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Author:
RonBasu
ABSTRACT
DespitethedramaticresultsofmanyimprovementinitiativessuchasTQM,BPRandSixSigma,mostcompanieshavefailedtosustainthebenefits.BuildinguponthesuccessfactorsofearlierwavesFITSIGMAoffersanorganisationalastinglong-termcompetitiveadvantage.
WhyFITSIGMA?
“Today,dependingonwhomyoulistento,SixSigmaiseitherarevolutionslashingtrillionsofdollarsfromCorporateinefficiency,orit’sthemostmaddeningmanagementfadyetdevisedtokeepfront-lineworkerstoobusycollectingdatatodotheirjobs."
(USAToday,21July1998)
Ithasbeentwoandahalfyearssincetheabovestatementwasmade.Duringthistimethe‘SixSigmarevolution’hascreatedahugeimpactinthefieldofOperationalExcellence,yetconflictingviewsarestillprevalent.
Letusevaluatetheargumentsforbothsides.Onapositivenote,thesuccessof‘SixSigma’inGeneralElectricundertheleadershipofJackWelchisundisputed.IntheGEcompanyreportof2000theirCEOwasunstintinginhisphrase:
“SixSigmahasgalvanisedourcompanywithanintensitythelikesofwhichIhaveneverseeninmy40yearsofGE."
(SixSigmaExcellence,20001).EvenfinancialanalystsandinvestmentbankerscomplimentthesuccessofSixSigmainGE.AnanalystatMorganStanleyDeanWitterrecentlyestimatedthatGE’sgrossannualbenefitfromSixSigmacouldreach5%ofsalesandthatsharevaluemightincreasebybetween10and15%.
Howeverthesituationismorecomplexthansuchpredictionswouldsuggest.
InspiteofthedemonstratedbenefitsofmanyimprovementtechniquessuchasTotalQualityManagement,BusinessProcessRe-EngineeringandSixSigma,mostattemptsbycompaniestousethemhaveendedinfailure(EastonandJarrell2,1998).Stermanetal3(1999)concludethatcompanieshavefounditextremelydifficulttosustaineveninitiallysuccessfulprocessimprovementinitiatives.Yetmorepuzzlingisthefactthatsuccessfulimprovementprogrammeshavesometimesledtodecliningbusinessperformancecausinglayoffsandlowemployeemorale.Motorola,theoriginatorofSixSigma,announcedin1998thatitssecondquarterprofitwasalmostnonexistentandthatconsequentlyitwascutting15,000ofits150,000jobs!
TocounterheavyweightenthusiastslikeJackWelch(GE)andLarryBossidy(AlliedSignal)therearesharpcriticsofSixSigma.SixSigmamaysoundnew,butcriticssaythatitisreallyStatisticalProcessControlinnewclothing.Othersdismissitasanothertransitorymanagementfadthatwillsoonpass.
Itisevidentthatlikeanygoodproduct‘SixSigma’shouldalsohaveafinitelifecycle.Inaddition,BusinessManagerscanbeforgiveniftheyareoftenconfusedbythegreyareasofdistinctionbetweenqualityinitiativessuchasTQM,SixSigmaandLeanSigma.
Againstthisbackground,thispaperwillexaminetheevolutionoftotalqualityimprovementprocesses(alsoknownasOperationalExcellence)fromAd-hocImprovementtoTQMtoSixSigmatoLeanSigma.Buildingonthesuccessfactorsoftheseprocessesthekeyquestionis:
howdowesustaintheresults?
TheauthorhasnamedthissustainableprocessasFITSIGMA,whichwillbedevelopedlateron.
WhatisFITSIGMA?
Firstly,takethekeyingredientofquality,thenaddaccuracyintheorderof3.4defectsin1,000,000.Nowimplementthisacrossyourbusinesswithanintensiveeducationandtrainingprogramme.TheresultisSixSigma.Nowlet'
slookatLeanEnterprise,anupdatedversionofclassicalIndustrialEngineering.Itfocusesondeliveredvaluefromacustomersperspectiveandstrivestoeliminateallnonvalueaddedactivities(‘waste’)foreachproductorservicealongavaluechain.TheintegrationofthecomplementaryapproachesofSixSigmaandLeanEnterpriseisknownasLeanSigma.FITSIGMAisthenextwave.IfLeanSigmaprovidesagilityandefficiency,thenFITSIGMAallowsasustainablefitness.Inadditionthecontrolofvariationfromthemean(smallSigma‘‘)intheSixSigmaprocessistransformedtocompanywideintegration(capitalSigma‘Σ’)intheFITSIGMAprocess.Furthermore,thephilosophyofFITSIGMAshouldensurethatitisindeedfitfortheorganisation.
TheroadmaptoFITSIGMA(seefigure1)containsthreewavesandtheentrypointofeachorganisationwillvary:
FirstWave:
AsIstoTQM
SecondWave:
TQMtoLeanSigma
ThirdWave:
LeanSigmatoFITSIGMA
Figure1:
RoadmaptoFitΣ
FirstWave:
TheorganiseddivisionoflabourtoimproveoperationsmayhavestartedwithAdamSmithin1776.However,itisoftentheIndustrialEngineeringapproach,whichhasrootsinFWTaylor’s‘ScientificManagement’,thatiscreditedwiththeformalinitiationofthefirstwaveofOperationalExcellence.ThisIndustrialEngineeringapproachwassharpenedbyOperationalResearchandcomplementedbyoperationaltoolssuchasManagementAccounting.
DuringtheyearsfollowingtheSecondWorldWar,the'
firstwave'
sawthroughtherapidgrowthofindustrialisation,butintheshorttermthefocusseemedtobeuponbothincreasingvolumeandreducingthecost.Ingeneral,improvementprocesseswere‘ad-hoc’,factorycentricandconduciveto‘pocketsofexcellence’.Theninthe1970stheholisticapproachofTotalQualityManagementinitiatedthe'
secondwave'
ofOperationalExcellence.Thetraditionalfactorsofqualitycontrolandqualityassuranceareaimedatachievinganagreedandconsistentlevelofquality.HoweverTQMgoesfarbeyondmereconformitytostandard.TQMisacompanywideprogrammeandrequiresacultureinwhicheverymemberoftheorganisationbelievesthatnotasingledayshouldgobywithintheorganisationwithoutinsomewayimprovingthequalityofitsgoodsandservices.
SecondWave:
LearningthebasicsfromWEDemmingandJMJuran,JapanesecompaniesextendedandcustomisedtheintegratedapproachandcultureofTQM(BasuandWright,19974).ArguablytheeconomicgrowthandmanufacturingdominanceofJapaneseindustriesinthe1980scanbeattributedtothesuccessfulapplicationofTQMinJapan.ThethreefundamentaltenetsofJuran’sTQMprocessarefirstly,uppermanagementleadershipofquality,secondly,continuouseducationonqualityforall,finally,anannualplanforqualityimprovementandcostreduction.ThesefoundationsarestillvalidtodayandembeddedwithintheSixSigma/LeanSigmaphilosophies.PhilCrosbyandotherleadingTQMConsultantsincorporatedcustomerfocusandDemming'
sSPCtoolsandpropagatedtheTQMphilosophytotheUSAandtheindustrialisedworld.TheMalcolmBaldridgeQualityAward,ISO9000andDemmingQualityAwardhaveenhancedthepopularityofTQMthroughouttheworld,whileinEuropetheEFQM(EuropeanFoundationofQualityManagement)wasformed.Duringthe1980sTQMseemedtobeeverywhereandsomeofitsdefinitionssuchas‘fitnessforthepurpose’,‘qualityiswhatcustomerwants’and‘gettingitrightfirsttime’becamesooverusedthattheywerealmostcliché
s.ThustheimpactofTQMthenbegantodiminish.
InordertocomplementthegapsofTQMinspecificareasofOperationExcellencehighprofileconsultantsmarketedmostlyJapanesepracticesintheformofahostofthreeletteracronyms(TLAs)suchasJIT,TPM,BPRandMRPII.TotalProductiveMaintenance(TPM)hasdemonstratedsuccessesoutsideJapanbyfocusingonincreasingthecapacityofindividualprocesses.TQMwasthebuzzwordofthe1980sbutitisviewedbymany,especiallyintheUSqualityfield,asanembarrassingfailure–aqualityconceptthatpromisedmorethanitcoulddeliver.PhilipCrossbypinpointsthecauseofTQM‘failures’as‘TQMneverdidanythingtodefinequality,whichisconformancetostandards”.Perhapsthependulumswungtoofartowardstheconceptofqualityas‘goodness’andemployeeculture.ItwasagainstthisbackgroundthatthesceneforSixSigmaappearedtoestablishitself.
SixSigmabeganbackin1985whenBillSmith,anengineeratMotorola,cameupwiththeideaofinsertinghardnosedstatisticsintotheblurredphilosophyofquality.Instatisticalterms,Sigma()isameasureofvariationfromthemeanandthegreaterthevalueofSigmathefewerthedefects.MostcompaniesproduceresultatbestaroundfourSigmaormorethan6,000defects.BycontrastattheSixSigmalevel,theexpectationisonly3.4defectspermillionascompaniesmovetowardthishigherlevelofperformance.
AlthoughinventedinMotorola,SixSigmahasbeenexperimentedwithbyAlliedSignalandperfectedatGeneralElectric.Followingtherecentmergerofthesetwocompanies,GEistrulythehomeofSixSigma.Duringthelastfiveyears,SixSigmahastakenthequantumleapintoOperationalExcellenceinmanybluechipcompaniesincludingDuPont,Ratheon,Ivensys,Marconi,BombardierShorts,SeagateTechnologyandGlaxoSmithKline.
ThekeysuccessfactorsdifferentiatingSixSigmafromTQMare:
❑Theemphasisonstatisticalscienceandmeasurement
❑Arigorousandstructuredtrainingdeploymentplan(Champion,MasterBlackBelt,BlackBeltandGreenBelt)
❑AprojectfocusedapproachwithasinglesetofproblemsolvingtechniquessuchasDMAIC(Define,Measure,Analyse,Improve,Control)
❑ReinforcementofJurantenets(TopManagementLeadership,ContinuousEducationandAnnualSavingsPlan)
FollowingtheirrecentapplicationincompanieslikeGlaxoSmithKline,Ratheon,IvensysandSeagate,theSixSigmaprogrammeshavemovedtotheLeanSigmaphilosophy,whichintegratesSixSigmawiththecomplementaryapproachofLeanEnterprise.Leanfocusest