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Quality Beyond Six Sigma Quality Beyond Six Sigma Ron Basu and Nevan Wright OXFORD AMSTERDAM SAN DIEGO BOSTON SAN FRANCISCO LONDON SINGAPORE NEW YORK SYDNEY PARIS TOKYO Butterworth-Heinemann An imprint of Elsevier Science Linacre House, Jordan Hill, Oxford OX2 8DP 200 Wheeler Road, Burlington MA 01803 First published 2003 Copyright © 2003, Elsevier Science Ltd. All rights reserved No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder except in accordance with the provisions of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1T 4LP. Applications for the copyright holder’s written permission to reproduce any part of this publication should be addressed to the publisher British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data A catalogue record for this book is available from the Library of Congress ISBN 0 7506 5561 5 For information on all Butterworth-Heinemann publications visit our website at www.bh.com Typeset by Replika Press Pvt. Ltd, India Printed and bound in Great Britain Contents Foreword by Professor John S. Oakland vii Preface ix Acknowledgements xi 1 Why FIT SIGMA™? 1 2 History of the quality movement 11 3 The enigma of Six Sigma 33 4 Case studies: Six Sigma in practice 53 5 Lean enterprises 68 6 The methodology of FIT SIGMA™ 81 7 FIT SIGMA™ and service organizations 112 8 Project management and FIT SIGMA™ 138 9 Implementation, or making it happen 150 References 174 Glossary 179 Index 185 Foreword Since the early 1980s, in the ‘Western World’ we have been in what I have called a quality revolution. Based on the simple premise that organizations of all kinds exist mainly to serve the needs of the customers of their products or services, good quality management has assumed great importance. Competitive pressures on companies and Government demands on the public sector have driven the need to find more effective and efficient approaches to managing businesses and non-profit making organizations. In the early days of the realization that improved quality was vital to the survival of many companies, especially in manufacturing, senior managers were made aware, through national campaigns and award programmes, that the basic elements had to be right. They learned through adoption of quality management systems, the involvement of improvement teams and the use of quality tools, that improved business performance could be achieved only through better planning, capable processes and the involvement of people. These are the basic elements of a Total Quality Management ((TQM) approach and this has not changed no matter how many sophisticated approaches and techniques come along. The development of TQM has seen the introduction and adoption of many dialects and components, including quality circles, international systems and standards, statistical process control (SPC), business process re-engineering (BPR), lean manufacturing, continuous improvement, benchmarking and business excellence. An approach finding favour in some companies was Six Sigma, most famously used in Motorola, General Electric and Allied Signal. This operationalized TQM into a project-based system, based on delivering tangible business benefits, often directly to the bottom line. Strange combinations of the various approaches have led to Lean Sigma and other company specific acronyms such as ‘Statistically Based Continuous Improvement (SBCI)’. The authors of this book have looked at the history of what I call TQM and developed another approach – Fit Sigma – which they hope will address some of the failures in the implementation of earlier projects and programmes, particularly in smaller companies and service organizations. In Fit Sigma the authors offer a holistic approach that fits the needs of all types of businesses and sustains improved performance. I wish them well with this book, but readers should recognize that the key element of any successful improvement management scheme is real and total commitment to the approach, viii Forword alignment with the business strategies and dedicated follow through in the implementation. John Oakland Executive Chairman Oakland Consulting plc (www.oaklandconsulting.com) and European Centre for Business Excellence (www.ecforbe.com) Professor of Business Excellence and Quality Management, Leeds University Business School Professor Oakland is author of Total Quality Management – text with cases, Statistical Process Control and Total Organizational Excellence, all published by Butterworth-Heinemann. Preface Whilst passing through Miami airport en route to Mexico City, Ron came across an article on Six Sigma in USA Today, 21 July 1998. It read: ‘Today, depending on whom you listen to, Six Sigma is either a revolution slashing trillions of dollars from corporate inefficiency or it’s the most maddening management fad yet devised to keep front-line workers too busy collecting data to do their jobs’. At that time Ron was coordinating a Global MRPII programme between all manufacturing sites of GlaxoWellcome, including the Xochimilco site in Mexico. The Global Manufacturing and Supply Division of GlaxoWellcome was considering a ‘LeanSigma’ initiative, which was meant to be a hybrid of Six Sigma and Lean Manufacturing. It struck Ron that the message in USA Today reflected not just the doubts (or expectations) in the minds of colleagues, but perhaps also those of quality practitioners worldwide. These doubts or expectations addressed many questions. Isn’t Six Sigma simply another fad, or just a repackaged form of TQM? It appears to be successful in large organizations like Motorola and General Electric, but can a small firm support such a programme? How can we apply Six Sigma methodology, originating from manufacturing operations, to the far larger market of the service sector? Like any good product, Six Sigma will have a finite lifecycle – so what is next? Surely one big question is, how can we sustain the benefits in the longer term? It is good to be ‘lean’ but isn’t it better to be ‘fit’, to stay agile? The idea of writing Quality Beyond Six Sigma to address these issues was mentally conceived at Miami airport, and the concept of FIT SIGMA™* was born. Ron nurtured the concept of FIT SIGMA for about two years, and then the opportunity came to write the book. In 2000 Nevan Wright, Ron’s co-author for Total Manufacturing Solutions, returned to England from New Zealand to complete his PhD research at Henley Management College, and met up with Ron. Nevan has carried out extensive research into total quality and service performance, and is also the author of The Management of Service Operations. From our previous partnership we knew that we complement each other and share the same philosophy re. quality and continuous improvement, and thus we found a perfect fit for the FIT SIGMA project. The central theme of this book is to provide a practical approach for FIT *FIT SIGMA™ is a trademark of Performance Excellence Ltd, UK, copyright Ron Basu.