Six Sigma may have started with Mikel Harry of Motorola, but after him many other quality advocates have also studied and adapted Six Sigma. One of them is Thomas Pyzdek. Pzydek has been into process improvement for 38 years. He has written more than 50 books, software and training products, including The Six Sigma Handbook, The Handbook for Quality Management Handbook and The Quality Engineering Handbook, and is considered a leading quality and Six Sigma authority. He is a multi-awarded Quality man, including the ?Outstanding Writer and Author? by The International Who?s Who in Quality and the Quality Progress Reader?s Choice award for his articles on the future of quality.
Pyzdek has provided consulting to major clients in a broad spectrum of industries. He provides consulting guidance from the executive suite to “Belts” working in the trenches. Among his latest work is an outline on real-life Six Sigma projects in different fields. These project synopses have omitted significant factors, such as the leadership and infrastructure necessary to make the projects succeed.
First Project was on accounts receivable. Sponsored by the CFO, the Six Sigma team was to improve the collection process. The team used the average age of uncollected accounts on the last business day of the month as their metric. Using X-bar charts, the team determined that the process was in statistical control with a mean of 57 days. They made a flowchart of the as-is AR collection process and used it to guide an observational study. The team noted and corrected several discrepancies.
For example, a team member from billing asked why the term “Net 30 Days” was used. An experiment was conducted where the term was changed to “Due on Receipt” for a random sample of invoices. The results showed that the average time to collect for the experimental group was 45 days vs. 57 for the control group. The difference was highly significant, both financially and statistically. Next, the team contacted randomly chosen customers who had paid late and asked why they had been late. Fully 70% of the reasons for late payment were factors under the company’s control (e.g., invoice errors or the bill being sent to wrong address). The team constructed a Pareto diagram and set about correcting the biggest problem areas. Within six months, the average age of uncollected invoices dropped to 37 days. The resulting savings were substantial.
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