Giving in to the Voice of the Customer

As if Sony Ericsson and Google’s collaboration is not enough, Yahoo! and Nokia are set to give their mobile customers their own brand of collaborative service. Know more about Yahoo! Go for Mobile on Global Business Watch.

Filed under: Tools/Toolkits

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Scottish Power: 2006′s “Best Six Sigma Project for Service & Transaction”

The age-old formula of success is still hard work and persistence after all.

Scottish Power, an international energy company supplying business and domestic customers with gas and electricity in the UK and Western United States, took the challenging Six Sigma way and reached the top.

The company received the best in class medal at the European Six Sigma IQ Awards recognizing its project to improve customer account setup time. There were other quality awards in between. The latest is the Best Six Sigma Project for Service & Transaction award during the 2006 Six Sigma Excellence Awards.

“The Six Sigma business transformation programme originally adopted in our supply activities was extended to our generation activities in 2005 and, in total, delivered revenue and cost savings of £15m that year,” reads the company’s full-year results statement.

According to Willie MacDiarmid, who established the Six Sigma programme at Scottish Power, they were not only aiming to bring their costs in check but also to improve their processes.

In a utility company, an initial Six Sigma project would be to improve the customer billing process. When it succeeded, Six Sigma efforts have been expanded to an organization-wide initiative, from power stations to IT.

MacDiarmid said that it was not easy to do. He recalls shaking hands with some former employees of Scottish Power and letting them move on when they refused to buy the Six Sigma idea. He says, “There were the early adopters, who see the opportunity early and grab it; there were the people who were sceptics to begin with but then came on board when they saw the power of it; and then there were the people who just wouldn’t buy into it at all.”

Good thing MacDiarmid and the whole Scottish Power organization committed to the endeavor and saw it through. Today after their success, some of the biggest names in the world of business, including Shell and Credit Suisse, have since benchmarked their own programs against that of Scottish Power’s Six Sigma progress. Read more…

Filed under: Awards, Benefits and Savings, Deployment, Six Sigma Organizations

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Some Six Sigma Questions

Today, I’ve decided to visit Six Sigma forums and find out the answers to my Six Sigma questions. I checked out first the American Society for Quality (ASQ) then the isixsigma blogosphere. In doing so, I can’t help throwing in my two cents worth. Interesting questions and answers. Read on…

The first question on ASQ Discussion Boards, Students in Quality Discussion Board is:

Financial Implication of defects
Raghavendra Nelli
Posted: Mar 13, 2006 10:14 AM

Hi,
I have a query related to the financial implications of defects or returns. What is the best method to find how much a company is losing through say return of defective products? Will just the knowledge of price of individual product help to calculate the cost? Is any other information required? Are there any specific methods?

One of the replies:

A few other things to consider, items that can be measured (or estimated) to give a better financial picture.

1) Shipping Costs: Did your company pay to ship the product back from the unhappy customer? Did your company pay to ship a replacement product?

2) Replacement Costs : If you replaced the product, was it with a like product or an upgrade to regain the customer’s favor? Replacement cost is as important as the cost of the original item.

3) Manpower: How many manhours are spent processing the request, the return, and running an analysis to determine the actual failure mode of the product?

4) Distribution: Is this product distributed via a Retail Store? If so, have your Sales folks made any sort of discount deals on certain product lines based on a high defect/return rate? This loss of revenue is certainly something you want to know about, it will help show you where your real defective loss leaders are.

There are certainly less tangible costs (such as those mentioned in the earlier reply). But if you focus on the tangible/measurable costs you can easily develop data that will help pareto the products and set focus. The act of taking care of the big 3 or 5 products will significantly reduce the impact of the other defective products, especially in the intangible areas. Consumer Good Will is a tough currency to earn, hard to keep, and easy to spend.

Brian Myers

The second question on isixsigma.com is: Who is Malcolm Bridge?

“Malcolm Baldrige was US Secretary of Commerce (1981-1987) and a leader in quality management. He helped create the US Quality Improvement Act of 1987 and in his honour the annual award is named after him (Malcolm Baldrige National Quality Award). The US President presents the award…”

Filed under: General

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Energy Saving with Six Sigma

Yes. It is again proven that Six Sigma methodology can be used not only in manufacturing or services process improvements, but also in energy saving upgrades.

Dow Chemical Company, recevied an award for leadership in energy management from the Organizing Committee of the 28th Annual Industrial Energy Technology Conference (IETC), in New Orleans, Louisiana .

A leader in science and technology, providing innovative chemical, plastic and agricultural products and services to many essential consumer markets, Dow was recognized for its strong global focus on energy efficiency and recent company achievements, including:

• achieving aggressive EH&S 2005 goals related to energy efficiency—reducing our energy intensity by 22% from 1994 to 2005
• maintaining strong corporate support and an energy efficiency organization to drive results at the site and business levels
• using proven Six Sigma methodology and industry best practices to accelerate energy efficiency improvements
• supporting external energy efficiency programs to help other energy consumers save energy, such as the Alliance to Save Energy’s “Power is in Your Hands” residential energy efficiency campaign and the U.S. Department of Energy’s “Save Energy Now” industrial energy efficiency campaign.

To improve performance, the company used MAIC roadmap:

Measure – Gather the right data to accurately assess a problem.
Analyze – Use statistical tools to correctly identify the root causes of a problem.
Improve – Correct the problem (not the symptom).
Control – Put a plan in place to make sure problems stay fixed and sustain the gains.

The team then outlined the following key roles and responsibilities.

Sponsor – Business executive leading the organization.
Champion – Responsible for Six Sigma strategy, deployment, and vision.
Process Owner – Owner of the process, product, or service being improved—responsible for long-term sustainable gains.
Master Black Belts – Coach black belts—expert in all statistical tools.
Black Belts – Work on 3 to 5 $250,000-per-year projects; create $1 million per year in value.
Green Belts – Work with black belt on projects.

Using the MAIC roadmap, the team launched four Six Sigma projects.

1. Steam Trap Improvement (Texas City, TX) – Optimize the steam delivery in energy systems by reducing steam loss through steam traps. Result: $220,000 savings to date in the first year.

2. Polycarbonate Unit Energy Reduction (Freeport, TX) – Ascertain why the Freeport PC plant has consumed twice the energy per pound of product as a similar DOW PC plant in Germany. Result: $2340,000 savings to date, and expected to reach $500,000 per year.

3. Styrene Unit Energy Envelope (Freeport, TX) – Identify opportunities to optimize plant energy heat integration, improve efficiency, and reduce CO/CO₂/NO_x emissions. Result: 80 MMBtu per hour energy reduction.

4. Angus Site Energy Reduction (Sterlington, LA) – Optimize operation/maintenance of the primary boilers and the steam-reducing station without exceeding boller air permits. Result: $474,000 savings to date, and expected to reach $600,000 per year.

Award Press Release: Dow Wins Award for Energy Efficiency Leadership

Dow’s Six Sigma Project: Applying Six Sigma Methodology to Energy-Saving Projects

Filed under: Awards, Deployment, Six Sigma Organizations, Sustainable Business

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HSBC Bank Malaysia Vows to Intensify its Six Sigma

Here is again another story of a company whose bottomline is improved by the Six Sigma methodology.

HSBC Bank Malaysia Berhad attributes its success in custodian and clearing services to Six Sigma. The bank registered a 20% annual growth in this sector in 2005. Thus management decided to intensify its Six Sigma initiatives specifically in all its custody and clearing operations.

Already, HSBC was in fact voted HSBC the number one bank in Malaysia for this sector in 2005 by the Global Custodian magazine under the emerging markets category. Source: Read more…

HSBC is not the only bank who has been benefitted by Six Sigma; HSBC Securities (USA), Inc., too. Bank of America is one and also Citibank. Banking can also be benefitted by Lean Six Sigma. This goes to show that Six Sigma is as effective in the financial services industry as it in the manufacturing industry.

SearchCIO.com features how DMAIC can be used to measure and eliminate defects in the banking industry.

During the past 10 years, retail banks have implemented numerous new technologies and marketing programs to improve service delivery and boost earnings. Banks offer an ever-widening range of financial products through constantly expanding branch networks. To successfully market new products like investments and insurance, banks now find themselves cross-training branch employees for a much wider variety of roles. For a bank to make sure it has the right people with the right skills available at the right time is a growing challenge. Read on…

Filed under: Finance

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Mobile Blogging Anyone?

No doubt about it, blogging is the hottest thing on the Internet these days. It has become so hot that Google and Sony Ericsson have joined forces to integrate Google’s Blogger and Web Search features on Sony Ericsson mobile phones. Read about it on Global Business Watch.

Filed under: General

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Six Sigma and Employee Satisfaction

Many organizations are guilty of this: focus their effort on bottomline, customer satisfaction. As a result, they take for granted one most important element that gets the organization going—human resource, or the employees.

You often observe this during management meetings or budget hearings. Executives lend their ears when the discussion veers onto the subject of increased or decreased profits. “What’s the output?” the COO booms. And the anxious employee with his heart in his mouth would fire away the figures.

Management should realize that the human potential when inspired and satisfied spells the differentiating factor. The words of I. Singh, “A satisfied employee can actually be the differentiating factor in the struggle to gain market share, to deliver customer delight, to innovate product and services and, ultimately, to deliver a better bottom line.”

According to Singh, there are many ways to assess employee satisfaction. One study using the Q12 questionnaire-instrument (measures employee engagement) of Gallup Worldwide employed Six Sigma tools: voice of the employee (through focused groups), factor analysis (using a Pareto chart), interaction analysis, and process capabilities (using process analysis).

Here are some of the salient points:

• Based on the voice of the employee, an internal dipstick was created with 30 questions grouped into three parameters: job related, self related, and manager related. A five-point scale, ranging from “strong agreement” to “strong disagreement,” was used in collecting the responses. Since all questions were written in a positive manner, anything below and including partial agreement was considered a defect for the purpose of analysis. Percentage of defects to total responses were taken as a score for each question.
• Factor analysis looked at the two largest departments that accounted for more than 70% of the total number of employees. Result: Those with less than one year of tenure in the executive band were found to be relatively more dissatisfied with respect to their jobs.
• Cross-functional movements of managers, counseling sessions with heads of departments, initiation of self-development and learning programs, a few cultural initiatives for managing work-life balance, and structured feedback and a review program for every function were carried out. Result: increase in interaction among employees, more involvement of employees in providing ideas for solving day-to-day problems, the initiation by employees of several projects to enhance process capabilities, and several other work-culture changes.
• Future initiatives will focus on the response of employees on the internal dipstick along with other factors to build an attrition prediction model.

Read more: Using Six Sigma for Assessing Employee Satisfaction

Filed under: Human Resource

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Six Sigma Training Games

I saw this book on Amazon.com and I’m itching to have my copy.

What I like about this book is that it uses play or structured learning experiences. As adult learners, it works well for us to be doing while learning.

The book features 50 games, exercises, and activities—all of which can be performed using common, everyday materials such as playing cards, water, and paper clips–and each provides a thorough and enjoyable Six Sigma learning experience to:

• Acquaint employees with Six Sigma–what it is, where it came from and what it can do for them and their companies
• Teach Six Sigma roles and organization
• Familiarize teams with DMAIC, as well as Failure Mode Effects Analysis, Pareto charts and other key improvement tools
• Gear teams up for success
• Help them identify problems in business processes and generate innovative solutions

Filed under: Training

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Six Sigma @ MagnaChip Semiconductors

Through the years, from Motorola to GE, many other successful companies have attributed their savings and turn-arounds to their Six Sigma deployments.

In the hope of experiencing the same benefits and savings, Korean-based MagnaChip Semiconductors Ltd., a leading designer, developer, and manufacturer of mixed-signal and digital multimedia semiconductors, launched its Six Sigma management system to improve product quality, earn substantial savings, and enhance the company’s industry leading profile. The company-wide initiative started on March 21, 2006, specifically focusing on three areas: sales & marketing, research & development, and production.

President and CEO, Mr. Youm Huh said…

“Our Six Sigma initiatives will allow MagnaChip to more effectively deliver industry leading solutions to our consumer electronics and communications customers worldwide. These initiatives place MagnaChip on the same corporate development path as recognized global industry leaders. This program is not only limited to enhancing cost savings and quality but will be actively used to improve overall business management, innovation and execution.”

This move is most likely prompted by the company’s revenue for its Q1 (ended April 2, 2006) of $213.1 million—essentially flat compared to $213.4 million in Q1 2005. Following are the comparative data:

• Q1 2006 gross margin was $40.3 million or 18.9% of revenue, compared to $26 million or 12.2% of revenue for Q1 2005
• Operating expenses were $51.4 million in Q1 2006 or 24.1% of revenue compared to $54.6 million or 25.6% of revenue during Q1 2005.
• Operating loss fell to $11.1 million during Q1 2006 compared to an operating loss of $28.6 million in Q1 2005.
• Net interest expense for Q1 2006 was $14.7 million, compared to $13.9 million in Q1 2005.
• Q1 net loss was $3.9 million compared to a net loss of $31.3 million in the same quarter last year.

Aside from the transition to new products that are expected to improve revenue growth into the second half of the year, MagnaChip is looking forward to more savings with its Six Sigma initiative.

Robert Krakauer, executive VP of strategic operations and CFO of MagnaChip disclosed…

Our Six Sigma initiatives will allow us to more effectively deliver industry-leading solutions to our consumer electronics and communications customers worldwide and place us on the same corporate development path as recognized global industry leaders. This program is not only limited to enhancing cost savings and quality but will be actively used to improve overall business management, innovation and execution.

Sources:
MagnaChip Q1 Sales Flat but In-Line with Guidance
MagnaChip Implements Six Sigma Management System

Filed under: Benefits and Savings

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Six Sigma at NBC Universal?

There has been much controversy hounding Jeff Zucker’s management of NBC. Zucker rose from the ranks so to speak—from producer to chief entertainment programmer to network president in a span of about 10 years. A phenomenal rise, observers would say.

Zucker first got noticed when as a producer, he recast, remade, and revived Today. Yet after that phenomenal rise, he doesn’t have a successful show that he can boast of. Zucker took reins just as Friends and Frasier went off the air, leaving the network’s primetime empty. Since then it has been one TV show going down the ratings game after another.

Some quarters however said that Zucker cannot be entirely blamed for it. For two decades, NBC had its season of champions and the best shows on TV from Cheers and The Cosby Show through Seinfeld and ER and Frasier and Friends and The West Wing. In a way, that sort of gave way to complacency and Zucker could very well be the product of that and also over confidence.

However, since the network is 80% owned by General Electric (GE), somehow the question on quality strategy can’t be avoided. In fact, according to Jack Welch himself…

the second of the five stages GE inevitably goes through in response to a crisis is “containment,” which means you “try to make the problem disappear by giving it to someone else to solve.”

Can’t GE’s Six Sigma culture turn around the situation?

An article on New York Metro has this to say about it.

GE’s cultish management philosophy—the so-called Six Sigma system—seems ill-suited to advertising-supported television. Six Sigma is all about reducing defective products to the absolute minimum. Great! But for TV shows, even defining “defects per million opportunities” (the Six Sigma term of art) is an absurd exercise. Moreover, Six Sigma defects are defined by one’s dissatisfied customers, but NBC and all advertising-supported media have two very different sets of customers, the advertisers and the audience. Digital recorders like TiVo, by empowering viewers to ditch the advertisers, make that contradiction all the more acute. And in a fractured culture of niches, the big old-fashioned broadcast networks, whose business models require huge audiences, find it harder than ever to define a single set of viewer-customers: I think NBC’s My Name Is Earl may be the funniest new network sitcom in a decade, but plenty of people will consider it coarse, ugly, unkind—defective.

Yet, in a May 2nd press release, officials of NBC Universal Cable named Michael Schreiber director of new media and Schreiber is a certified GE Six Sigma Black Belt.

Well, you can never tell. Six Sigma might just be NBC’s answer as it was for GE.

Filed under: Services

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