Excellence Through Baldridge Award: Customer Focus with Six Sigma

1. Capturing the Voice of Customer: The Role of Quality Function Deployment, Lean Six Sigma, and Design for Six Sigma in Achieving Excellence through Baldridge Award Amar Sahay, Ph.D. www.realleansixsigmaquality.com

2. Baldridge Quality Award: an overview • Award is given to organizations that have demonstrated outstanding quality in their products, services, and processes. Categories: • manufacturing, • service, • small business, • education and health care.

3. Baldridge Quality Award Criteria • Submit an application that details the approach, deployment, and the results of quality activities under the following seven major categories: • Leadership, • Strategic Planning, • Customer Focus, • Information and Analysis, • Human Resource (workforce) Focus, • Process Management (operations focus), and Business results.

4. Focus of this presentation • This presentation focuses on one of the major categories of the Baldridge Quality Award – the customer focus.

5. Presentation: Customer Focus Source: 2011–2012: BaldridgeCriteria for Performance Excellence

6. “More than any other program, the Baldridge Quality Award is responsible for making quality a national priority and disseminating best practices across the United States.”Report by Building on Baldridge: American quality for the 21st Century, by the private Council on Competitiveness:

7. Meeting Customer Requirements • We will show how the requirements in the customer focus category of the Baldridge Award criteria can be met by using the proven tools and technologies – • Six Sigma, • Lean Sigma, • Design for Six Sigma (DFSS), and • the Quality Function Deployment (QFD)

8. Addressing Customer Issues and Achieving Excellence • The proven tools in meeting and exceeding customer expectations: • Six Sigma • Lean Six Sigma • Design for Six Sigma (DFSS), and • Quality Function Deployment (QFD) These are customer-driven quality approach that aim at meeting or exceeding customer expectations.

9. Addressing Customer Issues… • The success of companies depend on: • designing, developing and launching new • products/service of superior quality, • getting to the market quickly (reduced cycle time), • bringing innovation in products, • and most important of all, • understanding the customer’s needs and • requirements.

10. How Six Sigma and Related Tools have helped Companies? • Six Sigma, Lean, Design for Six Sigma, and QFD are major tools and technologies that have helped companies achieve • excellence in designing and developing • products and services, • meeting and exceeding customer needs and • requirements, and • improving their revenues and profitability by • increasing their market share.

11. What is Six Sigma?(1 of 4) Six Sigma can be described as a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and essential for a clear financial return for the organization. Six Sigma was pioneered by Motorola in the mid-1980s and popularized by the success of General Electric.

12. What is Six Sigma?(2 of 4) • Six Sigma is a customer focused approach to create near perfect processes, products, and services all aligned to delivering what the customer wants. • It is a project based approach where majority of projects are selected for measurable bottom line or customer impact; majority of projects are completed within two to six months. • Six sigma projects use well defined set of statistical tools and process improvement techniques by well trained people in an organization.

13. What is Six Sigma?(3 of 4) Six Sigma can be viewed as • a set of powerful tools for improving products and processes • an approach for improving both the process-and people related aspects of business performance “Six Sigma has turned the company’s focus from inside to outside, changed the way we think and train our future leaders and moved us toward becoming truly customer-focused organization.”—Annual Report 2000, GE

14. Six Sigma(4 of 4) • Six Sigma is a business strategy that employs well-structured continuous improvement methodology and statistical tools to reduce defects and process variability. • Six Sigma has evolved from a focus on process improvement using statistical tools to a comprehensive framework for managing a business • Six Sigma has been employed in numerous companies to reduce operating cost, eliminate waste, increase reliability, incorporate innovation in products and services, reduce cycle time, and increase productivity.

15. Six Sigma and Variation Reduction We quickly learned if we could control variation, we could get all the parts and process to work and get to an end result of 3.4 defects per million opportunities, or a Six Sigma level. Our people coined the term and it stuck. It was shorthand for people to understand that if you can control the variation, you can achieve remarkable results. --Interview with Robert W. Galvin, Chairman Emeritus of Motorola, Inc.

16. Objective of Six Sigma • The objective of a Six Sigma program is to reduce the variation in the process to the extent that the likelihood of producing a defect is virtually non-existent. This means improving quality, and meeting or exceeding customers’ expectations. • The improved quality and reliability in products and services leads to higher perceived value, and increased market share thereby increasing revenues and profitability.

17. What does ‘sigma’ mean? • The term sigma (denoted by the Greek letter,s) is a metric based on the statistical measure called standard deviation and is a measure of variability in a process. A metric is simply a measurement of some quality characteristic for example, percentage of defects. • The term six sigma statistically equates to 3.4 defects per million opportunities. Thus, a Six Sigma process is capable of producing 3.4 defects per million opportunities (DPMO).

18. Improvement in Quality from 3 to 6 Sigma Levels

19. Statistical Basis of Six Sigma • In a Six Sigma process, a shift in the process mean of 1.5-sigma on either side of the mean results into 3.4 nonconforming products per million.

20. Metrics used in Industry Source: Enterprise Strategies, Technologies Enable Six Sigma, Aberdeen Group, Sep. 2006

21. Six Sigma in Industries • Industry research and current trend shows that Six Sigma and related methodologies are considered as the most sought after emerging technologies and programs by industries today. • A current industry survey of 600 companies shows that approximately 41% are implementing Six Sigma, and vast majorities of them (approximately 87%) are implementing Lean Six Sigma and related technologies [World Class Manufacturing Report, 2006]. The survey also shows that 72% of the companies acknowledge that Six Sigma and related technologies have increased their profitability [Quality Digest 36].

22. Six Sigma Success • A survey of 2577 quality professionals by Quality Digest on Six Sigma “In the two years we have been tracking Six Sigma usage and perceptions, the predominant finding of survey responses is the overwhelming agreement on this methodology as a means to drastically reduce waste and improve productivity. when properly implemented and supported by management, the process yields huge results. Very few of those who utilize Six Sigma have anything negative to say about it. The down side reported was the difficulty of implementing it within small companies.

23. Quality Programs in Use (Source: The Lean Sigma Benchmark Report, Aberdeen Group, September 2006)

24. Relative Emphasis on Lean/Six Sigma (Source: The Lean Sigma Benchmark Report, Aberdeen Group, September 2006)

25. Factors Driving Quality and Six Sigma Program (Source: The Lean Sigma Benchmark Report, Aberdeen Group, September 2006)

26. Existing Business Processes Processes (Manufacturing and service processes) Suppliers Inputs Outputs Customers Define Measure DMAIC Control Analyze Improve Six Sigma Model Six Sigma Methodology Improved Business Performance Improve Quality, Productivity, and Perception Reduce Costs, Increase Market Share, Increase Profitability Exceed Customer Expectation

27. Key Concepts of Six Sigma • Think in terms of customer requirements, critical to quality (CTQ) characteristics, key business processes, costs of poor quality, and overall strategic objectives. • Ensure that the identified metrics focus on business results and are tied to customer requirements, and CTQs. • Focus on corporate sponsors, project and process owners, and internal and external customers. • Identify and prioritize business impact projects according to expected savings and improved throughput. • Help to overcome resistance to change; obtain the required resources.

28. Six Sigma Applications • Manufacturing – reduce waste, improve product consistency, reduce variation, improve quality, solve equipment problems, create capacity, improve productivity • Human resource – reduce cycle time for hiring processes, eliminate unneeded steps from the process, improve productivity • Sales – improve forecast reliability, pricing strategies, pricing variation, market share • Anyone – better understand customer needs and requirements; tailor service offerings to meet or exceed customer expectations

29. Second Generation of Six Sigma • Six Sigma is part of the corporate business plan that is key to achieving business objectives, with top leadership support and involvement • Six Sigma must address the voice of the customer (VOC)

30. Definition of Quality The quality of a product or service is the customer’s perception of the degree to which the product or service meets his or her expectations. Six Sigma is a customer-driven quality approach that aims at meeting or exceeding customer expectations. • Transcendent: Quality is something that is intuitively understood but nearly impossible to communicate, such as beauty or love. • Product-based:Quality is found in the components and attributes of a product. • User-based:If the product or service meets or exceeds customers’ expectations, it has good quality. • Manufacturing-based: If the product conforms to design specifications, it has good quality. • Value-based:If the product is perceived as providing good value for the price, it has good quality.

31. Defining Quality Perfection Fast delivery Consistency Providing a good, usable product Eliminating waste Variation reduction Doing it right the first time Delighting or pleasing customers Meeting or exceeding customer expectations Total customer service and satisfaction Compliance with policies and procedures

32. Dimensions of Product Quality • Based on the definitions of quality, Garvin developed the following eight dimensions that describe product quality • Performance • Features • Reliability • Conformance to standards • Durability • Serviceability • Aesthetics • Perceived quality The recognition of these dimensions by management and the selection of the dimensions along which the business will compete is critical to business success

33. Dimensions of Product Quality • Performance: Will the product do the job? • Features/Added features: Does it have features beyond the basic performance characteristics? • Reliability: Is it reliable? Will it last a long time? • Conformance: Does the product conform to the specifications? Is the product made exactly as the design specified? • Serviceability: Can it be fixed easily and cost effectively? • Durability: Can the product tolerate stress without failure? • Aesthetics: Does it have sensory characteristics such as taste, feel, sound, look, and smell? • Perceived quality: what is the customer opinion about the product or service? How customers perceive the quality of the product or service?

34. Customer-Driven Quality • Meeting and exceeding customer expectations • Customers • Consumers • External customers • Internal customers

35. Principles of Quality • Focus on customers • Participation and teamwork • Process focus supported by continuous improvement

36. Customer Focus • Customer is principal judge of quality • Organizations must first understand customers’ needs and expectations in order to meet and exceed them • Organizations must build relationships with customers

37. Customer Focus in Six Sigma To meet or exceed customer expectations, organizations must fully understand all product and service attributes that contribute to customer value and lead to satisfaction and loyalty – calledcritical to quality (CTQ) characteristics.CTQs represent the important drivers of Six Sigma improvement efforts.

38. Competitive Advantage • Six Sigma driven by customer wants and needs • Makes significant contribution to business success • Matches organization’s unique resources with opportunities • Is durable and lasting • Provides basis for further improvement • Provides direction and motivation Six Sigma efforts are focused on building strong competitive advantage

39. Six Sigma Quality and Profitability Improved quality of design Improved quality of conformance Higher perceived value Higher prices Lower manufacturing and service costs Increased market share Increased revenues Higher profitability

40. Six Sigma and Business Results Considerable evidence exists that Six Sigma initiatives positively impact bottom-line results from companies such as GE, Allied Signal, 3M, Xerox, Raytheon, Citibank, and many others.

41. Lean Six Sigma • Lean is an approach that seeks to improve flow in the value stream and eliminate waste. It is about doing things quickly. • Six Sigma uses a powerful framework (DMAIC) and simple to advanced statistical tools to uncover root causes of the problem to understand and reduce variation. It is about doing things right (defect free)

42. Lean and Six Sigma • Lean is an approach based on the removal of waste from service and manufacturing processes. Many companies have reported significant improvement through the removal of waste or non-value added activities. • Six Sigma improves quality through defect removal and process optimization. The improved quality leads to higher perceived value and increased market share thereby, increasing revenue and achieving higher profitability. Many companies have reported significant savings by reducing the cost of poor quality.

43. Difference Between Lean and Six Sigma (1 of 2)

44. Difference Between Lean and Six Sigma (2 of 2) Source: Lean Six Sigma: some basic concepts, NHS Institute for Innovation and Improvement

45. Integrating Lean and Six Sigma • Companies have reported that bringing the two concepts- Lean and Six Sigma together delivers faster results. • While the objective of Lean is to create flow and eliminate waste from the process, Six Sigma improves process capability and reduces variation thereby improving quality and reducing cost. If a company just applies Six Sigma, it cannot maximize the potential of the organization. Lean is really an enabler for Six Sigma.* *The Power of Six Sigma, Chowdhury, S., Prentice Hall, London.

46. Integrating Lean and Six Sigma • More and more companies are realizing that it is possible to achieve dramatic improvements in cost, quality, and time by using the above techniques. • Several companies including Toyota, General Electric, Motorola, and many others have accomplished impressive results using one or the other technique. However, using only one of the above techniques- Lean, Six Sigma, or Design for Six Sigma has limitations.

48. Design for Six Sigma (DFSS)

49. Design for Six Sigma (DFSS) (1) • DFSS is a systematic methodology to design new products or processes so that quality is built into every phase of product design. It is also used for improving existing products through redesign. • The roots of DFSS are in systems engineering. It combines systems engineering methodology with statistical methods to achieve ‘built-in quality’ objectives. • DFSS optimizes the critical to quality (CTQ) characteristics to achieve the best system performance. (CTQs are the selected few measurable quality characteristics that are key to a specific product, process, or service that must be controlled to meet or exceed customer expectation).

50. Design for Six Sigma (DFSS) (2) • The DFSS methodology has been identified by a five-step process: DMADVthat stands for Define, Measure, Analyze, Design, and Verify. These are explained briefly. • Define: determine the project need, identify the project goals and objectives, determine customers’ needs and requirements, and include the voice of customers (VOC) • Measure: determine the characteristics critical to quality, prioritize customer needs and requirements, and assess customers’ needs and CTQ metrics • Analyze: evaluate the process options to meet customers need and CTQs • Design: design product and process to meet the customer requirements, include customer requirements in the development process • Verify: check the design to ensure that the customers’ requirements are met