to those professionals who operate at the team member level. These critical professionals, who make the greatest contribution toward the successful outcome of process improvement projects, will find extreme value in the course. The powerful tools, techniques, and software that are used in this course will allow those individuals who attend the course to provide immediate value to their operation.
The ten days of instruction are typically spread throughout a one-month period to provide time for participants to apply what they learn and receive guidance and project mentoring from course instructors at no additional charge. This is a two-week training program; this course is designed for anyone who will be directly involved with Six Sigma Project as a Team Member. The average cost to train a Green Belt is $7,500.
We will not discuss the details of the Green Belt class because we covered it earlier in this chapter.
Yellow Belt Training
The Yellow Belts (sometimes called White Belts) are individuals who have received fundamental Six Sigma training. They often help to solve problems by inputting their personal experience and expertise to work on an SST. They also often help collect data that is used by the SST. This training allows them to solve the day-to-day problems they face. The Yellow Belt training is a three-day class that covers the following:
• What the Six Sigma process is about
• How does Six Sigma apply to them
• Six Sigma goals and metrics
• Six Sigma teams
• How to be a part of an SST
• Six Sigma implementation and management
• Creating customer-driven organizations
• Selecting and tracking Six Sigma projects
• How the Six Sigma System works
• Simple Six Sigma tools
• Fast action solution teams (FAST)
• Area Activity Analysis (AAA)
The course is designed to provide a broad understanding of the Six Sigma improvement methodology, concepts, and language, along with a complete toolbox of basic process improvement methods applied within the Six Sigma System, including basic statistical process control charts. Individuals who have completed the Blue Belt training only need one day of training to bring them up to the Yellow Belt level.
Blue Belt Training
“Organizations that don’t use Blue Belts usually stop their Six Sigma projects without changing the organization’s culture.”
—H. James Harrington
The Blue Belts improvement effort is directed at continuously improving the work that goes on in their assigned natural work team. Management looks to them to improve their output between 5 to 15 percent each year by working smarter, not harder. This requires them to be well trained in basic problem analysis and solving tools. They take a two- to three-day class that covers the following topics:
• How teams function
• What the Six Sigma processes are about
• How Six Sigma applies to them
• How to define who their customers are
• The seven basic problem-solving tools
• How to flowchart their process
• Area Activity Analysis
• How to be more creative
• Simple statistics
Training—The Starting Point
“I hear, I forget
I see, I remember
I do, I understand.”
—Chinese Proverb
Training is just the beginning of the learning and using process. There is a long road to travel from the time you complete a Six Sigma class until you have mastered what you were presented. Bloom’s Taxonomy13 points out that there are six levels of learning and using: Benjamin Bloom created this taxonomy for categorizing the level of abstraction of questions that commonly occur in educational settings. The taxonomy provides a useful structure in which to categorize test questions, since professors will characteristically ask questions within particular levels, and if you can determine the levels of questions that will appear on your exams, you will be able to study using appropriate strategies.
1. Remember. The ability to remember what was presented (recognition, recall, or rote knowledge). Hopefully the training brings you up to this level.
2. Understanding. The ability to read and interpret data, reports, graphs, tables, and so on.
3. Apply. The ability to apply what you have learned to the assigned tasks.
4. Analyze. The ability to break down information into its constituent parts and recognize the relationships in complex scenarios.
5. Evaluate. The ability to make sound judgment calls related to the information you have selected to generate new ideas and solutions and to develop value propositions.
6. Create. The ability to look at the different parts and different situations to see patterns and/or structures and put them together in a way that has never been done before.
It takes time, effort, and experience to move from Level 1 to Level 6. Each time a Green or Black Belt cycles through a project, he/she becomes closer to becoming a Level-6 performer.
Activity 4—Selecting the Six Sigma Projects
“The best time to stop a poor project is before you begin it.”
—H. James Harrington
“Right now, there is little true focus on that (preventing disease rather than treating illness). There’s a bit of lip service to it, and there’s a lot of talk about anti-smoking and fitness and keeping your weight down.”
—Michael Porter, Professor, Harvard Business Review
Now is an excellent time to look at what the HCP is doing and where it wants to go. The HCP of the future must offer the best quality at the lowest cost and that only the sickest patients will require hospital care. This means that the HCP must look at the services they provide from a strategic marketing perspective. The buying power or influence has shifted; the customer has become elusive. Who is the HCP customer—the patient, the employee, the employee’s family, the healthcare plan member, the insurer, and/or the physician? Which one is the HCP customer? Or maybe they all are? At least the healthcare system has to be value-added to each of them.
The following will help the HCP accomplish this task and identify major improvement opportunities:
• Define the impact of managed-care penetration on the hospital:
• Identify how many hospital patients and potential patients belong to capitated health plans.
• Estimate the penetration of managed-care patients over the next three to five years.
• Estimate the impact of managed-care revenue on the hospital’s total revenue stream over the next three to five years.
• Identify the cost structure required to cover operating costs and achieve targeted margins.
• Compare the required cost structure to the hospital’s current cost structure to show the need for dramatic change.
• Define patient-population-change trends over the next five years, considering the aging patient population. (For example, the number of acute-care beds occupied each day has dropped 25 to 30 percent in most competitive HCP markets. At about $1,000/day for an acute-care bed, that is a lot of money.)
• Analyze competitor’s business trends and estimate their impact on the HCP.
• Define the HCP core capabilities and competencies.
• Identify best practices and best-practices trends in the industries.
• Profile the potential customer base.
• Profile other stakeholders.
• Define new and/or improved services that are needed.
• Define and evaluate major processes.
• Define probable market scenarios (for example, an HMO decides not to approve the HCP for services).
This type of analysis should lead to a five-year improvement plan that will identify many improvement opportunities over a number of years. It is also a good time to define who the stakeholders are and what they will expect from the HCP system. Performance measurements and targets need to be established. They are called Key Performance Indicators (KPIs), and should relate to the stakeholder expectations, which typically are the following:
• Patients. Trust and belief that they are getting the best professional and personal care.
• Health Plan Provider. Low cost with effective results/total value-added activities. No unjustified activities. Follow standard procedure.
• PCPs (Primary Care Physicians). Effective access to patient records and participation in patient planning and monitoring.
• Specialists. Instantaneous response to patient test requests.
The Group Health Corporation of Puget Sound, Seattle, Washington, when they were developing their business goals and operations, defined their changing environment as shown in Table 11.3.
Table 11.3. Group Health Corporation Changing Environment
“Those little cards inserted with bills or set on table tops are not designed to elicit an accurate measure of the customer’s experience with that company. They’ll give some tepid information on the level of customer satisfaction, but they are not a useful complaint system.”
—James G. Shaw, CEO, Shaw Resources
During the first Executive Team training session, the executives agreed on a set of guidelines that would be used to qualify projects as Six Sigma projects. Typical guidelines require
• The solution should have a significant impact upon the external customer’s perception of the organization and/or satisfaction.
• The solution should result in a minimum savings of $200,000.
• The solution was not one that was being already addressed.
• The solution will be implemented within 90 days from the start of the project.
• The solution had a significant impact upon the business performance/processes.
• The impact of the solution can be measured and documented.
“The measurements or indicators you select should best represent the factors that lead to improved healthcare outcomes; improved customer, operational, and financial performance; and healthier communities. A comprehensive set of measures or indicators tied to patient/customer and/or organizational performance requirements represents a clear basis of aligning all processes with your organization’s goals.”14
—Harry S. Hertz
“In fact, one and a half points of customer satisfaction drive about one point more loyalty. In North America alone, that translates into more than $2 billion in incremental revenue and roughly $100 million in profit.”15
—Louise Goeser, Ford’s Vice President of Quality
Process Maturity Grid
In Phase I (Activity 3), a list of the major core processes were developed. Now is the time to evaluate each of these processes, using the Process Maturity Grid. The grid has six levels, with Level 6 being the lowest level (unknown status). Level 2 (error-free) is the Six Sigma Level. Level 1 should be the target that every organization should be striving to reach. This Maturity Grid was developed by Ernst & Young in 1989 and has been used to define process maturity every since. It can be used to measure your progress to improve your process. We do not recommend that all your processes reach the Level 1 development state, but at least all of your major processes should be at that level.
“Too few organizations understand how good their processes can be since they have no measure of how good they can be.”
—H. James Harrington
Introduction to the Process Maturity Grid
Qualification usually is a one-time event because it is designed to validate that the process can perform to its designed specification. But today, organizations that wish to excel have expanded this concept to evaluate the maturity of their business processes. (For example, the software industry has agreed to a five-level process development maturity grid.) We like to use a six-level maturity grid for all business processes (see Table 11.4).
Table 11.4. Six Levels of the Process Maturity Grid
To determine whether the process has evolved to the next level, eight major change areas are addressed:
• End-Customer Related Measurements
• Process Measurements and/or Performance
• Supplier Performance
• Documentation
• Training
• Benchmarking
• Process Adaptability
• Continuous Improvement
For each level, a set of requirements has been established. The requirements are more stringent as you move up in levels. Until the process is evaluated, it is considered to be at Level 6. Figure 11.29 shows the six levels versus eight items. As the color gets darker, the requirements become closer to world class.
Note: The darker the color, the better the performance.
Figure 11.29. Six levels versus eight items
“Don’t make the mistake of trying to run when you are still trying to walk.”
—H. James Harrington
Requirements to Be Qualified at Level 5
Qualification Level 5 signifies that the process design is understood by the SST and is operating to the prescribed documentation.
All processes are classified as Level 6 until sufficient data has been collected to determine their true status. Normally, processes move from a qualification Level 6 to a qualification Level 5. To be qualified at any level, all the criteria in each of the eight major change areas (for example, supplier performance, process measurements, and/or performance) must be met or exceeded. Those for Level 5 are
• End-Customer Related Measurements
• Measurements reflect the end-customer’s view of the process.
• End-customer requirements are documented.
• End-customer feedback system is established.
• End-customer effectiveness charts are posted and updated.
• Process Measurements and/or Performance
• Overall effectiveness and efficiency are measured and posted where they can be seen by employees.
• Effectiveness and efficiency targets are set.
• Process operational and/or control weaknesses are evaluated and meet minimum requirements.
• Supplier Performance
• All suppliers are identified.
• Documentation
• Process Is Defined and Flowcharted
• Flowchart accuracy is verified.
• Documentation is followed.
• SST members and process owners are named.
• SST mission is documented.
• Process boundaries are defined.
• Training
• SST is trained in the basic tools and the fundamental BPI tools.
• In-process training needs are evaluated and documented.
• Resources are assigned to support training needs.
• Benchmarking
• Not required.
• Process Adaptability
• Not required.
• Continuous Improvement
• Basics of BPI are in place.
• All major exposures are identified, and action plans are in place.
• A detailed plan to improve the process to the Level 4 is agreed to and funded.
Requirements to Be Qualified at Level 4
When a process evolves to qualification Level 4, it is called an effective process. Processes qualified at Level 4 have a systematic measurement system in place that ensures end-customer expectations are met. The process has started to be streamlined.
To be qualified at Level 4, the process must be able to meet all the requirements for the qualification Level 5, plus the following requirements:
• End-Customer Related Measurements
• End-customer requirements are met.
• End-customer expectations are documented.
• Process Measurements and/or Performance
• Overall effectiveness targets are met, and challenge targets are established by the SST.
• Poor-quality cost measurements are developed.
• Some internal efficiency measurements are established.
• Internal effectiveness measurements and targets are 50 percent complete and posted.
• Overall process cycle time and cost are defined.
• No significant effectiveness, efficiency, or control exposures exist.
• Substantial improvement activities are underway.
• Supplier Performance
• Meetings are held with critical suppliers, and agreed-to input requirements are documented.
• All critical suppliers meet input requirements.
• Documentation
• Process is flowcharted, and documents are updated.
• Overall process is fully documented.
• Documentation of sub-processes starts.
• Readability is evaluated.
• Training
• In-process job training procedures are developed for all critical activities.
• People are assigned to conduct job and process training.
• SST is trained in statistical process control.
• Benchmarking
• Plan exists to benchmark end-customer requirements.
• Process Adaptability
• Data is collected that identifies problems with present process adaptability.
• Continuous Improvement
• Process is operational, and control weaknesses are assessed and deemed containable.
• A plan for improving the process to Level 3 is prepared, approved, and funded.
• The process philosophy accepts that people make mistakes, provided everyone works relentlessly to find and remove causes of errors.
Requirements to Be Qualified at Level 3
When a process evolves to qualification Level 3, it is called an efficient process. Processes qualified at Level 3 have completed the streamlining activities, and there has been a significant improvement in the efficiency of the process.
To be qualified at Level 3, the process must be able to meet all the requirements for qualification Levels 5 and 4, plus the following:
• End-Customer Related Measurements
• End-customer expectations are met.
• Challenge targets are set by the SST.
• Process Measurements and/or Performance
• There is a significant improvement in Poor Quality Cost (PQC).
• Internal effectiveness and efficiency measurements are in place and are posted, with targets set by the affected areas.
• There is a significant reduction in cycle time, and in the amount of bureaucracy.
• Overall efficiency targets are met.
• Most measurements show an improvement trend.
• Key process control points are identified.
• Tangible, measurable results are realized.
• Supplier Performance
• Meetings are held with all suppliers, and agreed-to input requirements are documented.
• All critical suppliers meet input requirements.
• Documentation
• Sub-processes are documented.
• Training requirements are documented.
• Software controls are in place.
• The readability level of all documents is at a grade level less than the minimum education of the people using them.
• Employees understand their job descriptions.
• Training
• All people performing critical jobs are trained in the new procedures, including job-related training.
• In-process job training procedures are developed for all activities.
• Plans are in place to train all employees, who are part of the process, in team methods and problem-solving tools.
• SST understands one or more of the BPI 10 sophisticated tools.
• All employees in the process receive training on the total process operation.
• Benchmarking
• End-customer requirements are benchmarked.
• Plan exists to benchmark critical activities.
• Plan exists to benchmark the process.
• Employees are trained to distinguish how far they can deviate from the established procedures to meet a customer’s special needs.
• Future process change requirements are projected.
• A proactive internal and external customer complaint system is established.
• The end-customer reviews the process change plan and agrees that it meets his or her needs over the strategic period.
• Continuous Improvement
• A plan to improve the process to the Level 2 is developed, approved, and funded.
Requirements to Be Qualified at Level 2
When a process has evolved to qualification Level 2, it is called an error-free process. Processes qualified at Level 2 are highly effective and efficient. Both external and internal customer expectations are measured and met. Rarely is there a problem within the process. Schedules are always met, and stress levels are low.
To be qualified at Level 2, the process must be able to meet all the requirements for the previous qualification levels, plus the following requirements:
• End-Customer Related Measurements
• End-customer expectations are updated.
• Performance for the last six months never fell below end-customer expectations.
• The trend lines show continuous improvement.
• World-class targets are established.
• End-customers are invited to regular performance reviews.
• End-customer desires are understood.
• Process Measurements/Performance
• All measurements show an improvement.
• Benchmark targets are defined for external customers and critical in-process activities.
• In-process control charts are implemented as appropriate and the process is under statistical control.
• Feedback systems are in place close to the point where the work is being done.
• Most measurements are made by the person doing the job.
• There is tangible and measurable improvement in the in-process measurements.
• No operational inefficiencies are anticipated.
• An independent audit plan is in place and working.
• The process is error-free.
• All supplier inputs meet requirements for the last three months.
• Regular meetings are held to ensure that suppliers understand the changing needs and expectations of the process.
• Documentation
• Change level controls are in place.
• Documents are systematically updated.
• Training
• All employees in the process are trained and scheduled for refresher courses.
• Employee evaluation of their training process is complete, and the training meets all employee requirements.
• Team and problem-solving courses are complete. Employees are meeting regularly to solve problems.
• Benchmarking
• Process is benchmarked, and targets are assigned.
• SST understands the keys to the benchmark organization’s performance.
• Process Adaptability
• Employees are empowered to provide the required emergency help to their customers, and are measured accordingly.
• Resources are committed to satisfy future customer needs.
• Process adaptability complaints are significantly reduced.
• Continuous Improvement
• The process philosophy evolves to the point at which errors are unacceptable.
• Everyone works relentlessly to prevent errors from occurring, even once.
• Surveys of the employees show that the process is easier to use.
• Plans to improve the process to Level 1 are prepared, approved, and funded.
• The process measurement trendline indicates that the process has improved at an annual rate of at least 10 percent in 75 percent of the measurements, and there are no negative trends.
Requirements to Be Qualified ay Level 1
Qualification Level 1 is the highest qualification level. It indicates that the process is one of the ten best processes of its kind in the world, or it is in the top 10 percent of like processes, whichever has the smallest population.
Processes that reach qualification Level 1 are called world-class processes. Processes qualified at Level 1 have proved that they are among the best in the world. These processes are often benchmark target processes for other organizations. As a rule, few processes in an organization ever get this good. Processes that reach Level 1 truly are world-class, and continue to improve so they keep their world-class process status.
To be qualified at Level 1, the process must be able to meet all the requirements for the previous qualification levels, plus the following:
• End-Customer Related Measurements
• End-customer expectation targets are regularly updated, and always exceeded.
• World-class measurements are met for a minimum of three consecutive months.
• Many of the end-customer desires are met.
• Process Measurements and/or Performance
• All measurements exceed those of the benchmark organization for three months.
• Effectiveness measurements indicate that the process is error-free for all the end-customers and in-process control points.
• Supplier Performance
• All suppliers meet process expectations.
• All suppliers meet process requirements for a minimum of six months.
• Documentation
• All documents meet world-class standards for the process being improved.
• Training
• Employees are regularly surveyed to define additional training needs, and new training programs are implemented based on these surveys.
• Benchmarking
• Ongoing benchmarking plan is implemented.
• Process Adaptability
• In the last six months, no customers complained that the process did not meet their needs.
• Present process handles the exceptions better than the benchmark organization’s process.
• Continuous Improvement
• All process measurement trend lines indicate that the process is improving at an annual rate of at least 15 percent.
• An independent audit verifies world-class status.
• Plans are approved and in place to become even better.
It is important to note that the goal for all Level 1 processes is to go beyond world-class to become the best-of-breed process. Although some processes become “best-of-breed” for short periods of time, it is very difficult to stay number 1. It requires a great deal of work and creativity, but the personal satisfaction is well worth it.
For more information related to process maturity grids, read Dr. Harrington’s book, Business Process Improvement (McGraw-Hill, 1991).
Making the Selection
“Measure twice, cut once.”
—The Carpenter’s Rule
An initial list of Six Sigma opportunities was developed by the executive committee during Phase I that was not addressed in the Pilot Phase. This provides the start for the potential Six Sigma project list. During Phase II and III, the Six Sigma Champion Black Belt and pilot teams should be instructed to search out and turn in any other Six Sigma opportunities that they run across. These are added to the potential Six Sigma project list. An opportunity must have the following supporting data:
• Definition of the opportunity
• The benefits to the organization if the opportunity is taken advantage of
• An estimate of the dollar savings
• A definition of what parts of the organization will be affected and how will they be affected
Often ideas are submitted to the Six Sigma Champion that had not been thoroughly evaluated and quantified. In many cases, the Six Sigma Champion or the Black Belt will need to collect additional required data. The Six Sigma Champion should personally be able to support the input data before it is submitted to the Executive Team.
The initial selection of Six Sigma projects will be made at the second Executive Team training class. Each executive will be instructed to bring to the class one or two of their projects that they would like to have an SST work on. These inputs will be added to the potential Six Sigma project list.
Now the first inclination is to ask the question, “Why not do all of them right away? After all, each one will add at least $200,000 to the bottom line.” That’s a very good point, but if you did all of them at once, probably it would have a major impact upon your ability to meet your commitments to your present customers. That is why you need to slow down and consider how many resources you can afford to devote to the Six Sigma System.
The first decision that the Executive Team needs to make is, “Will Black Belts be assigned full-time as the Six Sigma best practices recommends?” Remember BBs should be very proficient people who have a good future with the organization. It is a major decision to take these high-potential individuals and pull them out of the normal workflow for one or two years. It is also a major career decision for the individual.
We suggest that you start this activity by selecting three to five full-time Black Belts that will be assigned to one to three projects. Too often, the Black Belts are selected because they have some specific skills needed to solve a specific problem. This is a bad practice. The Black Belt should be a person that can effectively manage many projects at the same time, not someone who can solve a specific problem. Select them because they are people you want to develop for future higher-level management assignments. By selecting an individual, you are in effect putting him/her on the fast track to the top.
The next step is for the Six Sigma Champion to lead the Executive Team through a prioritization process similar to the one defined in Phase I. The objective of this prioritization process is to identify one to three projects that will be assigned to each of the designated future Black Belts. For each of these assigned projects, the Executive Team should clearly document what it considers acceptable results from the project and the project time frame to complete the project. After the Black Belts are trained and the initial projects are well underway, the Six Sigma Champion can assign additional projects to them.
There will be a continuous flow of requests for Six Sigma projects coming in from the various managers throughout the HCP as the various departments gain better understanding of the Six Sigma process. This means that the potential Six Sigma project list will need to be prioritized from time to time and, as the Six Sigma System grows and gains momentum, you will want to add many more Black and Green Belts. (The normal ratio is for 1 Black Belt to every 100 HCP employees, and 1 Green Belt for 20 HCP employees. This means if the HCP has 2,000 employees, you will end up with 20 Black Belts and 100 Green Belts by the end of the first year.)
The Executive Team should set high-improvement objectives for each project and each Black Belt. Jack Welch, when he was chairman of GE, was willing to ask the organization to make improvements at seemingly impossible levels and rates. This is what Dr. W. Edwards Deming called “Arbitrary Number Goals” and “Cheerleading.” But, it worked for GE and it can work for your organization. Sometimes you need a cheerleader to keep you trying to do your very best.
Activity 5—Forming the SSTs
“Successful companies achieve average savings of $400,000 to $600,000 per ‘Black Belt’ project and add millions of dollars to the bottom line.”16
—Steven A. Zinkgraf, Author
The Executive Team should identify the Black Belts and assign projects to them. If the selected Black Belts were part of the Pilot Phase and have been certified as Green Belts, you have a good start to move ahead rapidly to provide them with the skills required to perform as a Black Belt. All of a sudden managers want their star people to become Black Belts because they want them working on their pet projects. In addition, many employees see the Black Belt assignment as a very positive career move. As a result, you will have two types of Black Belt candidates:
• Certified Green Belts
• Employees with no Six Sigma training
Let’s look closely at these two types of candidates.
The Black Belt Candidates Who Are Certified Green Belts
These Black Belt candidates were good performers during the Pilot Phase and passed the Green Belt examination. In this case, the potential Black Belts can attend a five-day class to prepare them to manage the SSTs that will provide them with enough skills to get through the Define and Measurement phases of the Six Sigma process. Thirty days later, they should take another five-day class to provide them with the information they need to get through the Analyze, Improve, and Control phases. With this approach, the candidates can bring data related to the project that they are assigned to and work on it during this second five-day training program. At the end of their first project, they should attend a three-day class to exchange experience and to provide them with additional detailed tools and approaches. At the end of the three-day class, they will be given a two-hour examination. Those who pass the examination will be certified as Black Belts.
Black Belt Candidates with No Six Sigma Training
In this case, the candidate has not worked on a Six Sigma project, and it will be important for him/her to get trained very fast. We suggest that this individual take the Green Belt training with the other SST members for one week and then take the first week of the Black Belt training. Two weeks later, he/she should take the second week of the Black Belt training. The third week of the Black Belt training will follow about two weeks later. At the end of the first project, the candidate should attend a five-day Black Belt training program that will end with the Black Belt exam. The following is a timeline for this training:
• Week I: Green Belt Training with SST
• Week II: First Week of Black Belt Training
• Week V: Second Week of Black Belt Training
• Week VIII: Third Week of Black Belt Training
• Week XII: Fourth Week of Black Belt Training and Exam
The Master Black Belt or the Six Sigma consultant should work closely with these types of Black Belt candidates during the first project.
What If the Candidate Fails the Black Belt Exam?
“The wisest of the wise may err.”
—Aeschylus
This represents a very difficult decision for the Executive Team. If the Black Belt candidate is dropped from the Six Sigma initiative and put back into his/her old assignment, it is very embarrassing for everyone. On the other hand, you cannot afford to have a poorly-skilled individual assigned full time to the Black Belt activities. Based upon our experience and the results of other Six Sigma certification exams, it is not unusual for only 70 percent of the candidates to pass the Black Belt exam the first time.
We recommend the following to our clients when a Black Belt candidate fails to pass the exam:
• Determine if the candidate just barely failed (for example, their grade was 65 and the passing grade is 70) but the project results were acceptable. In this case, we let them conduct another project and repeat the fourth week of the Black Belt training and re-take the exam.
• For individuals whose grades were below 60, we recommend that input be collected from the Six Sigma Champion, the Master Black Belt, and the individual’s instructor to determine if they feel that the individual had been really trying and was capable of succeeding. If there is common agreement that the individual tried and is capable and the results of the project he/she is working on were satisfactory, we would suggest that you give the individual another three months to complete one or more projects. After this time, the candidate should then repeat the fourth week of Black Belt training and re-take the exam. Throughout this probationary cycle, the Master Black Belt should work closely with the individual. Of course, the individual should be informed that failure to pass the test on the second try would mean that he/she will be re-assigned.
Some organizations that believe the Six Sigma System has an excellent chance of being adopted by their organization will set aside three to four Black Belts to go through a conventional four-month Black Belt training program in parallel with the Pilot Phase. This allows them to have a group of trained Black Belts on hand when they enter the Implementation Phase.
Activity 6—Executing the Projects
“Great works are not performed by strength, but by perseverance.”
—Samuel Johnson
Now that Black Belts or Black Belt candidates have been prepared to form SSTs, the real benefit from the Six Sigma System is close to being realized. The procedures that the Black Belt or Black Belt candidates should go through to form a SST and the SST’s activities during the project were discussed in the Pilot Phase of this chapter so they will not be repeated here.
When to Use DMAIC and DMADV
DMAIC is used under the following conditions:
• A process exists.
• Customer needs can be met by changing the existing process.
• The project is part of an on-going continuous improvement activity.
• Only a single process needs to be changed.
• A single customer performance requirement needs to change.
• Competitor’s performance is stable.
• Customer’s purchase behavior is stable.
• Technology is stable.
Examples of DMAIC problem-solving methods:
• Reduce the cycle time to process a patent.
• Reduce the number of customer complaints about incorrect records.
• Increase the number of prompts on the customer service system.
• Reduce the number of errors in sales’ leads lists.
• Improve search time for critical information.
DMADV is used under the following conditions:
• No process exists.
• Existing processes have reached the limits of its capability.
• Project is of strategic importance.
• Multiple processes need to be changed.
• Multiple customer performance requirements need to be addressed.
• Competitor’s performance is dramatically improving.
• Customer’s behaviors are changing.
• Technology is evolving.
Examples of procedures that the DMADV development method is designed to address:
• Add a new service.
• Reduce the total number of customer complaints.
• Create a multiple-source lead tracking system.
• Create a real-time access to live help.
Activity 7—Internalizing the Six Sigma Culture
“Changing the culture of an institute is a slow process, and one that is best not rushed. If the effects of TQM are to be lasting, people have to want to be on board.”
—Edward Salis
Six Sigma is not just SSTs attacking major problems throughout the organization. It’s about a new culture that requires everyone doing near-perfect work all the time. It looks impressive to have a team work on a problem for three months and save $200,000 dollars, but it is often better to have 5,000 small problems solved that saved $1,000 each. Yes, this small savings adds up to real big profits fast. The organization needs to get everyone thinking Six Sigma and Lean. If a process has 800 activities in it with an average of three failure opportunities in each activity, that’s 2,400 different failure opportunities that need to be analyzed and improved to the Six Sigma level. Of course, that is an impractical and impossible task if you are assigning an SST to each opportunity. If the SST spends three months on each failure opportunity, that would require 600 years just to do one process. Of course, this is ridiculous. It is the individuals doing the work every day that brings a Six Sigma culture into the organization. This can only be accomplished when each natural work team understands its processes and is committed to supplying the internal and external customers of these processes with Six Sigma level output. A Natural Work Team (NWT), sometimes called a Natural Work Group (NWG), is any group of people who are assigned to work together and report to the same manager or supervisor.
Each natural work team and each individual in that natural work team needs to understand that he/she has a customer for their output; that customer maybe the person who is sitting beside them, the person that is across the room, the person that’s in the next building, or maybe an external customer to the organization. These customers all have needs and expectations of the inputs they receive. All excellent organizations realize that they need to listen to the voice of both the internal and external customer if they are going to survive. This applies to every nurse, doctor, nurse’s aid, lab technician, accountant, manager, and janitor. The real Six Sigma challenge is how you get each member of the HCP performing at the Six Sigma level. It is even difficult to define the number of failure opportunities at the individual levels. First, think about how many failure opportunities a manager has each day—a hundred, a thousand, ten thousand, and a hundred thousand? How many error opportunities does a doctor, nurse, accountant, x-ray technician, and so on, have? And is it even worth while calculating all the potential error opportunities and measuring them? Many HCPs believe that the concept of error opportunities is legitimate, and taking the time to establish an accurate measurement of the number of error opportunities per individual is not cost-effective nor value added.
Making Your NWTs Hum
“In essence, a team that is just starting out is not really a team, even though everyone might call it one... Don’t fool yourself.”
—Richard S. Wellins, William C. Byham, and Jeanne M. Wilson
The NWT is the engine that drives the organization. Only by educating, empowering, and continuously communicating with the NWT can any organization perform at an acceptable level. Of course, the organization is made up of individuals, each with different personalities and needs that must be managed. But success comes not from each individual doing his or her own thing, but from individuals working together to create outputs that are greater than the sum of the outputs of the single individuals.
“The face-to-face group is as significant a unit of organization as the individual. The two are not antithetical. In a genuinely effective group, the individual finds some of his deepest satisfaction.”
—Douglas McGregor, Author
Internal and External Supplier/Customer Relationships
Defining customer/supplier relationships is only one part of making an area function effectively. There are many other factors that also must be considered. For example,
• What is the area responsible for?
• How is the area measured?
• What is acceptable performance?
• How does the area fit into the total organization?
• How well do the area’s employees understand their roles and the ways they can contribute?
• What are the important activities that the area performs from top management’s standpoint?
“Area Activity Analysis (AAA) is the only effective and systematic way to make the internal- and external-customer relationship work.”
—H. James Harrington
It is important to note that all these questions pivot around the activities that the area is involved in. It is for this reason that the Area Activity Analysis (AAA) methodology broadened its perspective to go beyond the customer/supplier partnership concept to embrace a complete business view of the area.
“Groups become teams through disciplined action.”
—John R. Katzenbach and Douglas K. Smith, Authors
We believe it is important to get everyone thinking about striving to perform at 3.4 errors per million opportunities, but it is often impractical to put these measurements in place. At the individual level it is often better to use the Error-Free Criteria. The Error Free approach measures the duration between errors and sets the objective of increasing the duration between errors. This becomes a very personal measurement system where the individual can set personal goals per their own desires. If the present error-free duration is 10 hours for an individual, he/she can set, as an objective, to improve to 15 hours, then to 25 hours, then to 50 hours, and so on. This allows each individual to always be striving for improved measurable performance improvement. At the natural work team level, we have found AAA as the most effective approach to establishing the internal and external supplier customer relationships and measurements. We will discuss this approach parting the next part of this chapter.
But before we go any further, let’s discuss what we mean by customer/supplier relationships as they relate to internal and external customers. Basically, a customer/supplier relationship can develop in one of two different ways:
• An individual or organization can determine that it needs something that it does not want to create itself. As a result, it looks for some other source (supplier) that will supply the item or service at a quality level, cost, and delivery schedule that represents value to the individual or organization. We will call this organization the customer.
• An individual or organization develops an output that it believes will be of value to others. Then the individual or organization looks for customers that will consider the output as being valuable to them (for example, the Internet, VCR, and so on). We will call this organization the supplier.
Although both these situations reflect real life, we will use the first one to discuss how the customer/supplier relationships develop. We feel that after reading this explanation, the reader will be able to apply the concept to the second situation.
“A customer’s assessment of the quality of any organization is based on the best that customer has seen. The customer does not know what is technically or organizationally feasible.”
—David Hutchins
The customer defines a need (requirement) for an input and begins looking for some source that can fulfill this need (see Figure 11.30).
Figure 11.30. Search for a potential source
To find a source for this input, the customer needs to define the performance parameters related to the required input, when the input needs to be delivered, how good the input needs to perform, and how much the individual or organization is willing to pay for the item or service. Usually, all of this data is communicated to potential sources of the item or service with the exception of how much the customer is willing to pay for the item or service. Once the potential source of the input receives the potential customer’s information (requirements), it is evaluated to determine if the source has the capabilities of providing the input to the customer in keeping with the customer’s performance, quality, and delivery requirements. If there is a near match, the potential source will contact the customer and discuss how their differences can be resolved. Once these requirement issues have been resolved, the potential source will determine how much it will cost them to provide the input to the customer and add to this cost their profit margin, so that a total compensation requirement can be defined. These compensation requirements are then communicated to the customer. Through the negotiation process, a closure of all outstanding issues between the customer and the potential source is reached (see Figure 11.31). It is important to note that at this point the potential source is not a supplier because the customer often is negotiating with other potential sources to provide the same product or service.
Figure 11.31. Complete definition of the potential source’s and customer’s requirements
If the potential source represents the best-value option to the customer, the customer will agree to accept the input as long as it is in compliance with the negotiated requirements. The customer also agrees to compensate the potential source for the item or service as negotiated. With an external customer, this act often takes the form of a purchase order. Once the potential source agrees to the provisions defined by the customer, it enters into a contract (formal or informal, verbal or written) to provide the input to the customer that meets the requirements in return for the agreed to compensation. At this point in the process, the potential source becomes the supplier (see Figure 11.32).
Figure 11.32. Agreed-to requirements that both the supplier and customer are committed to provide
“The customer deserves to receive exactly what we have promised to produce—a clean room, a hot cup of coffee, a nonporous casting, a trip to the moon on gossamer wings.”
—Philip Crosby
It is important to note that the agreed-to requirements include both the customer requirements and the supplier requirements for compensation.
Now that an agreed-to requirement package has been developed, it is up to both parties to live up to their part of the agreement. The supplier provides the input to the customer, and the customer evaluates the input to determine if it meets the defined requirements. The customer then provides feedback to the supplier related to the performance of the input compared to the agreed-to requirements. This feedback should include both positive and negative data. If the input meets the customer requirements, the customer’s feedback that documents positive performance often takes the form of paying the supplier the compensation that was agreed to. We suggest that even if the customer requirements are met, it is a good idea to provide positive feedback to the supplier and suggest ways that the supplier can improve future inputs. All too often, the customer pays the bill but is still not happy with the supplier’s output. This represents a major problem with the customer, not the supplier. The suppliers have every right to believe that they are doing a good job if the only feedback they receive from the customer is positive (paying their bills). In the case where the input does not meet the customer requirements, the deviation should be defined so that the supplier can correct the problem. Often, the supplier’s compensation is tied into the correction of these problems (see Figure 11.33).
Figure 11.33. The complete Supplier/Customer Model
You will note that in Figure 11.33 there is a corrective action/improvement feedback flow from the supplier to the customer. This information flow provides the customer with assurance that past problems will be corrected and/or that continuous improvement is scheduled related to the supplier’s output.
What did we learn from this analysis? There are two key points:
• A customer/supplier relationship cannot exist unless the requirements of both parties are understood and agreed to. Too often, customers expect input from suppliers without understanding their requirements and/or capabilities. On the other hand, too many suppliers provide output without defining their potential customer’s requirements and obtaining a common, agreed to understanding of both party’s requirements.
• Both the customer and the supplier have obligations to provide input to each other. The supplier is obligated to provide the item or service and define future performance improvements. The customer has an obligation to provide compensation to the supplier for its outputs and feedback on how well the outputs perform in the customer’s environment.
The customer/supplier process has a domino effect. Usually, when a supplier is defined, that supplier requires input from other sources in order to generate the input to its customer. As a result, most organizations become both a customer and a supplier (see Figure 11.34).
Figure 11.34. The Cascading Customer/Supplier Model
Although the procedures related to internal customer/supplier partnerships are less stringent and have been simplified because the internal customer does not pay for the services that are provided, the concepts are equally valid. Too often, we set different standards for internal suppliers than we have for external suppliers. As a result, many of the internal suppliers provide inputs that are far less valuable than it costs to produce the inputs. This often results in runaway costs and added bureaucracy.
Area Activity Analysis (AAA)
With AAA, we will show you how to apply the customer/supplier model to the internal organization, thereby improving quality and reducing cost and cycle time of the services and items delivered both within and outside of the organization.
“Area Activity Analysis is the best approach to developing a true performance culture.”
—H. James Harrington
Area Activity Analysis is one of the few, if not only, improvement tools that is specific to an individual NWT and focuses on the internal and external customer/supplier. It’s based on a model that has a supplier providing input into an area (organization) that adds value to produce an output that a customer needs. This tool works best with organizations that are well along with their overall improvement effort. It is used to understand how a natural work group fits into the overall picture and to establish the natural work team’s measurements.
A Natural Work Team (NWT) or a Natural Work Group (NWG) is defined as a group of people who are assigned to work together and report to the same manager or supervisor. AAA projects are implemented by NWTs.
AAA is known as “The People’s Improvement Tool.” Why? Because this is the one tool that helps the individual within a particular work area to identify what he/she does for the organization and assists in determining the area’s improvement opportunities.
The AAA methodology has been divided into seven different phases (see Table 11.5) to make it simple for an NWT to implement the concept. Each of these phases contains a set of steps that will progressively lead the NWT through the methodology.
Table 11.5. AAA Implementation Approach
We will briefly describe each of the seven phases of AAA. Implementing these seven phases will bring about a major improvement in the organization’s measurement systems, increase understanding and cooperation, and lead to reduced cost and improved quality throughout the organization.
Phase I—Preparation for AAA
AAA is most effective when it precedes other initiatives that are taking place such as Six Sigma, Continuous Improvement, team problem solving, Total Quality Management, Reengineering, or new IT systems. It is also best to implement the AAA methodology throughout the organization. This does not mean that it will not work if other improvement activities are underway or of it is only used by one area within the total organization. In the preparation phase, the good and bad considerations related to implementing AAA within an organization should be evaluated. A decision is made whether or not to use AAA within the organization. If the decision is made to use AAA, an implementation strategy is developed and approved by management. Phase I is divided into five steps:
1. Analyze the environment.
2. Form an AAA project team.
3. Define the implementation process.
4. Involve upper management.
5. Communicate AAA objectives.
Phase II—Develop the Area’s Mission Statement
A mission statement is used to document the reasons for the organization’s or area’s existence. It is usually prepared prior to the organization or area being formed, and is seldom changed. Normally, it is changed only when the organization or area decides to pursue new or different set of activities. For the AAA methodology, a mission statement is a short paragraph, no more than two or three sentences, that defines what the area’s role and its relationships with the rest of the organization and/or the external customer.
Every area should have a mission statement that defines why it was created. It is used to provide the area manager and the area employees with guidance related to the activities on which the area should expend its resources. Standard good business practice calls for the area’s mission statement to be prepared before an area is formed. The mission statement should be reviewed each time there is a change to the organization’s structure or a change to the area’s responsibilities. It should also be reviewed about every four years, even if the organization’s structure has remained unchanged, to be sure that the mission statement reflects the current activities that are performed within the area.
A service policy is a short statement that defines how the area will interface with its customers and suppliers.
During Phase II, the AAA team will review and update the area’s mission statement. If a mission statement does not exist, the AAA team will prepare a mission statement. In all cases, any change to the mission statement must be approved by management before it is finalized. Phase II is divided into six steps:
1. Obtain present mission statement.
2. Develop preliminary area mission statement/NWT manager.
3. Develop preliminary area mission statement/each employee.
4. Develop a consensus draft area mission statement.
5. Finalize area mission statement.
6. Develop the area’s service policy.
Phase III—Define the Area’s Major Activities
During this phase, the AAA team will define the activities that are performed within the area. For each major activity (activities that account for more than 10 percent of the area’s resources), the AAA team will define its output and the customers who receive that output. An activity champion is also assigned to each activity. Phase III is divided into eight steps:
1. Identify major activities for each individual.
2. Combine into broad activity categories.
3. Develop percentage of time expended.
4. Identify major activities.
5. Compare list to area mission statement.
6. Align activities with mission.
7. Approve of the area’s mission statement and major activities.
8. Assign activity champions.
Phase IV—Develop Customer Relationships
During this phase, the AAA team will meet with the customers who are receiving the outputs from the major activities conducted by the area to
• Define customer’s requirements.
• Define the supplier’s requirements.
• Develop how compliance to the requirements will be measured.
• Define acceptable performance levels (performance standards).
• Define the customer feedback process.
Phase IV is divided into seven steps:
1. Select critical activity.
2. Identify customer(s) for each output.
3. Define customer requirements.
4. Define measurements.
5. Review with customer.
6. Define feedback procedure.
7. Reconcile customer requirements with mission and activities.
Phase V—Analyze the Activity’s Efficiency
For each major activity, the team will define and understand the tasks that make up the activity. This is accomplished by analyzing each major activity for its value-added content. This can be accomplished by flowcharting the activity, and collecting efficiency information related to each task and the total activity. Typical information that would be collected is
• Cycle time
• Processing time
• Cost
• Rework rates
• Items processed per time period
Using this information, the AAA team will establish efficiency measurements (sometimes called Key Performance Indicators) and performance targets for each efficiency measurement. Phase V is subdivided into six steps:
1. Define efficiency measurements.
2. Understand the current activity.
3. Define data reporting systems.
4. Define performance requirements.
5. Approve performance standards.
6. Establish a performance board.
Phase VI—Develop Supplier Partnership
Using the flowcharts generated in Phase V, the AAA team identifies the supplier that provides input into the major activities. This phase uses the same approach discussed in Phase IV, but turns the customer-supplier relationship around. In this phase, the area is told to view itself in the role of the customer. Their interfaces are called internal or external suppliers. The area then meets with their suppliers to develop agreed-to requirements. As a result of these negotiations, a supplier specification is prepared that includes a measurement system, performance standard, and feedback system for each input. This completes the customer-supplier chain for the area, as shown in Figure 11.35.
Figure 11.35. Detailed Process Model
The supplier is an organization that provides a product (input) to the customer (source: ISO 8402).
The internal supplier refers to areas within an organizational structure that provide input into other areas within the same organizational structure. The external supplier refers to suppliers that are not part of the customer’s organizational structure.
Phase VI is divided into five steps:
1. Identify suppliers.
2. Define requirements.
3. Define measurements and performance standards.
4. Define feedback procedure.
5. Obtain supplier agreement.
Phase VII—Performance Improvement
“It is only when management supports, in both word and deed, the goal of continuous improvement that it will begin to see increases in both quality and productivity.”
—Donald Wheeler and David Chambers
This is the continuous improvement phase that should always come after an activity has been defined and the related measurements are put in place. It may be a full Six Sigma, TQM, or just a reengineering activity. It could be a minimum program of error correction and cost reduction or a full-blown Six Sigma project.
During Phase VII, the NWT will enter into the problem-solving and error-prevention mode of operation. The measurement system should now be used to set challenge improvement targets. The NWT should now be trained to solve problems and take advantage of improvement opportunities.
All the members of the natural work team should be trained in the following (note: these are your Blue Belts):
• Six Sigma principles
• What 3.4 errors per million opportunities means
• What error-free performance means and how to measure duration between errors
• Plan-Do-Check-Act and/or DMAIC
• Basic problem-solving tools:
• Brainstorming
• Check sheets
• Graphs
• Nominal Group Technique
• Force Field Analysis
• Cause-and-effect diagrams
• Flow charting
• Team operating ground rules and team-building methods
The individual efficiency and effectiveness measurements will be combined into a single performance index for the area. Typically, the area’s key measurement graphs will be posted and updated regularly.
“The hunger for performance is far more important to team success than team-building exercises, special incentives, or team leaders with ideal profiles.”
—Katzenbach and Smith, in The Wisdom of Teams: Creating the High-Performance Organization, Harper Business, 1994.
We further suggest that a 4-by-5-foot area performance board be set up in a very visible part of the area with the following posted on it:
• The area mission statement
• The area performance report
• Improvement plans and their associated measurement charts
• An up-to-date picture of the NWT
• A list of the area’s customers
• Letters from customers (both positive and negative)
• A list of the people who make up the NWT, their dates of hire, and their birthdays
• Board posting procedure
We recommend that the area’s manager encourage the NWT members to post improvement ideas and suggestions for any measurement on this board in a section of the board called “New Ideas.” This eliminates the need to wait for a meeting to get actions started on good ideas. The manager in the area should review the posted ideas at least once a day and move them from the “new idea” part of the board to the “ideas in progress” part of the board (see Figure 11.36).
Figure 11.36. Performance board
“Visual reminders get attention and results. You need them to keep you focused.”
—H. James Harrington
We cannot overemphasize the need to keep the performance board up-to-date. Nothing telegraphs management’s lack of interest in performance improvement more than an outdated performance board. I have seen performance boards with reports on them that are six months old. We like to see a statement on the board that defines when the board is updated. For example: “New reports and graphs will be posted each Tuesday that reflect the previous week’s performance.” If for some reason the new reports and graphs cannot be posted on schedule, an explanation of why the graphs and reports are not available and a new target date for their availability should be posted on the performance board.
We find it is good business practice to write a short document that defines what can and cannot be posted on the performance board. Some organizations will allow personal items to be posted, such as postcards from NWT members who are on vacation. We do not recommend this practice because it is hard to control. First the manager posts a postcard from an employee, then someone posts a birthday card, then someone else puts up a notice that she has a car for sale. We find it is best to clearly define what can be put on the performance board, who can put it up, where they can put it, and when it will be taken down. This type of procedure needs to be defined for each different area of the board.
During Phase VII, management should show their appreciation to NWTs and individuals who expended exceptional error during the AAA project or implemented major improvements.
Phase VII is divided into eight steps:
1. Set up the reporting systems.
2. Identify the activities to be improved.
3. Install temporary protection, if needed.
4. Identify measurements or tasks to be improved.
5. Find best-value solutions.
6. Implement solutions.
7. Remove temporary protection, if installed.
8. Prevent the problem from recurring.
Six Sigma Communications
Throughout the Six Sigma initiative, the Six Sigma Champion and Executive Team should be releasing a series of news items holding meetings and personally selling the Six Sigma concepts of near error-free performance. The results of the SST activity should be highlighted on the organization’s website and newsletter. This ongoing communication flow should highlight the culture and behavior changes that the organization is undergoing. It should also be used to give liberal credit to the people who are bringing about these changes, especially at the employee level. Many organizations post pictures of the SST members and the results of their activities on the bulletin boards around the organization. It is important not to just promote the SST activities, as this is just a small part of the total transformation the organization goes through. The communication system needs to focus upon how the individual behavior patterns and performance objectives need to change in order to keep up with the Six Sigma standards. A detailed communication plan should be prepared that provides monthly reinforcement of the importance of everyone improving their performance to near perfection.
The Executive Team Six Sigma Culture
The culture change starts with the Executive Team. We are never surprised when we go into an organization and find that the most and biggest problem set on the top floor in the executive boardroom. If the Executive Team does not change, the rest of the organization will not change. To help the Executive Team change at General Electric, Jack Welch tied the 10,000 top manager’s bonus system into the Six Sigma program. GE executive bonus system runs between 20 to 70 percent of the manager’s base salary plus additional stock options. As much as 40 percent of the bonus was based upon how well the managers implement Six Sigma in their related areas.16 The single most cost-effective and fastest way to transform an organization is by transforming the Executive Team. Who has the biggest impact upon the employee’s involvement in the improvement process by management levels follows:
• Top Management: 50 percent
• Middle Management: 26 percent
• First Line Managers: 19 percent
The key to embedding a Six Sigma culture within an organization is to change the behavioral patterns of the Executive Team. Our data indicates that the average executive makes between 50 to 80 behavior errors per week, and at the Six Sigma level we want our assembly workers to make no more than one error every three months. It’s almost as though we pay people more if they will make more errors.
Dr. Joseph M. Juran has long stated that 80 to 85 percent of all problems are caused by management. Donald Stratton, Manager of Quality at AT&T Network Systems, reported the following findings in a Quality Progress article:17
• 82 percent of the problems analyzed were classified as common cause. These are process problems owned by management.
• 18 percent of the problems analyzed were classified as common cause. These are problems that were caused by people, machinery, or tools. Only a small portion of these problems can be solved by employee teams.
• Of the 82 percent management controlled:
• 60 percent of the corrections could be implemented by first- and second-level management
• 20 percent could be implemented by middle management
• 20 percent could only be implemented by top management
It is easy to see that the major problems within organizations throughout the world are the processes that management is responsible for modifying and controlling. Unfortunately, all the talk in the world and the desire to do something good does not get it done. The employees cannot correct the problems that management has created. Only management’s personal involvement in the improvement process will bring about the required changes.
Top Management Culture Change
“The culture of the organization changes only to the degree that the top management behavior changes.”
—H. James Harrington
Top management are all for change, as long as it is someone else who changes. The number one improvement rule is: Top management must change first.
Why should top management change? Aren’t they already successful? Look at all the money they are making. In truth, more than 99 percent of top managers have a lot of opportunity to improve. In fact, none of us are perfect and most of us have many opportunities to improve our own personal behavior patterns.
To prepare their personal performance indicators, top managers need to define what they do. I don’t mean things like “motivate employees” or “manage R&D.” These are their assignments. Examples of what management does include the following:
• Attend meetings
• Read and answer mail
• Answer telephone calls
• Make decisions
• Delegate work
• Chair meetings
Once top management has completed a personal list of what they do, they need to define behavioral patterns related to these activities that could be improved:
• Start meetings on time.
• Do not attend meetings that can be delegated to employees.
• Return all telephone calls within eight hours.
• Don’t set items aside that can be done quickly.
• Always show up on time for meetings.
• Read all new mail each day.
• Don’t use overnight mail if the project can be finished earlier and sent by regular mail.
• Talk to three customers each day.
• Make a minimum of three one-hour tours of the employee work areas each week.
• Read five technical articles each week.
• Have the office organized so well that there is no need to search for lost or misfiled items.
• Have a clean desk at the end of the day.
• Stop doing things that can be delegated.
• Stop using bad language in the workplace.
• Arrive at work on time.
• Have an agenda in each attendee’s hands before any meeting is held.
They then should select a maximum of eight of these behavioral patterns that they want to improve. Each selected behavioral pattern should be recorded on a card similar in size to an airplane ticket, which can be carried easily in a purse or a coat pocket. Each time the executive does not behave as defined, he or she has made an error, and a check mark should be placed behind the appropriate behavioral pattern. Once a week, the total number of check marks should be counted and plotted on a run chart. We recommend that each executive set an improvement target of 10 percent of the first month’s average error rate. When this target is reached, it is time to add eight more behavioral patterns to the list and start over again. In organizations where top managers have a high degree of confidence and credibility, each top manager is encouraged to post his or her personal performance run chart in his or her office, demonstrating to their fellow workers that top management accepts the fact that they personally need to change and improve. (Figure 11.37 is an example of a CEO behavioral error-rate chart.) Eventually this same approach will be used by all managers and employees to measure their personal improvement.
Figure 11.37. Executive behavioral performance chart
“Employees listen to your tongue with interest but they believe in the way that the tongue in your shoes go.”
—H. James Harrington
Executive Values
Each executive is also encouraged to define his or her personal set of values that govern their behavior at work and in their personal life. These values seldom mirror images of the organization’s values or principles because they reflect the total person. We encourage every top manager to post these value statements in a very visible place in their office and/or conference room. Sharing these personal values with their fellow managers and employees and posting then where they can influence the executive’s behavior has a major positive influence on the individual and the organization. Don’t be afraid to let your employees know you are human.
John D. Rockefeller had 11 management creeds (principles) that he posted and tried to live by. A sample of these are
• “I believe in the supreme worth of the individual and in his right to life, liberty, and pursuit of happiness.”
• “I believe in the dignity of labor, whether with head or hand; that the world owes no man a living, but that it owes every man an opportunity to make a living.”
• “I believe in the sacredness of a promise, that a man’s word should be as good as his bond; that character—not wealth or power or position—is of supreme worth.”
• “I believe that every right implies a responsibility; every opportunity, an obligation; every possession, a duty.”
Dr. H. James Harrington has selected the document entitled “The Man I Want to Be.” The following is just a sample statement. The total document can be found in Appendix B.
“A man who would be concerned with how he could help me instead of himself, who would give me loyalty instead of demanding of me, who would think of himself as my assistant, instead of my boss, who would think it was his job to help me do my job better.”
Six Sigma Suggestion Programs
“There is nothing more fragile or precious to an individual than his or her idea.”
—H. James Harrington
A suggestion system is one of the best ways to provide your employees with a way to continuously improve and get recognition for their activities. World-class organizations are receiving an average of two suggestions per month per employees; 90 percent of them are implemented.
How does the suggestion process work? National Cash Register Company developed the concept back in 1896. The value of the suggestion program is that it offers the person closest to the work activity the opportunity to suggest improvements. This results in more effective utilization of assets, increased productivity, waste reduction, lower product costs, and improved quality. As Paul Petermann, then manager of Field Suggestions at IBM, put it, “Ideas are the life-blood of the company, and the suggestion plan is a way of getting these ideas marketed.”
The formal suggestion process requires that employees document their ideas for improvement and submit them to a central suggestion department that is responsible for coordinating and evaluating the ideas and reporting back to the employee. The suggestion department reviews each suggestion and chooses an area within the organization that is best suited to evaluate the suggestion. The evaluation studies the recommended changes to determine if they will provide overall improvement in quality, cost, or productivity. If the suggestion is accepted by the evaluation area, the evaluator will determine what tangible savings will result from implementing the idea.
Paul Revere Insurance Company employees submitted 20,000 suggestions during the first three years of their improvement process. The suggestions were a major contributor to the organization’s improved performance:
• Income up 200 percent with no additional staff
• The organization moved from number 2 to number 1 in the insurance field
Frank K. Sonnenberg, in his article “It’s a Great Idea, B...” wrote, “A new idea, like a human being, has a life cycle. It is born. If properly nurtured, it grows. When it matures, it becomes a productive member of society.” He points out that at 3M, some people claim that the company’s 11th commandment is, “Thou shalt not kill an idea.”18
The following is a quotation from Toyota’s Creative Suggestion System manual:
“The system came to Toyota from the United States back in 1951 when Toyota was still a newcomer in the automobile industry. Two Toyota officials traveled to the United States to study modern management methods, and at Ford Motor Company they saw a suggestion system being used that inspired them to try a similar system in Toyota.”
Starting with this very modest introduction, the Japanese, in a very methodical way, expanded this application and used it much the same way they did statistical process control and Total Quality Control. Starting from a zero base line, they expanded the idea to the point that today it is the most effective employee involvement tool used in Japan, surpassing even the Quality Circle movement. In a study done by the Japanese Suggestion Association, they reported, “As viewed from the relationship with small group activities, which is the nucleus of suggestion activities, 50 times as many suggestions are made for every solution of one problem by one circle.” Dr. Kaoru Ishikawa, the father of the Japanese quality process and the Quality Circle concept, stated, “In Japan, only 10 percent of the quality improvements come from teams. The remaining 90 percent come from individual suggestions.”19
Now let’s compare Japan’s and the United States suggestion programs:
Now this data may be interpreted that the U.S. goes after the big, important problems and the Japanese workers focus on the insignificant problems. But look at the bottom line. The average eligible Japanese worker saves the organization more than $3,500 per year over the savings generated per American worker.
Getting Ideas Flowing
“Creativity is thinking up new things. Innovation is doing new things.”
—Theodore Levitt
For the average organization, it is easy to embrace the concept of tapping the hidden powers of the employees’ ideas. The problem is, how do you do it? How do you keep your credibility with the employees if they start turning in ideas and swamp the process? A good way to tap into this reservoir of ideas and not open the floodgates is to hold an “idea week.” In this approach, management announces to the employees that a specific week will be set aside to see how many improvement ideas can be generated. For example, “The week of January 16 to 21 will be set aside to see how many ideas can be turned in that will improve the safety and quality or reduce costs.”
Idea Sharing
“I believe the real differences between success and failure in a corporation can very often be traced to the question of how well the organization brings out the great energies and talents of its people.”
—Thomas Watson, Jr.
An important part of developing a creative environment within an organization is the open sharing of the ideas that are generated. Many organizations accomplish this by maintaining a list of new and creative ideas that is made available to the entire organization. Often this data is stored in a computer database that can be sorted in many different ways, providing a valuable database to help solve future problems.
3M has made use of “innovation fairs” to exhibit new ideas. Employees from product engineering, marketing, production, and other departments attend these fairs to gain new ideas and to discuss the ideas that are being exhibited with their creators.
To keep the Six Sigma System operating, we find that focusing your suggestion system on small suggestions that the employees can implement themselves is the most effective approach.
“The never-ending task of self improvement.”
—Ralph Waldo Emerson
There are a lot of small improvement opportunities related to each job, and the person who is doing the job is the best person to identify and implement these ideas. For example, an operator put her work into a pail and when it was full, carried it to the next operator. Her suggestion was to put wheels on the pail so she could just push it with her foot to the next operator. When the next operator removed the parts, she could just kick it back to the other operator. No big deal, but it saved two people time and effort, resulting in increased productivity.
These ideas are documented on a very simple form and approved or rejected by the individual managers. This approach is working in Japan and the U.S. For example, Dana Corporation received an average of 38 ideas per person with 82 percent of them implemented.20 For more information about this approach to suggestion systems, read The Idea Generator by Bunji Tozawa and Norman Bodek.
Rewards and Recognition to Support Six Sigma
“Performance will matter to the individual if rewards are dependent upon performance.”
—Edward M. Baker
The rewards and recognition system needs to be changed or the organization’s culture will not accept the Six Sigma System. If your measurement and reward systems remain the same, then you cannot expect to get different results.
The complexity of today’s environment and the sophistication of today’s employees make it necessary to carefully design a reward process that provides the management team with many ways to say thank you to each employee, because the things that are valued by one individual may have no impact upon another. In addition, the reward process needs to be closely aligned with the organization’s personality. The reward process that functioned well in the 1990s is probably inadequate today because the personalities of most organizations have undergone major changes. The influx of women and various minority groups has had a major impact on the way the reward process needs to be structured.
In today’s environment, men’s attitudes have changed. The male population is aging, and men are often not the sole breadwinner for the family, causing them to be less financially driven. Because of this, it is easy to see, for example, why time-and-a-half pay is no longer a satisfactory reward for giving up a Saturday for many employees. It is for these reasons that we need to take a fresh look at our reward processes to upgrade them so that they meet the needs of today’s organizations and their aggressive goals.
Vince Lombardi said, “Winning isn’t everything. It’s the only thing.” This is true for many people, but for others it is enough to help someone else win. At the Olympics, only one man stood on the top platform to receive the gold medal for cross-country skiing, but without the many people standing along the route to give him water, he would not have won. To these “little people” (and there are a lot more of us little people than there are gold medal winners), often recognition is simply having someone else acknowledge your worth. Recognition is something everyone wants, needs, and strives to obtain. Studies have shown that people classify recognition as one of the things they value most.
Ingredients of an Organization’s Reward Process
A good reward process has eight major objectives:
• To provide recognition to employees who make unusual contributions to the organization and stimulate additional effort for further improvement.
• To show the organization’s appreciation for superior performance.
• To ensure the maximum benefits from the reward process by an effective communication system that highlights the individuals who were recognized.
• To provide many ways to recognize employees for their efforts and stimulate management creativity in the reward process.
• To ensure that management understands the variation enhances the impact of the reward process.
• To improve morale through the proper use of rewards.
• To reinforce behavioral patterns that management would like to see continued.
• To ensure that the employees recognized are perceived as earning the recognition by their fellow employees.
Why does recognition matter? George Blomgren, president of Organizational Psychologists, puts it this way, “Recognition lets people see themselves in a winning identity role. There’s a universal need for recognition, and most people are starved for it.”21
Definition: Reward is something given or offered for a special service or to compensate for extra effort expended.
“Everyone hears ‘thank you’ in a different way. You need to find the right way to reward each individual.”
—H. James Harrington
Rewards can be subdivided into the following categories:
• Compensation. To financially reimburse for service (s) provided.
• Award. To bestow a gift for performance or quality.
• Recognition. To show appreciation for behaving in a desired way.
After the organization has provided the employee with a paycheck and health coverage, what more can or should the organization do for the employee? Management is obligated to do more than just eliminate their financial worries. Employees excel when they are happy, satisfied, and feel that someone else appreciates the efforts they are putting forth. A tangible and intangible reward process can go a long way to fulfilling these needs when properly used.
Research has proven that when management rewards employees for adopting desired behaviors, they work harder and provide better customer service. The benchmark service organizations are more likely to have well-defined and well-used approaches for telling their employees that they are important individuals. Individuals in the world-class organizations who go beyond expectations are held up as customer heroes and role models for the rest of the organization. This provides a continually more aggressive customer performance standard for the total organization.
Key Reward Rules
The reward process needs to be designed, taking into consideration the following points:
• Organization’s culture
• Desired behavioral patterns
• Employee priorities
• Behavior/reward timing relationships
• Ease of use
The reward process must be designed to be compatible with the culture and personality of the organization. Things that may be very desirable in one organization can be quite inappropriate in another.
Cut the bureaucracy out of your reward process as much as possible. Give management general guidelines, and eliminate the checks and balances in all but the most significant rewards. For example, an individual should not be given more than three minor awards each year, and no more than 10 percent of the employees should receive major contribution awards each year. Be sure that the employees are not given special awards for just doing their jobs.
Give the manager the power to give the reward and process the paperwork later. Major rewards should be processed through a rewards board to be sure that required standards are met, but there should be a long list of rewards that the manager can give to the employee on the spot—for example: dinners for two, movie tickets, theater tickets, or $50 merchandise certificates.
Types of Rewards
Everyone hears “thank you” in different ways. The reward process must take these different needs into account. Some people want money, some want a pat on the back, others want to get exposure to upper management, while still others want to look good in front of their peers.
American Express has one awards program that it calls “Great Performer Award Luncheon.” Typical activities that won employees invitations to these luncheons were
• One American Express employee bailed a French tourist out of jail in Columbus, Georgia
• Another took food and blankets to travelers stranded at Kennedy Airport
Are these unusual performances for employees to take up on their own? Yes, but that’s what we need if we want to have empowered employees and a truly world-class organization.
It’s easy to see that the reward process is only limited by the creativity of your people and the individuals who design the process. The National Science Foundation study made this point: “The key to having workers who are both satisfied and productive is motivation; that is, arousing and maintaining the will to work effectively—having workers who are productive not because they are coerced, but because they are committed.”
To help structure a reward process, let’s divide the rewards into the following categories:
• Financial Compensation
• Salary
• Commissions
• Piecework
• Organizational bonuses
• Team bonuses
• Gain-sharing
• Goal-sharing
• Stock options
• Stock purchase plans
• Benefit programs
• Monetary Awards
• Suggestion awards
• Patent awards
• Contribution awards
• Best-in-category awards (example: best salesperson, or employee of the year)
• Special awards (example: president’s award)
• Public Personal recognition
• Private Personal recognition
• Peer rewards
• Customer rewards
• Organizational awards
Basically, the following media are used individually or in combination to produce desired behavior.
• Money
• Merchandise
• Plaques/trophies
• Published communications
• Verbal communication
• Special privileges
A well-designed reward process will use all six, because each has its own advantages and disadvantages. One of the biggest mistakes management makes is to use the same motivating factors for all employees. People are moved by different things because we all want different things. The reward process needs to be designed to meet the following basic classifications of needs:
• Money
• Status (ego)
• Security
• Respect
The Leapfrog Group has developed a Web-based compendium of incentive and reward programs aimed at improving healthcare in both inpatient and outpatient settings. The compendium provides details on both financial and public recognition programs initiated mainly by health plans, purchasers, or purchasing coalitions and aimed at hospitals, physicians, health plans, and consumers. Freely available on the Leapfrog Group website at http://www.leapfroggroup.org/rewards_compendium, the summary allows users to sort by location and program target, and search the programs using a built-in keyword search function, such as one related to quality and safety practices. The compendium has been supported by the Commonwealth Fund and the Robert Wood Johnson Foundation.22
Conclusion
“Things have gotten bad enough and people have tried all the simple things, and they haven’t worked. I think most people are now stepping back and saying, ‘My God, we’ve got to rethink this whole system.’”
—Michael Porter, professor, Harvard Business School
If you have implemented the recommended processes, you will have a very effective and profitable system in place that should grow your market share and improve your customer satisfaction level. But this is not the end of the Six Sigma initiative; it is just the beginning. As the Six Sigma process matures, it will continue to gain momentum. First, no one wants anything to do with it. Then all of a sudden everyone wanted to be part of it. Starting slow and getting at least 10 percent of the organization behind the Six Sigma initiative is key in the start-off phase. Once the results are documented, there will be no question in anyone’s mind that this is the right thing for the HCP. As you implement your Six Sigma initiative, there are some things you need to look out for:
• Don’t label all the ideas as new ones.
• Don’t select small aspects of a larger concept.
• Don’t streamline without process redesign.
• Don’t do process change without the cultural change.
• Don’t redesign without fundamentally re-thinking the way you are doing business.
• Don’t think that the change process is not going to affect you personally.
• Don’t make Six Sigma separate from the normal business structure of the HCP.
• Don’t make Six Sigma a problem-solving initiative. It should be a strategic initiative that sets new culture and behavioral patterns.
• Don’t measure your Six Sigma by dollars saved alone; a much more meaningful measure is lives saved.
The Six Sigma program should result in establishing a very extensive set of KPIs (Key Performance Indicators) for the HCP. Some typical high-level, general KPIs are
• Patient satisfaction
• Employee satisfaction
• External doctor satisfaction
• Turn-over rates
• Ratio of management and staff to patient
• Percentage of medical records completed within 30 days
• Percentage of billing arrears
• Percentage of multi-skilled employees
• Percentage of staff cross-trained, admittance cycle time, outpatient wait time
• Operating cost ration to dollars collected
• Collections to full-time equivalent (FTE)
• Percentage increase in collections fiscal year 2006-2007
• Percentage of insured inpatient stays billed
• Percentage of insured outpatient visits billed
• Average claims generate by FTE for insured outpatient visits billed
• Average claims for insured outpatient visits billed
• Average age of insurance claims outstanding
Specific sub-process measures are
• Number of calls attempted
• Number of calls connected
• Number of demographic changes
• Number of next-of-kin changes
• Number of employment changes
• Number of insurances identified or changed
• Number of billable insurances of total identified
• Dollar amount billed: inpatient
• Dollar amount billed: outpatient
• Preregistration (monthly)
• Dollar amount collected: inpatient
• Dollar amount collected: outpatient
These KPIs should be a direct result of the AAA process where each natural work team’s processes are analyzed to define efficiency and effectiveness measurements. The result is a balance scorecard for the HCP that is extremely robust and reflects real business needs and measurements. These measurement systems should cover all the major healthcare systems including HCP governance, resource management, patient acquisition, health maintenance, health restoration, and continuous learning.
“No one has ever reached the point that there is no room for improvement”
—Dr. H. James Harrington
Endnotes
1. Porter, Annette Wilkerson. Six Sigma takes root at North Carolina Baptist Hospital. Visions, Fall/Winter, 2005.
2. Jones, Milton M. Jr., “Six Sigma...at a Bank?” Six Sigma Forum Magazine, February 2006.
3. Miller, Kurt. “Beyond Traditional Reengineering.” Redesigning Healthcare Delivery, by Peter Boland. 210. Berkeley CA. Boland Healthcare, Inc. 1996
4. Dusharme, Dirk. Healthcare quality increases. Quality Digest, December 2005.
5. Ibid.
6. Smith, Laura. Healthcare report cards unreliable. Quality Digest, April 2006.
7. Levinson, William A. Taking the QMS cure. Quality Digest, December 2005.
8. Hackle, John. The agency for healthcare research and quality. Quality Progress Editor, August 2005.
9. McGee, Marianne Kolbasuk. Brailer gets vote of confidence. IT Magazine, May 31, 2004.
10. Revere, L., K. Black, and A. Hug. Integrating Six Sigma and CQI for improving patient care. The TQM Magazine 16: 2, 105-113, 2004.
11. Goel, Parveen S.; Gupta, Praveen; Jain, Rajeev; and Tyagi, Rajesh K. Six Sigma for Transactions and Service. New York: McGraw-Hill. 2004.
12. Brassard, Michael and Diane Ritter. Sailing Through Six Sigma. Marietta, Ga. Brassard & Ritter, LLC. 2001.
13. Bloom, Benjamin S. Taxonomy of Educational Objectives. Allyn and Bacon, Boston, MA. Copyright (c) 1984 by Pearson Education. Adapted by permission from the publisher.
14. Hertz, Harry S. Healthcare Criteria for Performance Excellence. Gaithersburg, MD: Baldrige National Quality Program. 2004.
15. Paton, Scott M. No small change: Making quality Job 1 again. Quality Digest, September 2001.
16. Brassard, Michael and Diane Ritter. Sailing Through Six Sigma. Marietta, Ga. Brassard & Ritter, LLC. 2001.
17. Harrington, H. James and Harrington, James S. Total Improvement Management. New York: McGraw-Hill. 1995.
18. Ibid.
19. Ibid.
20. Goel, Parveen S.; Gupta, Praveen; Jain, Rajeev; and Tyagi, Rajesh K. Six Sigma for Transactions and Service. New York: McGraw-Hill. 2004.
21. Harrington, H. James and Harrington, James S. Total Improvement Management. New York: McGraw-Hill. 1995.
22. Hackle, John. Leapfrog Group provides incentive program summary. Quality Progress, November 2004.