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RONALD D. SNEE, PH.D.

The Six Sigma Approach to Improvement and Organizational Change

Six Sigma is quickly becoming part of the genetic code of our future leadership.

—Jack Welch

The Supply Chain and Biopharmaceuticals

For a major U.S. biopharmaceutical manufacturer, it was the best of times and the worst of times. Though approval for their new blockbuster drug was expected in nine months, the company’s manufacturing and quality assurance processes were not ready to manufacture product and generate required FDA (Food and Drug Administration) documentation in a reliable, repeatable fashion (McGurk 2004). Another company product already in production had historically suffered from supply problems. For both the old and new drug, the creation and review of “batch records” was also a major problem. These records, required by corporate standards and government regulations, track important steps in the manufacturing process. Failure to keep accurate batch records can result in high inventory costs, a potential plant shutdown, and delays in shipments of lifesaving drugs to patients awaiting treatment.

The stakes were enormous and the organization was at loggerheads. The manufacturing organization blamed Quality Assurance (QA) for inconsistencies in the records and the long delays in completing them. QA insisted that manufacturing should get the records right the first time instead of simply throwing in lots of undigested data and expecting QA to find the inconsistencies and correct mistakes. Meanwhile, the clock was ticking toward approval of the new product, and problems persisted with the existing product.

Phase	Six Sigma Principles and Tools Helped …
Define	• Clearly identify the problem to be solved and associated financial impacts
Measure	• Understand the process through various measurement tools
Analyze	• Analyze data to determine root causes of problems
Improve	• Develop and test potential solutions
Control	• Sustain the gains by developing control plans to monitor key performance variables

Table 1. Six Sigma’s DMAIC Methodology

The manufacturer decided to address the poor performance of its batch records review process—and the underlying organizational issues—through Six Sigma’s powerful problem-solving methodology: Define, Measure, Analyze, Improve, Control (DMAIC) (see table 1).

In the Define phase of DMAIC, management created a cross-functional team of ten people drawn from operations, quality assurance, and documentation, and reached agreement on what success of the project would look like: a reduction of 50 percent in review time of the batch records for the two products in six months.

In the Measure phase, the project team mapped the batch record process and identified key measurement points that allowed them to track review cycle times through a complicated network of participants (the lab, operators, supervisors, manufacturing, quality assurance, and investigators reporting out-of-spec incidents).

In the Analyze phase, the team tracked and analyzed each of the subprocess cycle times and overall cycle time. In addition, the analysis uncovered the root causes of errors in the records, which was the other critical-to-quality (CTQ) criterion besides cycle time. The team identified five areas that needed to be addressed: lack of expectations and targets for the overall process and subprocesses, a single reviewer, lack of feedback through metrics, lack of training, and problems with the records themselves.

In the Improve phase, the team worked with management to develop target cycle times for each step in the process, set up a system to report progress on the targets, initiate training, create backup reviewers, and restructure the review process to focus more on exception resolution than routine data gathering. These improvements reduced cycle time by 55 percent for one of the products and by 36 percent for the second product, freed up $5.2 million in inventory, increased customer satisfaction, saved $200,000 in cost of capital, and achieved additional savings through reduced floor space and handling costs.

In the Control phase, the team initiated a continuous improvement process to manage and improve cycle time, reduce errors over time, and sustain the gains already made. In addition, management planned future evaluations of subprocess cycle times in order to look for further improvements.

This example illustrates a number of key features and advantages of Six Sigma. It begins with the premise that improvement happens project by project. Its methodology entails a carefully sequenced set of steps; it relies on rigorous empirical observation as well as statistics, and it seeks not merely to correct individual “defects” but also to get at the root causes of variation in processes and fix them once and for all. Moreover, though it involves manufacturing processes—which Six Sigma is best known for improving—the project actually focuses on a business process, indicating Six Sigma’s wide applicability to any work process.

In this case, as in other successful implementations, the methodology can help overcome organizational silos and intramural conflict, create an organization-wide culture of quality, and disseminate training and the tools widely among employees, creating a permanent capability for continuous improvement and a training ground for future leaders of an organization (Snee, “Can Six Sigma,” 2004). Within one year, the site went from a conflict-ridden, process-challenged facility to one that won the company’s global award as a model of improvement.

The Basics: Answers to Frequently Asked Questions

WHAT IS SIX SIGMA?

Six Sigma methodology arose at Motorola more than a quarter of a century ago as a statistically based, process-focused method of eliminating defects in manufacturing processes. It subsequently flourished at Allied Signal and achieved legendary status at General Electric (GE) under Jack Welch. GE, expanding the notion of “defect,” recognized that Six Sigma could be applied not only to ailing manufacturing processes but also to any subpar process, enabling the company to drive relentlessly toward a goal of “zero defects” across all of its business processes. Millions of dollars of bottom-line savings resulted. Six Sigma moved quickly beyond manufacturing to administration, finance, business processes, new product development, and supplier performance—becoming the characteristic approach to quality and continuous improvement of organizations as diverse as 3M, Johnson & Johnson, Home Depot, J. P. Morgan, Chase & Co., Dupont, and W. R. Grace. Six Sigma continues today as a well-known approach to process and organizational improvement (Snee and Hoerl 2003, 2005).

Based on the scientific method and utilizing statistical thinking and methods (Hoerl and Snee 2002), Six Sigma builds on quality improvement approaches developed earlier. It seeks to find and eliminate causes of mistakes or defects in business processes by focusing on process outputs that are critically important to customers. Six Sigma projects also often focus on improving productivity, process yields, production rates, and process downtime. As a result, process performance is enhanced, customer satisfaction is improved, and the bottom line is impacted through savings and increased revenue. It is a strategic approach that works across all processes, products, and industries—and it is a significant catalyst for ongoing organizational change.

Six Sigma is also a measure of process performance. The methodology utilizes “process sigma” as a measure of process capability. A six-sigma process has a defect level of 3.4 parts-permillion (ppm) opportunities and a three-sigma process has a defect level of 66,807 ppm (Harry 1998). In many instances, a six-sigma process is considered world-class. Today, the performance of most processes is in the three- to four-sigma range.

The ability to produce products and services with only 3.4 defects per million opportunities yields a Six Sigma process. Of course, a Six Sigma level of performance should not be the goal for all processes. Some processes, such as airline safety, require a higher level of performance. For other processes, a lower level of performance may be acceptable. The appropriate level of performance is determined by a business decision that balances the cost of attaining the higher level of performance versus the benefits of a higher-performing process. Further, as customer needs and competitive pressures change over time, the appropriate process sigma level may change accordingly.

WHAT ARE THE DISTINCTIVE CHARACTERISTICS OF SIX SIGMA?

There are at least four critical elements that, when combined, make Six Sigma a distinctive, highly value-added approach to organizational improvement:

1. Six Sigma places a clear focus on getting bottom-line results. In properly run Six Sigma programs, no improvement project is approved unless the bottom-line impact has been identified. Six Sigma initiatives have been known to produce average bottom-line results of >$175,000 per project and as much as $1 million per year per full-time Six Sigma practitioner.

2. Six Sigma integrates the human and process elements of improvement. Six Sigma emphasizes human elements like teamwork, customer focus, and culture change as well as the process aspects of improvement such as statistical process control, process improvement, and design of experiments.

3. Six Sigma sequences and links the improvement tools into an overall approach. The five-phase DMAIC improvement process—Define, Measure, Analyze, Improve, Control—sequences and links key improvement tools proven to be effective in improving processes. DMAIC creates a sense of urgency by emphasizing rapid project completion, typically in three to six months.

4. Six Sigma provides a unique leadership development tool. Companies such as Honeywell, GE, DuPont, 3M, and American Standard require that managers achieve Six Sigma Green Belt (GB) certification and in some instances Black Belt (BB) certification for management promotion. These companies realize that the job of leaders is to help the organization move from one paradigm of working to another. Changing how we work means changing our processes. By providing the concepts, methods, and tools for improving processes, Six Sigma provides leaders with the strategy, methods, and tools for changing their organizations—a key leadership skill that heretofore has been missing from leadership development.

WHEN AND WHERE IS SIX SIGMA USED?

Across almost all major industries, the pressure to improve to the point of achieving flawless execution—every time—is relentlessly increasing. From financial services to telecommunications, executing on customer service has become one of the few remaining differentiators for products that are largely commodities. In consumer goods, giant merchandisers like Wal-Mart and Target continue to pressure suppliers to improve their performance year after year—or lose business. In the life sciences, with an unprecedented number of blockbuster drugs coming off patent and little in the pipeline to replace them, excellence in manufacturing has taken on more importance than ever. Identifying, investigating, adjudicating, and correcting manufacturing deviations costs pharmaceutical companies millions of dollars each year in reduced capacity and increased labor, inventory, and good manufacturing practices (GMP) compliance problems. In manufacturing generally, where Six Sigma originated, continuously improving manufacturing processes remains a critical imperative.

Within any of these organizations and in any area of the business, Six Sigma can be usefully applied to improve virtually any kind of processes, whether they are manufacturing, financial, supply chain, or customer service. The key is simply to recall the great insight from GE—that Six Sigma can be applied to any process that results in defects or faults, whether the defects or problems are in products, services, or transactions.

WHAT TOOLS ARE USED?

The broad use of DMAIC as an overall framework for improving existing processes adds predictability, discipline, and repeatability to improvement projects. Along with Define, Measure, Analyze, Design, Verify (DMADV; Creveling et al. 2002) for the development of new products and processes, DMAIC can constitute the improvement infrastructure of the organization, linking and sequencing the required tools regardless of their source. Sources can include Lean, which seeks to eliminate various forms of waste through such concepts as just-in-time manufacturing; and Total Quality Management (TQM), which seeks to integrate all organizational functions to meet customer needs and organizational objectives, as well as other improvement tool sets. It’s worth remembering, however, that the tools don’t make improvements; people do.

Table of Uses

Getting Started

Organizations considering whether to initiate a Six Sigma program have a broad range of choices that range from large-scale deployment across the entire company through a comprehensive, all-embracing Six Sigma structure; to divisional, business unit, or departmental programs; to limited, small-scale pilot projects. However, total deployment may be beyond the budget and resources of some companies. On the other hand, initially confining Six Sigma projects to a single pilot project, or one area, risks quarantining it to the area it is in and eventually killing it. The key phases of deployment and DMAIC projects are summarized in figure 1.

By instituting Six Sigma projects in widely disparate areas, leaders can signal the entire organization that they are serious about it—it’s not just for those folks over in manufacturing or Quality Assurance (Snee, “With All Deliberate Speed,” 2004). For example, you might choose an operational process, a customer-facing process, and a business/managerial process, each in a different department, for initial Six Sigma projects. Moreover, having projects in disparate areas prepares the way for widespread and rapid propagation of Six Sigma later.

Figure 1. Six Sigma Deployment and Methodology

There are basically three different types of deployment: Full top-down deployment involving the whole organization, a single location such as a plant, and a process or function such as finance. Other examples of Six Sigma deployment can be found in Snee and Hoerl (2003, 2005).

Once a program—of whatever size—has been established, individual project teams should, in the early stages of improvement, harvest the “low-hanging fruit”: correct obvious problems with a process, fix broken measurement systems, and ensure the consistency of process inputs, whether raw materials in manufacturing or data in nonmanufacturing processes. Work should also be streamlined through the reduction of complexity, waste, and non-value-added work. The later stages of improvement focus on optimizing and controlling processes by improving value-added work steps, shifting the process average and reducing variation around it, improving process flow, and reducing cycle time—in short, finding the “operating sweet spot.”

Roles, Responsibilities, and Relationships

Six Sigma creates an infrastructure of permanent change agents who lead, deploy, and implement improvement projects. Borrowing terminology from the martial arts, Six Sigma programs train and mobilize practitioners known as Champions, Master Black Belts (MBBs), Black Belts (BBs), and Green Belts (GBs), each with differing roles and responsibilities in individual projects and in ongoing continuous improvement (see table 2).

This infrastructure of quality-conscious people, determined to make improvement stick and thoroughly trained in how to do it, provides the organization with a significant advantage over competitors with a less rigorous and systematic approach to improvement and organizational change.

Participant	General Responsibilities
Corporate Management	Create strategy and goals, define boundaries, provide resources
Unit Management	Establish project selection criteria that support strategy, select project Champions, and approve projects
Project Champions	Ensure proper project setup, regularly monitor progress, and remove barriers to success
Black Belts	Deploy Lean and Six Sigma methodology and tools, deliver process improvements and financial benefits, and access formal power structure as needed to remove barriers
Master Black Belts	Develop, coach, and counsel Black Belts and Green Belts and focus on mission-critical projects
Green Belts	Lead Six Sigma projects at the local level and assist in improving a process as a member of a team that is guided by a Black Belt
Functional Support Groups	Provide data and expertise for improvement, identify improvement opportunities, serve on project teams, and take local responsibility for process execution and improvement

Table 2. Roles, Responsibilities, and Relationships

Conditions for Success: The Path to Organizational Change

One of the most frequently encountered obstacles to the success of Six Sigma programs is the “Six Sigma won’t work here” attitude, especially in nonmanufacturing organizations. To overcome that attitude, it is critical to obtain some quick wins and, as additional improvements and benefits materialize, the organization’s culture will change (Kotter 1996). Deployment should take place rapidly, with attention to critical elements of the launch, but without obsessive worry about defining every detail of the deployment. Taken together, the fundamental elements of Six Sigma deployment provide a path to organizational change that comes not as a result of the deployment but as a result of the benefits that Six Sigma produces, reinforcing its value and weaving it into the organization as the way to work. These key deployment elements, their significance, and their pitfalls include (Snee and Hoerl 2003):

• Strategy and Goals: Senior management sets the overall vision for Six Sigma deployment, chooses where to initially deploy Six Sigma, develops one- to two-year goals, including financial targets, and communicates the goals widely. Failure to state goals in financial terms often indicates a management team that is not serious about Six Sigma.

• Process Performance Measures: These measures, such as quality, delivery, and cost, define what’s important for success and are used to select projects. Such measures provide strategic focus areas for the initial projects; and if all initial projects affect the measures, then the organization will have significant, tangible results when they are completed. The chief pitfall here is selecting each project independently rather than choosing projects on the basis of their relation to common, strategic measures of success.

• Project Selection Criteria: The process metrics are used to develop a set of more specific criteria for selecting projects. These may include such criteria as savings per project and expected time to project completion. Such criteria also communicate to the wider organization what types of improvement are important.

• Project Identification/Selection System: In a Champion Workshop, initial candidate projects are put in a “project hopper” (list of projects) and prioritized for assignment to a Black Belt or Green Belt. In the first wave or two of projects, the focus should be on hard, bottom-line results, because nothing goes further to establish the credibility of Six Sigma. In later phases of deployment, a permanent system is established to identify potential projects, prioritize them, and put them in the hopper so that there is a continual stream of fresh projects. Ultimately, the hopper should be managed as a “project portfolio,” the composition of which matches the improvement and financial needs of the organization.

• Deployment Process for Leaders: A list of initial Champions is developed in an Executive Workshop. At an ensuing Champion Workshop, Champions develop the list of initial projects, as well as a list of candidate Black Belts to lead them. The pitfall here is selecting the Champions and Black Belts before identifying the specific projects they will lead, increasing the likelihood that important projects will be overlooked.

• Roles of Leadership and Others: Although there are generic job responsibilities for Champions, BBs, GBs, and so forth, leadership can tailor the roles for a specific function or business (see Table of Uses).

• Curricula and Training System: An overall training system is a must for each of the Six Sigma roles and, at launch, there must be a training schedule for the first wave of Black Belts. The pitfall here is undertaking a wave of mass training, which is usually ineffective and has little lasting impact. Instead, there should be a well-thought-out system that identifies the training needs of the roles and puts them together in a sustained way to continually satisfy training needs in the most efficient way.

• Project and Six Sigma Initiative Review Schedule: An effective review schedule involves short, usually 30-minute, weekly reviews by the Champion and monthly reviews with functional leaders, local management, or business leaders, as appropriate. Regular reviews show management’s commitment and provide timely feedback to keep projects on course. The entire Six Sigma deployment should be reviewed quarterly by the appropriate corporate or business unit leaders. Failure to review the overall progress of the initiative at this level can slow the momentum of the Six Sigma effort and fail to detect if the initiative is bogging down.

• Project Reporting and Tracking System: This system documents the results of the projects and provides management with valuable information. A formal system isn’t required during initial deployment, but it will ultimately maintain a record of all Six Sigma projects, generate managerial reports that include financial results as well as nonfinancial information such as number of projects in progress and completed, time to completion, status, and so on. The tracking component of the system documents the financial benefits of closed projects. The pitfall here is establishing an insufficiently rigorous tracking system that cannot provide accurate and credible results.

• Audit System for Previously Closed Projects: This system audits the financial and process performance impact of the improvements and the control plan of previously closed projects to ensure that the benefits of these projects are still being achieved. Failure to audit the control plan can lead to the improvements eroding over time.

• Reward and Recognition Plan: Human Resources should develop a reward and recognition plan that ensures the acquisition and retention of the best possible candidates for Six Sigma roles. Failure to reward Six Sigma roles in a way that attracts top performers to them can seriously undermine the long-term prospects for success.

• Communication Plan: A thorough communication plan, enacted through various media, is essential to support a Six Sigma initiative, especially in nonmanufacturing organizations that may harbor false impressions about the applicability of the approach. Leadership must clearly communicate why they chose to deploy Six Sigma, how it applies to the business, and where they expect it to take the organization both in business and in cultural terms. The pitfall here is setting unreasonable expectations. It is preferable to make more sweeping statements only after significant results are obtained.

Experience has shown that all of these elements of deployment are important. Paying insufficient attention to any of them can seriously limit the effectiveness of a Six Sigma program and leave the organization stuck in old, less-productive ways of doing business.

Theoretical Basis

From the long historical perspective, Six Sigma has its roots in the Industrial Revolution and the division of labor (Snee, “When Worlds Collide,” 2004). In the late nineteenth and early twentieth centuries, Frederick W. Taylor introduced scientific management, initially grounded in time and motion studies and standardization of tools and procedures. In 1924, Walter Shewhart introduced control charts. In the 1930s, Shewhart and W. Edwards Deming developed the improvement approach known as PDCA (Plan, Do, Check, Act). All of these methods were developed in response to the need to reduce high variation in production processes.

Joseph M. Juran, who as early as 1928 had already written a pamphlet entitled “Statistical Methods Applied to Manufacturing Problems,” made many contributions to the field of quality management. He was the first to incorporate the human aspect of quality management in what came to be known as Total Quality Management (TQM) and promoted such indispensable tools as Pareto charting and the project-by-project approach to improvement.

The ideas of Shewhart, Deming, and Juran were adopted extensively in Japan and began the revolution in quality. In the 1980s, Motorola executives, touring industrial sites in Japan, witnessed how the Japanese had achieved exemplary quality through the application of statistical tools—and Six Sigma was born. Developed throughout the 1980s by Motorola, it was adopted and famously expanded by GE to include any type of process. At the same time, TQM, just-in-time (JIT) manufacturing, Kaizen, Business Process Reengineering, Benchmarking, Lean Manufacturing, and other improvement methodologies were also developing and spreading to organizations all over the world. Today, Six Sigma encompasses the best practices from all of these methodologies.

Six Sigma has had a particularly fruitful relationship with Lean. Lean is based on the premise that work almost always involves waste: of correction (the quality of the worst component), overproduction, overprocessing, conveyance, inventory, motion, and waiting. Lean seeks to eliminate these various forms of waste through such concepts as just-in-time manufacturing. However, Lean does not address the effects of process variation, which Six Sigma, with its data-driven, rigorously statistical methods, can uncover and eliminate. In addition, Six Sigma is ideal for solving complex, multidetermined problems whose root causes are unknown. Often, Six Sigma and Lean are applied either concurrently or consecutively in an approach known as Lean Six Sigma (Snee 2005).

Six Sigma also fits well with ISO 9000 quality management systems and with the Baldrige Criteria for Performance Excellence. The key to their integration is the recognition that all three are process focused, data based, and management led. Six Sigma methods of project selection, reviews, and reporting can also be very effective in turning opportunities identified by a Baldrige assessment into sharply focused, high-impact projects that lead to lasting improvements.

Sustaining the Results

Six Sigma has a formal step in the DMAIC process—the control phase—that is specifically designed to implement controls that prevent improved processes from reverting to their previous levels of lower performance. Management reviews of projects—weekly by Project Champion and monthly by the management team—keep projects on track and also help ensure that the projects continue to generate benefits. At the level of the overall Six Sigma initiative, leadership undertakes quarterly reviews that monitor the progress of each of the elements of the deployment plan and, in particular, the contents of the project hopper.

The system for auditing the financial and process performance impacts and control plans of previously closed projects ensures that completed projects continue to generate the benefits that their improvement produced. If the audit finds that the benefits have eroded, action is taken to revisit the project, regain the benefits, and establish a more effective control plan. Moreover, having a cadre of people trained in Six Sigma ensures that the same disciplined, repeatable methodology will be brought to every project.

From the point of view of organizational development, one of the strongest spurs to maintaining momentum and sustaining the gains comes from the effect that the achievement of significant, measurable benefits has on the culture. People like to succeed, and when they get tangible results, they are eager to repeat the process. That is the simple but powerful principle of culture change underlying Six Sigma: Culture change doesn’t produce benefits; benefits produce culture change.

Burning Questions: Project Selection

After the question of how to sustain gains, the burning question both for those who are new to Six Sigma and for those with ongoing programs is how to select projects. The high-level characteristics of a good Six Sigma project, in any area of application, include:

• Clear connection to business priorities and links to strategic and annual operating plans

• The potential to provide a major improvement in process performance and a major financial improvement

• A reasonable scope and a doable time frame of four to six months

• Clear quantitative measures of success, with the baseline measures and the goals well defined

• Clear importance to the organization

• The wholehearted support of management

A Final Word

Six Sigma isn’t immune to criticism. It’s sometimes said, for example, that Six Sigma offers little that is new or innovative in the way of tools. It’s certainly true that many of the techniques of Six Sigma have been borrowed from TQM, Lean, and other quality and improvement programs. However, Six Sigma combines the tools with a disciplined methodology, teaches people when to use them, focuses on bottom-line results, and rigorously and successfully establishes a more effective way of working. Moreover, the insistence on “newness” is misplaced. The true test of an improvement methodology is a proven track record and, after a quarter of a century, it’s safe to say that Six Sigma has passed with flying colors.

About the Author

Dr. Ronald D. Snee ([email protected]) is a Tunnell Consulting principal in the Performance Excellence Practice, which offers Six Sigma, Lean Six Sigma, and other improvement approaches. He has authored numerous books and articles on process improvement and quality. Having begun his continuous improvement career at DuPont, Dr. Snee has been honored with the Shewhart and Grant Medals, and the Hunter and Brumbaugh awards. He also served on the Malcolm Baldrige National Quality Award Criteria Team.

Where to Go for More Information

REFERENCES

Creveling, C. M., J. L. Slutsky, and D. Antis, Jr. Design for Six Sigma in Technology and Product Development. Upper Saddle River, NJ: Prentice Hall, 2003.

Harry, Mikel J. “Six Sigma: A Breakthrough Strategy for Profitability.” Quality Progress (1998): 60–64.

Hoerl, R. W., and R. D. Snee. Statistical Thinking—Improving Business Performance. Pacific Grove, CA: Duxbury Press, 2002.

Kotter, J. P. Leading Change. Boston, MA: Harvard Business School Press, 1996.

McGurk, Thomas L. “Ramping Up and Ensuring Supply Capability for Biopharmaceuticals.” BioPharm International (January 2004): 38–44.

Snee, R. D. “Can Six Sigma Boost Your Company’s Growth?” Harvard Management Update (June 2004): 2–4.

———. “Six Sigma: The Evolution of 100 Years of Business Improvement Methodology.” International Journal of Six Sigma and Competitive Advantage 1, no. 1 (2004): 4–20.

———. “When Worlds Collide: Lean and Six Sigma.” Quality Progress (September 2005): 63–65.

———. “With All Deliberate Speed: Weaving Six Sigma into the Fabric of the Organization.” Quality Progress (September 2004): 69–71.

Snee, R. D., and R. W. Hoerl. Leading Six Sigma—A Step by Step Guide Based on the Experience with General Electric and Other Six Sigma Companies. New York: FT Prentice Hall, 2003.

———. Six Sigma Beyond the Factory Floor: Deployment Strategies for Financial Services, Health Care and the Rest of the Real Economy. Upper Saddle River, NJ: Pearson Prentice Hall, 2005.

Welch, Jack, and John Byrne. Jack: Straight from the Gut. New York: Warner Business Books, 2001.

Welch, Jack, with Suzy Welch. Winning. New York: Harper Business, 2005.

ORGANIZATIONS

American Society for Quality—www.asq.org

Tunnell Consulting—www.tunnellconsulting.com