Australian based company, Telstra, is completing a restructuring effort aimed at reaping $150 million in former costs from the company’s business structure. Over the last three years the company has implemented the Six Sigma program, yielding significant improvements in processes, cycle times, revenues and customer satisfaction. The company credits its patience with the implementation of Six Sigma, (they allowed six months of planning prior to implementation), for its success in their business. This success story can be taken as a lesson, as many companies want to test the program’s effectiveness by rushing to implementation. The Australian Reports:
"The deployment of Six Sigma and the increased focus on our processes is helping us to improve how we operate as a business. While improvements have been achieved within the various business units, our customers actually experience end-to-end process performance, so a company-wide view of our core processes is required.
Read More: Telstra’s Six Sigma to cut $150m costs
A recent survey by Optimize Research indicated that of the 156 business-technology executives recently surveyed fewer than 40% reported that their company employed any aspect of Six Sigma at all. This may be because of the daunting effort that overhauling key portions of a company’s business model requires. To help alleviate some of the time and energy requirements, over half of companies surveyed who have implemented the program sought partnership with an outside firm to complete the task. That same survey found that despite hiring outside service providers to implement the program, however, its intensity has required the vast majority to become intimately involved in the process themselves. Even with such efforts, often the adoption process does not go as smoothly as would be desired. InformationWeek Reports:
When asked about the challenges they’ve encountered, respondents say the issues aren’t related to money. Instead, resistance to change or lack of buy-in top the list of problems. Resistance was about the same at almost every level of the enterprise, including among employees, middle management, and senior executives.
Typically when Corporate America deigns to donate its services to charities, the help is more oriented towards publicity for the private company than any real effort and helping the charity. So it came as a surprise when after GE Consumer Finance offered to assist St. Gemma’s Hospice, they didn’t just hold a corporate sponsered bazaar in the parking lot. Rather, the company committed some of its Six Sigma black belts to the task of streamlining the business model and improving the organization’s efficiency. In a single day, the Six Sigma black belts made a host of suggestions that after implemented vastly improved the efficiency of the company. While some were more complex, a number of changes were as simple as using telephones to order food up to rooms rather than have nurses run downstairs to place the orders. Times Online Reports:
So, how did the staff at St Gemma’s react when the men with black belts in data drilling knocked at their door? “At first you think, ‘how can this work?’ ” says Tracy Dick, director of business at St Gemma’s and part of the consultancy process with the GE team. “How can someone who doesn’t know the hospice, the rooms, the patients, make improvements?” But the hospice staff was soon won over.
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HSBC Bank Malaysia Bhd, a leading lender for the country of Malaysia plans to intensify the usage of Six Sigma throughout its business model. The company initially adopted the methodology within its core processes and satisfied with its success is now incorporating the methodology into its peripheries. Six Sigma incorporation is spearheading a larger effort on the part of the bank to increase its clientele base as well as the number and variety of value-added services it provides its customers. TheStar Online Reports:
Under this methodology, every key party plays an active role in ensuring that customer demand and satisfaction are met and at the same time, the quality of products and services are enhanced.
On the credit card business, he said the bank was targeting to secure 850,000 cardholders by the end of the year from 700,000 currently.
Read More: Six Sigma propelling HSBC
Enthusiasm for the Six Sigma model amongst IT departments and analysts has been less than lackluster. Philip Howard of IT-Analysts.com believes he knows why. IT departments are flooded with products designed to measure efficiency and productivity and as a consequence often percieve Six Sigma as just another high-priced version of these. Understanding, what has long been familiar to those intimate with the process, that Six Sigma is principally about process change rather than mere measurement is vital to comprehending its worth. A provider of a comphrehensive Six Sigma product designed for IT departments discusses the comprehensiveness of the program. IT-Analysis.com Reports:
The Instantis product set starts from the assumption that everything will be based on Six Sigma (with support for black belts) and it has three main components: the Idea Portal, which is a collaborative portal in which practitioners can weight ideas in order to comes up with a consensus about strategies and objectives to implement; Project Tracker, which does what its name suggests (incidentally, this is where the company originated, with project management software that gradually evolved towards Six Sigma); and Financials Tracker, which uses a service oriented architecture to integrate with your existing financial system.
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After being introduced to Six Sigma through a recommendation by IBM, the Kennedy Space Center’s Consultant firm, the organization has launched two more Six Sigma initiatives. This experience with such a large scale investment in the principles of Six Sigma has brought forth a number of helpful lessons which can aid anyone planning to implement the program. The article outlines 6 key principles to follow when implementing the program including being open to fundamental changes in the business and organizational models, and having someone clearly responsible for the efficiency process implementation. FederalTimes.com Reports:
3. Pick the process owner early. Sure, the CFO or the chief executive officer owns the process. But that’s not what we mean. The process owner is the person who worries about process performance, is accessible every day and is the person the CFO looks to for process accountability. Process ownership is not a recognizable role in the CFO organization; it doesn’t fit anywhere in the standard position descriptions, and there’s no spot for it on the organization chart. After rigorous analysis, it was clear to us that unclear process ownership was one of our major problems.
State-owned monopolies which are then privatized typically have disasterous results when their often bloated payrolls and inefficient products hit the free market. However, KT Corp., Koreas largest fixed-line telephone and broadband Internet operator is having great success through their incorporation of Six Sigma. Over a year after the company launched its Six Sigma Initiative, the company is seeing the benefits of their efforts, as the company has cut over $183 million US in costs since the beginning of 2004. The company began the process by first looking at customer relations and then reaching backward through its supply chain. The company is so pleased with its initial results that it plans to announce the expansion of the program within the next month. The Korea Herald Reports:
It would be hard to say that KT has completed its transition from a state fixed-line monopoly to a well-functioning private company but we hope that the six sigma effort will bring us closer. The Six Sigma Initiative is at the center of our efforts to enhance competitiveness and reinvent ourselves as a world-class company, said Lee.
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Telstra is in the final stages of completing a three year program to implement Six Sigma which will ultimately yield $150m in cost savings. The company was introduced to Six Sigma through consumer and marketing chief David Moffatt, formerly of GE. The program has been implemented within specific units, however, because of the unique flexibility of the program it has also been incorporated in wider scoped end-to-end performance improvements. The Australian Reports:
"Over the last three years Telstra has implemented significant improvements in our processes which have contributed to reduced cycle times, increased revenues and, importantly, improved the customer experience with Telstra," chief executive Ziggy Switkowski said in a note to senior management.
Read More: Telstra’s Six Sigma to cut $150m costs
For years the largest of companies have required that their suppliers by ISO certified, a process that ensures basic standards in business operations and management. Critics of the process, however, argue that standardizing management eliminates the potential for entreprenureal growth in the first place. In addition, the certification is often criticized as being an indirect means of keeping smaller start-ups out of the bidding process. The rise of Six Sigma, however, is beginning to shake things up. Beginning with suppliers of GE, a number of smaller companies are pursuing Six Sigma rather than ISO as a means of verifying their business model and management structure. Typically the process is less costly, and according to some far more beneficial. Because of this initial success, the practice is spreading as more and more startups are foregoing the cost of becoming ISO certified and are instead focusing on Six Sigma integration. Inc.com Reports:
Arunas Chesonis, CEO of telecom company Paetec Communications, based in Rochester, N.Y., is also de-emphasizing ISO in favor of Six Sigma, in part because GE is both an investor and a customer. He began instituting ISO soon after starting Paetec in 1998. The standards, he says, were "a pretty powerful training tool" for new employees and signaled to potential customers "that we were the type of company that was focused on quality and process improvement."
Paul O’Brien of PricewaterhouseCoopers, who recently held a seminar on Six Sigma in Dublin, has commented that despite Six Sigma’s success in companies who have implemented it in the U.S. and Europe, the business strategy has not yet been widely accepted in Ireland. The difficulty has been that many Irish executives have percieved the process as merely American jargon and thus have not investigated it or simply regarded it as useless. The key to wider adoption, according to O’Brien, is the incorporation of a limited project which will allow a company to see the benefits of Six Sigma without exposing them to the heavy investment which full incorporation of the program requires. SiliconRepublic.com Reports:
“So far, it has mainly been American, British and some European banks that have implemented Six Sigma. For example in the UK, JP Morgan, one of the first banks to work with this, had a huge amount of success with the deployment. Irish banks are beginning to look at Six Sigma or at least at facets of it. I know of one bank that has deployed an element of it in branch banking.” He notes that other banks to deploy the technique include the Irish subsidiaries of US banks such as Morgan Stanley and Merrill Lynch that have "inherited" the Six Sigma projects from their parent firm.
Read More: Six of the best
Employees at St. John and Trinity Health Systems are implementing Six Sigma to cut cost and eliminate errors to improve their health care services. Under the program, hospital workers make careful analysis of every aspect of care including patients experiences, length of stay, waiting times, and employee experiences. The program blends a mix of green belts and black belts, having green belts maintain their current position, albeit with greater awareness and imput, while black belts work full time on effeciency and effectiveness. The Detroit News Reports:
The Six Sigma crew at Trinity noticed lab technicians and doctors had no set way of communicating and were wasting time leaving paper and phone messages. The solution: have the doctors and the lab communicate by text message.
Across town, St. John Health has cut waiting times in the emergency room from 64 minutes to 42 minutes and has saved $5 million in less than two years. The number of patients who leave the emergency room without being seen has been halved.
Editorial Director of outbound, Mitch MacDonald says that tools like Six Sigma should be focused on the end of attaining a leaner company, a link that can often become muddled by those employing the technique as a mere catchphrase. A recent report by researchers at Georgia Southern University write, "Lean is a systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection." The problem for many smaller companies, is that they get caught in the details of programs aimed at achieving cost-effectiveness and miss the larger picture. DC Velocity Reports:
The authors also point out that although it’s billed as a "cutting edge" approach to manufacturing, the edge really isn’t all that sharp. In fact, they note that the basic concept of lean can be traced all the way back to Henry Ford’s assembly lines circa 1920, when the notion of continuous flow was first introduced. Still, as with so many business management concepts, what’s old has become new again. And so, it seems, lean is all the rage.
Read More: time to lean up your act?