This book dispels the myth that Six Sigma is limited to the manufacturing process by providing compelling examples of transactional successes combined with a guide to practical deployment." -Paul J. Norris, Chairman and Chief Executive Officer, W. R. Grace and Co. "Ronald D. Snee and Roger W. Hoerl provide a compelling, fact-based, example-supported argument on the importance of improvement of nonmanufacturing processes within a manufacturing company. This valuable book completes the authors' "trilogy" of books on improving business performance via statistical thinking and Six Sigma, and is a welcome addition to the library of any individual or company engaged in this pursuit of excellence." -Dr. Steven P. Bailey, principal consultant and Master Black Belt, DuPont Engineering, Past President American Society for Quality "As interest in Six Sigma continues to flourish, this book will be of interest to newcomers and veterans alike. Snee and Hoerl address the case for Six Sigma, ensuring successful deployment and project success through a detailed yet easily understood style. Their use of case studies rounds out their assertion that Six Sigma can and should be used to improve performance in all types of businesses, from finance to health care." -Jean Cherry, Executive Vice-President, Commonwealth Health Corporation The first comprehensive, step-by-step Six Sigma implementation guide for nonmanufacturing organizations For finance, health care, retail, logistics/supply chains, R Financial Times-Prentice Hall, 2003 , the best-selling executive's guide to Six Sigma. They also cowrote Statistical Thinking: Improving Business Performance Duxbury Thomson Learning, 2002 , an innovative guide to the strategic use of data and statistics in solving business problems. There are dozens of books on implementing Six Sigma in manufacturing. But what if you're in finance? Or health care? Or e-commerce? Or supply chain management? Or R D? Or the nonprofit sector? This book focuses on your needs: Six Sigma Beyond the Factory Floor, the start-to-finish Six Sigma guide for the rest of the real economy. Ronald D. Snee and Roger W. Hoerl cover every level of Six Sigma implementation in nonmanufacturing environments: deployment planning and strategy, project execution, methods, statistical tools, and more. Throughout, they illuminate key concepts with case studies from a wide range of businesses and functions. Drawing on their unsurpassed consulting experience, they systematically identify hurdles to success-and best practices for overcoming them. Whatever your Six Sigma goals, this book will help you achieve them faster-with less pain, cost, or risk. Using a proven Six Sigma deployment roadmap for nonmanufacturing organizations Planning strategies, execution tactics, customized methods and tools Leveraging the immense value of Six Sigma in your environment Realistically assessing the benefits of Six Sigma in nonmanufacturing organizations Driving ongoing success: lessons from real-world case studies Best practices for driving project-by-project improvement Aligning the entire organization behind Six Sigma From leadership commitment to team building-and beyond
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Six Sigma Beyond the Factory Floor About the Authors
Dr. Ronald D. Snee is principal in Tunnell Consulting's Performance Excellence Practice, which offers Six Sigma consulting, training, facilitation, and implementation, in addition to other process improvement approaches. Dr. Snee is a winner of the American Society for Quality's highest honor, the Shewhart Medal, and has served as a member of the Malcolm Baldrige National Quality Award Criteria Team. He designed DuPont's first company-wide continuous improvement curriculum.
Dr. Roger W. Hoerl is a long-time leader in GE's renowned Six Sigma initiative. As manager of GE's Applied Statistics Lab, he partners on R&D with GE businesses ranging from NBC and GE Capital to GE Aircraft Engines. He has implemented Six Sigma in a wide range of GE processes, ranging from corporate audit to delinquent credit card tracking. He recently won the American Society of Quality's 2002 Brumbaugh Award.
Snee and Hoerl are coauthors of Leading Six Sigma (Financial Times-Prentice Hall, 2003), the best-selling executive's guide to Six Sigma. They also cowrote Statistical Thinking: Improving Business Performance (Duxbury Thomson Learning, 2002), an innovative guide to the strategic use of data and statistics in solving business problems.
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Preface: Six Sigma Beyond the Factory Floor
The body of evidence continues to grow. Companies such as GE, Motorola, Honeywell, 3M, Home Depot, J.P. Morgan Chase & Co., Johnson & Johnson, Quest Diagnostics, DuPont, American Express, Ford, and many others, large and small, have been using Six Sigma to obtain large improvements in business performance that have produced millions of dollars in bottom-line savings. Six Sigma, a process-focused strategy and methodology for business improvement, is a strategic approach that we have seen work across all processes, all products, and all industries. The focus is on improving process performance that results in improved customer satisfaction and bottom-line results.
Six Sigma has been used extensively in improving manufacturing organizations, but only recently has it been used to improve processes outside of manufacturing—that is, processes beyond the factory floor. When we talk about using Six Sigma beyond the factory floor, we are referring to improving processes in the rest of the economy beyond manufacturing, such as financial services, e-commerce, health care, and so on. For reasons discussed below, we refer to this as the real economy. This real economy includes businesses that do not manufacture, such as banks and law offices, non-profits (including non-profit hospitals), as well as all the other (non-manufacturing) parts of organizations needed to operate the company but that do manufacture products, such as delivery, finance, and human resources (HR).
The real economy therefore consists of all businesses that do not manufacture physical products, as well as all the other functions and processes involved in manufacturing. All processes in an organization are opportunities for improvement. Therefore, by taking a holistic view, you will see that Six Sigma can be used to improve any process.
This book is the third in a series of books aimed at improving the processes and organizations used to serve our customers, a pursuit to which we have collectively dedicated more than 60 years of our careers. We first worked together at DuPont in the early 1980s. We continued our professional relationship over the years, and in 1995 we both independently began our work in Six Sigma. In our first book Statistical Thinking—Improving Business Performance (Duxbury/Thompson Learning 2002), we explained the concept of statistical thinking and its key elements: process, variation, and data. Our focus was how to use statistical thinking to improve business processes—those beyond the factory floor—by reducing variation. We believe that Six Sigma is the best way to deploy statistical thinking broadly.
In Leading Six Sigma: A Step-by-Step Guide Based on Experience with GE and Other Six Sigma Companies (Financial Times/Prentice Hall 2003), we showed how to deploy Six Sigma in an organization and how to integrate it with other improvement initiatives. We presented detailed case studies, both successful and unsuccessful, identified the key factors required for success, and presented a detailed deployment strategy.
We take the methodology one step further in this book, focusing on perhaps the most challenging use of Six Sigma: improving processes beyond the factory floor. This requires special attention because formal improvement methods have been applied less here, resulting in less being known about how to improve these processes. For example, there is typically less data available on real economy processes than manufacturing. We address this and other differences between manufacturing and real economy applications of Six Sigma. Understanding these differences will help you better understand what is required to improve processes beyond the factory floor. Our review of the Six Sigma literature shows that there are very few detailed case histories using the methodology beyond the factory floor at either the organizational deployment level or at the individual project level. We also see little or no discussion of the unique technical challenges associated with deploying Six Sigma in these areas. This book addresses each of these issues.
Features of This Book
This book has many unique features that can help you deploy Six Sigma beyond the factory floor. First we take a broad holistic view of the organizational and technical issues and what can be done about them. We address perhaps the biggest stumbling block encountered by those working beyond the factory floor: the view that "we're different," and therefore "Six Sigma doesn't apply to us." Although there is some truth to this argument, we show that improvement in these areas has much more in common with improvement in other areas, and show how Six Sigma can be applied within an organization with such a viewpoint.
We emphasize that moving beyond the factory floor means improving both non-manufacturing businesses (for example, finance, health care, non-profit) as well as those non-manufacturing functions that are needed to run manufacturing organizations (billing, human relations, delivery, and so on). We provide guidance on each of the three key levels of Six Sigma needed for success: deployment, project-by-project improvement, and methods and tools. We know of no other book that gives detailed guidance in all three areas, especially beyond manufacturing. This book provides case studies at both the organizational deployment level and at the individual project level and includes detailed advice for leaders at the business level and functional level.
We show how to take a proven road map for Six Sigma deployment and customize it to organizations and functions beyond the factory floor. This includes a discussion of how to deal with the unique technical issues involved as well as how to take a holistic view of the three aspects of process management (process design/redesign, process improvement, and process control) and how Six Sigma is used in each of theses areas.
How This Book Can Help You
This book will prove invaluable to those deploying Six Sigma beyond the factory floor, particularly managers responsible for deploying Six Sigma in their areas, Champions, Master Black Belts (MBBs), Black Belts (BBs) and Green Belts (GBs). You will get a holistic view of what deployment of Six Sigma entails, including your role and responsibilities and what to expect at various points in time. In addition, managers and Champions will receive specific advice about the following:
Identifying your company's most promising Six Sigma opportunities and leaders
Providing leadership, talent, and infrastructure for a successful launch
Implementing systems, processes, and budgets for ongoing Six Sigma projects
Measuring and maximizing the financial value of your Six Sigma initiative
MBBs will receive guidance on how to select projects and how projects can fail. MBBs, BBs, and GBs will get insight as to how to deal with unique technical problems such as non-normal distributed data, discrete data, and useful tools.
What's in This Book?
This book is divided into four main parts: the case for Six Sigma beyond the factory floor, ensuring successful deployment, ensuring project success, and proper application of methods and tools. In this overall flow, we address strategic, tactical, and operational aspects of deploying Six Sigma. Chapter 1 sets the context for the book, highlighting the growing importance of health care, financial, service, and non-manufacturing functions to our economy and the tremendous opportunity and need for improvement in these areas that we refer to as the real economy.
Chapter 2 addresses the fundamental barrier to improvement—the attitude that "we're different"—and shows that improvement efforts in diverse processes and environments have much more in common than not. We find that Six Sigma works very well beyond the factory floor.
Chapter 3 focuses on deployment and presents four deployment case studies: Bank of America, Commonwealth Healthcare Corporation (which is also a not-for-profit organization), the Motorola Finance function, and R&D at GE Global Research. Key learnings are identified for each case study individually and summarized to create an overall list.
Chapter 4 presents a Six Sigma deployment road map that has been effective in a number of companies representing a number of different environments. We also provide guidance on deploying Six Sigma in different environments (businesses and functions) as well as deployment success factors and pitfalls.
The focus of Chapter 3 and Chapter 4 is on the management systems that must be put in place to effectively deploy Six Sigma. One of the key things that makes Six Sigma different from earlier improvement methods is the existence of an infrastructure of management systems to support deployment. One of the key reasons that previous improvement approaches, such as total quality management (TQM) and statistical process control (SPC), did not demonstrate long-term success, is that these approaches lacked an effective deployment method. This is not the case with Six Sigma.
Chapter 5and Chapter 6 focus on ensuring project success. The successful completion of projects, one after another in a steady stream, is at the heart of Six Sigma. The discussion consists of case studies from beyond the factory floor, the Six Sigma method for realizing project-by-project improvement, keys to completing successful projects, and technical considerations that are essential to successful improvement in the real economy. To the best of our knowledge, many of these issues are not discussed elsewhere in the literature.
Chapter 5 presents three project case studies in finance, legal, and batch records release (a health care, non-manufacturing function). The chapter concludes with a discussion of lessons learned.
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