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What Is Six Sigma Process Improvement? Pivotal Resources, Inc.

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1 What Is Six Sigma Process Improvement? Pivotal Resources, Inc.

2 When your business is healthy, it is difficult to behave as if you are in a crisis. That is why one of the toughest parts of managing is to recognize the need for change and make it happen while you still have a chance. - Bill Gates

3 Process Management Why is it important?

4 Process: A series of tasks or activities whereby one thing (the input) is changed or used to create something else (the output) Processes Are Everywhere

5 Many Factors Affect Processes Customer requirements change New suppliers are used Technology is developed Competitors enter the market Leadership changes New employees are hired Products are launched

6 Process Inefficiency Is Costly Internal Failures Labor and material wasted by rework and rebilling Hidden Factories (unreported, ad hoc processes designed to work around the problem) Opportunity cost of time spent on defects Carrying costs of extra inventory required to allow for scrap and rework External Failures Warranty repairs and returns Customer service expense Lost sales (both immediate and future) Negative word-of-mouth Appraisal and Inspection Inspection Testing Quality audit Management of workers Initial and maintenance cost of testing equipment

7 Variation Affects Customers Do customers remember your average performance? or Do they remember their individual experience? Call Center Waiting Times Customer Requirement is 60 seconds or less

8 End-to-End Effectiveness is Key

9 The Six Sigma Solution

10 Six Sigma Defined A Measure to define the capability of a process A Goal for improvement that reaches near-perfection A System of Management to achieve lasting business leadership and top performance

11 A Measure and Goal

12 A System of Management… Customer Focus Process Mgmt Facts & Data

13 …Used To Control Process Variation

14 Integrating Tools That Work

15 Process Excellence Strategies


17 Whos Implementing Six Sigma? GE Cisco Systems Motorola Allied Signal Principal Financial DuPont Uniprise McKesson/HBOC Bombardier Sun Microsystems Sears 3M Cendant Mortgage Mt. Carmel Hospitals Starwood Hotels Sun Microsystems JP Morgan/Chase Kodak Cisco Systems Johnson & Johnson American Express Sony Callaway Golf Black & Decker Ford Federal Express Bank of America Allstate Insurance And many others…

18 Six Sigma Project Examples Helping Customers Pay A local and long distance telephone service provider was concerned about the amount of uncollectable accounts. Write- offs were costing the company over $3 million a year. A Six Sigma improvement team was formed to analyze the problem. After gathering initial data on the process and digging into root causes, three major contributors were identified: 1) lack of accountability for account reps; 2) a lack of procedures or training on how to deal with delinquent accounts; and 3) lengthy dispute resolution cycle time. The process improvements implemented included a primary customer contact system; revision, documentation and training in the collections process; and a cross functional buddy system to address customer problems more effectively and efficiently. Savings in the first few months totaled nearly $100,000. With the initial success so clear, the team has continued its work to further reduce the write-off amount. Developing New Products A telecommunication products company used Six Sigma design techniques to enable greater flexibility and faster turnaround at a key manufacturing facility. At the plant, several specialized products are built on a single production line. Since each customers order may require different circuit boards, the need to avoid retooling was critical. Working through alignment of customer needs, product design and process specifications, retooling was dramatically reduced. The plant was also able to institute parallel processing so that if one area of the line wasnt functioning, work-in-process could be easily rerouted without adding to cycle time. The improvement efforts also examined how information technology interfaces with the plant to meet customer needs. Under the new plant design, customer orders are transmitted electronically to the computer, where virtual design is used to ensure quick response. Altogether, these innovative changes reduced overall cycle time from days to hours, and improved productivity and resource management. Providing a Prompt Answer A credit financing center used a Six Sigma team approach to analyze and improve call center operations. The focus was on two objectives: 1) reducing average call answer time; and 2) increasing the percentage of customer issues and questions resolved in the initial call. The team centralized and simplified the call answering system, cutting average times from 54 seconds to 14 seconds. First Call Resolution jumped from 63% to 83%.

19 Six Sigma Project Examples Sending the Message Faster and Cheaper Every order at a telecommunications service company was being handled the same way. Whether a request for transmission time was for a few minutes or for a dedicated channel, each deal was passed through several levels of review, both technical and legal, before being approved. In addition to impacts on costs and resources used, the delays were very aggravating to the firms customers. A process improvement team measured and analyzed the problem. While the solutions identified were counter to the way we do things at the company, data backed up their definition of the problem and the likely impact of their proposed solution. After 6 months streamlining the review of routine orders, the group documented $1 million in savings. Thinking Outside the Box The spare parts marketing and logistics group for an aerospace manufacturing company was looking for ways to take costs and time out of their service to customers. One major cost element was parts packaging: bulk parts shipments from manufacturing plants were unpacked, placed on warehouse shelves, then picked and repackaged for shipment to customers. By focusing the process design on customer needs and value-adding activities, the spare parts packaging operation was moved from the warehouse to the plants. Packaging material cost savings alone were cut by half-a-million dollars per year. The change also contributed to major improvements in on-time delivery, which have jumped from less than 80% to over 95% in about three years. Giving Credit When Its Due A major corporate credit card company was experiencing a severe problem with excess cycle time for new card applications. A Six Sigma team was chartered to tackle the issue. Looking at defects (applications taking longer than a customers requirement) enabled the group to identify several problem points in their process, including: excessive hand- offs, redundant activities and multiple approval and inspection points. By rethinking the process and challenging existing assumptions, the team was able to get approval for a series of changes in the approval activity. Cycle time from application to mailing of the credit card was cut from a range of days down to 42 days. Since the teams goal was 30 days or less, they are continuing with further root cause analysis of factors impacting the process. One of the barriers now recognized is the response time of customers providing information to the credit card company. Working with the customer to reduce their cycletime will be a challengehowever, its considered a reasonable challenge for Six Sigma improvement efforts.

20 Six Sigma Drives Profitability Reported Results From Six Sigma Initiatives (cost savings and revenue gains) GE Capital - $2+ billion Sun Microsystems - $150+ million Federated Department Stores - $30+ million Roche Diagnostics - $4.5+ million Starwood Hotels & Resorts - $25+ million

21 Benefits of Six Sigma Understand & Satisfy Customers More Effectively –Drivers of satisfaction, loyalty, behavior, market share –How are we doing? How can we stay ahead of competitors? Enhance Efficiency –Reduce variation, eliminate errors and rework –Expand internal capacity Drive Profitability –Reduce operational expenses due to errors, rework –Grow market share and share of wallet –Increase revenues Transform Management Thinking –More informed decisions, greater collaboration & focus –Optimize flow of value to customerand gains to shareholders

22 Pivotal Resources The Leader in Organizational Improvement

23 Pivotal Resources History Six Sigma services provided to growing number of firms including Cendant, Sears, Ford, American Express, Starwood Hotels, Sun Microsystems. Focus on practical application and demystifying concepts/tools Pivotal Resources founded with mission of tying diverse organization improvement methods and programs into a coherent approach to building business leadership Product Development & Project Management consulting & training for: Johnson & Johnson, Silicon Graphics, Quantum, Sony Electronics Supply-Chain Management & process ownership consulting & training for Clorox GE Capital launches Six Sigma: Pivotal is primary Vendor/Partner. Implementation consulting, training materials development and Champion, BB & GB training for thousands of GECS professionals worldwide Pivotal consultants apply process improvement, TQM & rational thinking processes to critical business issues at organizations including petrochemical, health care, high tech and consumer products Pivotals principals launch process improvement services across the world. Process Improvement and Design/Redesign consulting and training projects for: Auspex Systems, FHP Healthcare, VMX Voice Processing, Read-Rite, Macys West Publication of The Six Sigma Way, presenting Pivotals approach and implementation guidelines for Six Sigma. (Forbes names it #9 of most influential business books of past 20 years). Translated into 15 languages and over 200K copies sold! 2001 Two new books published by McGraw-Hill New clients include Cisco Systems, Callaway Golf, Principal Financial, Federated Department Stores, Carlson Wagonlit, AOL Broadband, Roche Diagnostics International office opens in Brighton, England. Asia branch established. Clients include Marks & Spencer, Halifax Bank of Scotland New clients include Wells Fargo, Dal- Tile, Intel and British Petroleum. Pivotal launches two eSigma products: Oaktreean online reference tool and nLighten an online introduction to process improvement.

24 Pivotal Clients (partial list)

25 Pivotal Resources Advantages Expert in Six Sigma and Lean Implementation - Pioneered early Six Sigma methodology -Authored the best selling The Six Sigma Way Proven Ability to Drive Results - Partnered with clients to deliver billions of dollars in benefits - Trained over 20,000 leaders, managers and front line employees World-Class People and Experience - The most experienced Six Sigma professionals (400+ yrs cumulative) - Client list includes some of the worlds most respected companies Delivering the Highest Customer Satisfaction -All services are customized to meet an organizations unique objectives -Our model emphasizes self-sufficiency and establishing change as a core competency Innovative Learning Models and Training Materials - Modular training approach specifically designed for service and transactional businesses -Most comprehensive and highly regarded Six Sigma materials in the industry

26 For more information... United Kingdom Albert House 82 Queens Road Brighton, East Sussex England BN1 3XE 44(0) United States 1646 N. California Suite 520 Walnut Creek, CA The Most Experienced & Knowledgeable Consultants The Most Innovative & Effective Learning Models The Most Comprehensive Training Materials

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