Six sigma and Total Quality Management 1 1 X Six sigma and Total Quality Management Department of Industrial and Systems Engineering Chung Yuan Christian University Taiwan, R. O. C. 1. The practices and implementation of Six Sigma In the past two decades, Six Sigma methodology has been widely adopted by industries and non-profit organizations throughout the world. In this section, we demonstrate the development of Six Sigma program, and discuss the features and the five steps of the improvements 1. 1 The introduction of Six Sigma Six Sigma methodology was first espoused by Motorola in the mid 1980s. Antony & Banuelas, 2002; Wiklund & Wiklund, 2002). At that time, Motorola was facing Japanese competition in the electronics industry and needed to make drastic improvements in its levels of quality (Harry and Schroeder, 2000; Linderman et al. , 2003). A Six Sigma initiative ,which is originally focused on manufacturing process and product quality (Harry & Schroeder, 2000), is also designed to change the culture in an organization through breakthrough improvement in all aspects of the business (Breyfogle III et al. , 2001, p. 32).
The Six Sigma architects at Motorola focused on making improvements in all operations within a process—thus producing results far more rapidly and effectively (Harry & Schroeder, 2000). The successful implementation of the Six Sigma program in Motorola led to huge benefits. Motorola recorded a reduction in defects and manufacturing time, and also began to reap financial rewards. Within four years, the Six Sigma program had saved the company $2. 2 billion (Harry & Schroeder, 2000). The crowning achievement was being recognized with the Malcolm Baldrige National Quality Award (Breyfegle III et al. 2001; Wiklund & Wiklund, 2002). IBM, SONY, and Allied Signal successfully followed Motorola in implementing Six Sigma. Allied Signal began its Six Sigma activities in the early 1990s, It successfully attained savings of US$2 billion during a five-year period (Klefsjo et al. , 2001). Sooner, the impressive results obtained by Allied Sigma induced General Electric (GE) to undertake a thorough implementation of the Six Sigma program in 1995 (Pande et al. , 2000) as a corporate initiative to improve net profits and operating margin (Hendricks and Kelbaugh, 1998).
The 1999 annual report of GE showed that the implementation produced more than US$2 billion in benefit (Slater, 2001; Coronado & Antony, 2002, Raisinghani et al. , 2005). Yang, Ching-Chow www. intechopen. com 2 Quality Management and Six Sigma As a result, the impressive benefits of implementing Six Sigma programs in Motorola, Allied Signal, and GE led the Six Sigma methodology being widely adopted by industries throughout the world. American Express, Ford, Honda, and Samsung have all applied the methodology (Klefsjo et al. , 2001; Sandholm & Sorqvist, 2002; Yun and Chua, 2002).
The Six Sigma has become the most prominent trend in quality management (Sandholm & Sorqvist, 2002; Yang, 2004) not only for manufacturing and service industries, but also for non-profit organizations and government institutes. The GE-6? program and the Motorola Six Sigma program did have some differences. Whereas Six Sigma activities in Motorola had focused on product quality and the manufacturing process, the GE-6? program extended the improvement activities to cover all key processes related to customer satisfaction. 1. 2 Some key views on Six Sigma Several prominent researchers have expressed views on Six Sigma. Hahn et al. (1999) emphasized that Six Sigma improvement is a highly disciplined and statistically based approach for removing defects from products, processes, and transactions, involving everyone in the corporation. * Harry & Schroeder (2000) emphasized that Six Sigma provides maximum value to companies—in the form of increased profits and maximum value to the consumer through high-quality products or service at the lowest possible cost. * Harry & Schroeder (2000) also concluded that Six-Sigma is a business strategy and philosophy built around the concept hat companies can gain a competitive edge by reducing defects in their industrial and commercial processes. * Pande et al. (2000) commented that Six Sigma is a comprehensive and flexible system for achieving, sustaining, and maximizing business success. It is driven by close understanding of customers’ needs and disciplined use of facts, data, and statistical analysis. * Pearson (2001) described Six Sigma as a program that combines the most effective statistical and non-statistical methods to make overall business improvements. Slater (2001) stated that the Six Sigma approach provides a very specific control program with control techniques that ensure continuation of improved processes. * Lucas (2002) described Six Sigma as a statistical business system and a functional methodology for disciplined quality improvement that achieves successful outcomes. * Treichler et al. (2002) concluded that Six Sigma is a highly disciplined process that helps organizations to focus on developing and delivering near-perfect products and services. It is also, in Treichlers’ (2002) view, a change-acceleration process that focuses on pursuing success and the rapid adoption of change. Yang (2004) asserted that the GE-6? program and the Motorola Six Sigma program did have some differences. Whereas Six Sigma activities in Motorola had focused on product quality and the manufacturing process, the GE-6? program extended the improvement activities to cover all key processes related to customer satisfaction. www. intechopen. com Six sigma and Total Quality Management 3 In addition to the major features noted above, other features of the GE-6? program include (Breyfegle III et al. , 2001; Pande et al. , 2000; Treichler et al. 2002). * GE-6? rojects are integrated with the company’s visions and strategies; * all GE-6? projects are rigorously evaluated for financial impact; * everyone who contributes to the success of the program receives significant rewards, especially in terms of staff promotion; * significant financial incentives (representing 40% of all bonuses received by employees) are tied to GE-6? projects; * a sound statistical approach to improvement is adopted; * projects are completed rapidly (usually within 3–6 months); and * bottom-line results are expected and delivered. 1. 3 Implementation of GE Six Sigma The main features of GE-6? re discussed above, in this subsection we introduce the implementation of GE Six-Sigma: * improvement steps; * * staff roles; and investment in training. 1. 3. 1 Improvement steps There have been many improvement models for process improvement or re-engineering. Most of these have been based on the steps introduced by W. Edwards Deming, which can be characterized as ‘Plan’, ‘Do’, ‘Study’, and ‘Act’ (PDSA)(Deming, 1993). GE-6? has a five-phase improvement cycle that has become increasingly popular in Six Sigma organizations: ‘Define’, ‘Measure’, ‘Analyze’, ‘Improve’, and ‘Control’ (DMAIC).
There is another cycle characterized as ‘Define’, ‘Measure’, ‘Analyze’, ‘Design’, and ‘Verify’ (DMADV) (Pande et al. , 2000). Like other improvement models, the DMAIC (or DMADV) model is grounded in the original Deming PDCA cycle. Usually, Six Sigma organizations use DMAIC for process improvement and DMADV for process design (and redesign). Table 1. 1 describes the specific tasks in each step, and the tools and techniques used in the steps. Step Define ? ? ? ? ? ? Map process and identify inputs and ? outputs ? ? Establish measurement system for ? inputs and outputs ? ? Understand the existing capability of ? rocess ? ? ? ? ? Specific tasks Identify improvement issues Organize project team Set-up improvement goal Estimate financial benefit Measure Tools and techniques employed Customer complaint analysis Cost of poor quality (COPQ) Brainstorming Run charts, control charts Benchmarking Process map (SIPOC) Cause and effect matrix Gauge R&R Control charts Process capability analysis Failure models and effects analysis (FMEA) www. intechopen. com 4 Quality Management and Six Sigma ? Identify sources of variation in ? ? ? ? ? ? ? ? ? Analyze Improve ? ? ? Control projects Table 1. 1 DMAIC steps and tools usage ? ? Standardize the process ? ? Maintain critical inputs in the optimal ? area ? ? Verify long-term capability ? ? Evaluate the results of improvement process Identify potential critical inputs Determine tools used in the improvement step Conduct improvement actions Use experiments Optimize critical inputs Cause-and-effect diagram Pareto diagram Scatter diagram Brainstorming Analysis of variance (ANOVA) Design of experiment (DOE) Quality function deployment (QFD) Process capability analysis Control charts Standard operation procedure Process capability analysis Fool-proofing (Poka Yoke) Run charts . 3. 2 Staff roles Along with the systematic improvement steps described above, the design of specific roles and their effective operations are important factors of the GE-6? program. Senior management is ultimately responsible for the success of the project through the provision of sufficient support, resources, and strong leadership. The implementation of GE-6? is thus top–down. The chief executive officer (CEO) is usually the driving force who sets up the vision, develops the strategies, and drives the changes.
Apart from the critical role of the CEO, other players also have their specific roles (Henderson and Evans, 2000): (i) ‘Champions’ are usually the senior managers, who are the sponsors of the project and responsible for success of Six Sigma efforts, they are fully trained business leaders who promote and lead the deployment of Six-Sigma projects; (ii) ‘Master Black Belts (MBBs)’ are the full-time teachers and consultants, they are responsible for Six-Sigma strategy, deployment, training, mentoring, and results.
A master Black Belt in Motorola has leaded as a Black Belt for about ten successful projects at least five years, and needs the recommendation of high managements; (iii) ‘Black Belts (BBs)’ have the key operational role in the program as full-time Six Sigma players, they are fully-trained Six-Sigma experts and lead the improvement teams. They are qualified as they successfully leaded at least two Six-Sigma projects; (iv) ‘Green Belts (GBs)’ are the process owners who, led by the BBs, work on Six Sigma projects while holding down their original job functions in the company. . 3. 3 Investment in training Because training is a key ingredient in achieving success through Six Sigma (Pande et al, 2000), Motorola and GE have invested heavily in employee training for their Six-Sigma programs. Motorola invested $150 million per year in Six-Sigma courses, GE also spent $ 500 million per year in the implementation of Six-Sigma program (Sandholm and Sorqvist, 2002), GE has invested more than a billion dollars in this effort (Hahn et al. , 1999). GE has designed ww. intechopen. com Six sigma and Total Quality Management 5 a complete training plan for the various roles described above—from the CEO, to the ‘Champions’, ‘MBBs’, ‘BBs’, and ‘GBs’. In addition, the training program extends to all other employees in the organization. The training courses are comprehensive and cover team leadership skills, measurement and analytical tools, especially statistical methods, improvement tools, planning and implementation skills, and so on.
For examples, (i). Champions have one week champion training related to Six-Sigma development, leadership, and the implementation plan. (ii). BBs spend about four to five weeks to receive the intensive, highly quantitative training, roughly corresponding to the five steps of the implementation of Six-Sigma improvement project. Thus, the length of training is approximately 16-20 weeks. (iii) GBs receive the training of six to ten days.
The courses include the statistical tools and the use of statistical software, the detailed modules of five steps, the innovative and improvement tools, and the skill of project management. (iv) MBBs then take over the responsibility of the training for all the BBs and GBs. 2. The critical success factors of the implementation of Six-Sigma In this section we want to discuss the critical success factors for the successful implementation of Six-Sigma projects.
We investigate the importance degree of the critical success factors in implementing Six Sigma, and their implementation level by using the questionnaire survey. 2. 1 The consideration of critical success factors Table 2. 1 lists the key factors, as asserted in five previous studies. The factors identified by Coronado & Antony (2002) and Antony & Banuelas (2002) are almost identical, with the exception that Coronado & Antony (2002) added one extra factor (“communication”). Most of the success factors in the other three studies are included in the work of Coronado & Antony (2002).
The total twelve critical success factors in Coronado & Antony (2002) are considered in the present study In addition, two additional key factors, “complete evaluation system of project performance” and “promotion and incentive for employees tied to the results of Six Sigma projects”, are also considered in this chapter according to Yun & Chua (2002) and Sandholm & Sorqvist (2002). The former introduces the factor of “accurate and fair evaluation of all successful Six Sigma projects with meaningful recognition and rewards for employees”.
The later suggests “focus on results” to assert that the employee promotion and incentive compensation are tied to the results of Six Sigma projects. Finally, apart from the above, another key success factor somewhat neglected by previous studies is the application of techniques and innovations. Although Coronado & Antony (2002) and Klefsjo et al. (2001) mention it as a required technique in the progress of Six Sigma projects, and Yun & Chua (2002) asserts that “linkage with all innovation and infrastructure activities” is also a key factor. We therefore add another key factor: “usage of innovative techniques and IT systems”.
In total, a study is conducted to adopt fifteen critical success factors in the questionnaire to investigate the extent to which they are implemented and their degree of importance from the firms’ perspective. www. intechopen. com 6 Quality Management and Six Sigma The author conducted the empirical study for those enterprises have implemented Six Sigma program in Taiwan, The aim of this empirical study is to investigate the importance degree and the implementation level of the critical success factors. Thus, the research design is conducted according to the aim of the research. The Likert-type scale is used in the questionnaire.
In the investigation of the importance degree of the critical success factors, a five-point scale from 1 (not important) to 5 (very important) is used. In the analysis of implementation level, a five-point scale from 1 (not implemented) to 5 (full implemented) is adopted 2. 2 The analysis of critical success factors The main focus of this study is to analyze the degree of importance of critical success factors for Six Sigma effectiveness as perceived by the respondents, and to assess the implementation level of these critical success factors by the organizations (see Table 2. 2).
As Henderson & Evans (2000) notes that “top management leadership and support” should be the critical success factor, our first priority of success factors is “top management involvement and commitment”. The other critical success factors are prioritized as follows: “cultural change”, “communication with all employees to achieve congruence”, and “training in Six Sigma”, and so on. It should be noted that “employees’ promotion and incentive tied to the results of Six Sigma projects” is considered as an important factor for the success of Six Sigma in GE (Hendericks & Kelbaugh, 1998; Henderson & Evans, 2000). However, in
Taiwan, this practice is not followed in the industries investigated. Hahn et al. , 1999 Key factors for Six ? Quantified functional impact Sigma effectiveness ? Continued top management support and enthusiasm ? The emphasis on a quantitative and disciplined approach ? The value placed on understanding and satisfying customer needs ? Combining the right projects, the right people, and the right tools Yun & Chua, 2002 Success factors for ? Strong proactive support with required Six Sigma resources provided by top management ? Acceptance and implementation of Six Sigma’s effectiveness basic disciplines by employees ?
Linkage with all innovative and infrastructure activities ? Accurate and fair evaluation of all successful Six Sigma projects with meaningful recognition and rewards for employees www. intechopen. com Six sigma and Total Quality Management 7 ? Management commitment and visible support Sandholm & Sorqvist, 2002 Requirements for Six Sigma success ? Adaptation to an organization’s situation and ? Development of uniform language & ? Prioritization and selection of projects ? Focus on training and its content ? Customer orientation ? Focus on results ? Investment of adequate resources Treatment of Six Sigma as a holistic concept needs ? Responsiveness to external influences. ? Follow-up and communication of success stories ? Cultural change ? Management involvement and commitment ? Development of strategy to introduce Six Sigma terminology Coronado & Antony, 2002 Critical success factors for Six Sigma projects ? Understanding tools and techniques within Six ? Project prioritization and selection Key ingredient for ? Management involvement and commitment ? Cultural change Six Sigma ? Organization infrastructure effectiveness ? Training ? Project management skills ?
Project prioritization and selection, reviews and tracking ? Understanding the Six Sigma methodology, tools, and techniques ? Linking Six Sigma to business strategy ? Linking Six Sigma to customers ? Linking Six Sigma to human resources ? Linking Six Sigma to suppliers Table 2. 1 Critical success factors for Six Sigma effectiveness ? Project management skills ? Linking Six Sigma to suppliers ? Linking Six Sigma to human resources ? Linking Six Sigma to customers ? Linking Six Sigma to business strategy ? Training ? Organization infrastructure ? Communication Sigma
Antony & Banuelas, 2002 www. intechopen. com 8 Quality Management and Six Sigma Critical success factor 1. Top management involvement and commitment 2. Cultural change 3. Organization infrastructure 4. Training in Six Sigma 5. Project management skills 6. Project prioritization and selection 7. Understanding methods, tools and techniques within Six Sigma 8. Linking Six Sigma to business strategy 9. Linking Six Sigma to customers 10. Linking Six Sigma to human resources 11. Linking Six Sigma to suppliers 12. Communication with all employees to achieve congruence 13.
Complete evaluation system of project performance 14. Employees’ promotion and incentive compensation tied to the result of Six Sigma projects 15. The usage of innovative techniques and IT systems Importance degree mean order 4. 808 4. 365 4. 019 4. 192 3. 865 4. 077 4. 137 4. 192 4. 192 3. 725 3. 635 4. 231 4. 135 3. 885 3. 596 1 2 10 4 12 9 7 5 6 13 14 3 8 11 15 Implementation level mean order 3. 885 3. 192 3. 596 3. 981 3. 577 3. 558 3. 667 3. 423 3. 269 2. 882 2. 692 3. 519 3. 481 2. 981 2. 942 2 11 4 1 5 6 3 9 10 14 15 7 8 12 13 To be improved factor * * * * * Table 2. Importance degree and implementation level of critical success factors Most of the organizations paid significant attention to training in Six Sigma. The factor of “training in Six Sigma” is thus the first priority of implementation level, followed by such factors as “top management involvement and commitment”, “understanding methods, tools and techniques within Six Sigma”, “organization infrastructure”, and so on (see Table 2. 2). In Table 2. 2, if a critical success factor has a higher importance degree with a lower implementation level, then the firm should pay more attention on its implementation.
In this case, we denote five CSFs as the “to be improved” factors for the industries in Taiwan: - Top management involvement and commitment - Cultural change - Communication with all employees to achieve congruence - Linking Six Sigma to business strategy - Linking Six Sigma to customers. www. intechopen. com Six sigma and Total Quality Management 9 3. The Integrated Model of TQM and Six Sigma By the end of the 1970s, the competitiveness of Japanese industries had equaled or exceeded that of American industries.
In large part, this was due to the successful Japanese implementation of company-wide quality control (CWQC) (Powell, 1995). By the 1980s, Japanese CWQC had been replicated in the United States, and total quality management (TQM) soon became the prevailing business strategy adopted by industries around the world. This evolution of TQM has resulted from the development, on a global scale, of a consistent philosophy concerning the relationship between business and customers. At various stages in this development, different ideologies and practices for implementing quality management have been prominent, but the onsistent goal has been to pursue the quality of products and services, to reduce costs, and to raise business performance. The success of Japanese industries in the total and effective implementation of TQM meant that Japanese firms led the way in the production of good-quality products at lower cost. 3. 1 The decreasing adoption of TQM and the increasing trend of Six-Sigma The successful implementation of TQM does indeed result in better business performance, as firms expect (Hendricks & Singhal, 1996; Gunasekaran, 1999; Hansson & Eriksson, 2002).
The benefits come in the areas of cost reduction, increased market share, increased profit, and enhanced business competitiveness (Youssef et al. , 1996; Gunasekaran, 1999). TQM has therefore been widely adopted by industries, even in non-profit and governmental organizations (Powell, 1995; Zabaha et al. , 1998). Several critical factors are essential if TQM is to be successfully implemented. These include the support of top management, visionary leadership, effective management of human resources, employee involvement, and a corporate culture of commitment to quality and customer satisfaction (Joseph et al. 1999; Sureshchandar et al. , 2001). However, in practice, these corporate factors are not easy to achieve. As a result, the literature contains reports of several cases in which the implementation of TQM has failed. Hubiak & O’Donnell (1996), for example, have asserted that approximately two-thirds of companies in the United States have either failed or stalled in their attempts to implement TQM. Many of these TQM programs have been cancelled, or are in the process of being cancelled, as a result of the negative impact on profits (Anonymous, 1996).
The failure implementation of TQM is due to several factors. Besides the difficult achievement of TQM practices, one of them is that TQM has been a rather diffuse concept, with many vague descriptions but few more graspable definitions, and the management does not have a complete picture of what TQM really means (Hellsten & Klefsjo, 2000). Another one is that too management teams over the world do not realize that implementation of TQM means a cultural change (Hansson & Klefsjo, 2003). In fact, TQM was one of two workplace trends that recorded a significant decline in 1996 (Anonymous, 1996).
Academic discussion of TQM and its implementation has suffered a similar decline in recent years. Is this trend really due to poor corporate business performance as a result of the implementation of TQM, with a consequent decline in the implementation of TQM, as has been asserted (Anonymous, 1996)? It is a contention that this is not an accurate reflection of the current status of TQM. Reports of instances of failed TQM implementation are only part of the explanation for the apparent declining trend in TQM. In reality, TQM has been so prominent for about twenty years that many firms and institutions have incorporated TQM ww. intechopen. com 10 Quality Management and Six Sigma into daily management activities. The result is that a well-established model of TQM has been so much a part of the routine business activities, that the ‘decline’ in discussion and implementation of the TQM is apparent, rather than real. As interest in TQM has apparently waned, interest in the Six Sigma program has increased. Since General Electric (GE) initiated its Six Sigma program (GE-6? ) in October 1995, the results have been far beyond the company’s original hopes and expectations.
Based on the remarkable business successes achieved in GE and other large corporations, an increasing number of companies have initiated the GE-6? program as a business improvement and re-engineering strategy (Pearson, 2001; Lucas, 2002). As a result, the Six Sigma program has gained great popularly in recent years (Slater, 2001; Lucas, 2002). It has even been suggested that TQM will be replaced by Six Sigma as the main strategy for successful business management. However, such assertions reveal a fundamental misunderstanding of the nature of TQM and its relationship with GE-6?. For example, Pande et al. 2000) have asserted that TQM is less visible in many businesses than it was in the early 1990s, pointing to several major TQM gaffes as reasons for this apparent decline. According to Pande et al. (2000), these problems include a lack of integration, leadership apathy, a fuzzy concept, an unclear quality goal, failure to break down internal barriers, inadequate improvements in performance, and so on. They conclude that Six Sigma can overcome many of the pitfalls encountered in the implementation of TQM and, hence, that Six Sigma’s expansion heralds a ‘rebirth’ of the quality movement (Pande et al. 2000). However, Klefsjo et al. (2001) and Lucas (2002) have a different perspective. Klefsjo et al. assert that Six Sigma is a methodology within- not alternative to TQM. Lucas asserts that Six Sigma is essentially a methodology for disciplined quality improvement. Because this quality improvement is a prime ingredient of TQM, many firms have found that adding a Six Sigma program to their current business system gives them all, or almost all, of the elements of a TQM program.
Lucas has thus concluded that: Current Business System + Six Sigma = Total Quality Management The TQM pitfalls noted by Pande et al. (2000) are not essential features of TQM. Rather, they are caused by incorrect practices adopted by firms, especially the lack of proper endeavour shown by management in the implementation of TQM. 3. 2. Total quality management Since TQM began in the mid 1980s, several gurus, like Deming, Juran and Ishikawa have much contribution on the development of TQM (Boaden, 1997).
Besides, many researchers and experts on quality management have been eager to study the essentials of TQM. In the beginning, there was a lack of consensus on the contents and practices of TQM. Now, with TQM having been implemented for more than twenty years, academics and practitioners alike have achieved a degree of consensus on TQM. Tobin (1990) has stated that TQM is a totally integrated program for gaining competitive advantages by continuously improving every facet of organizational culture.
TQM programs are usually based on the ‘quality philosophies’-- customer focus, employee participation, teamwork, and management by facts and continuous improvement (Brown, 1992). TQM is therefore an integrated management philosophy and set of practices that emphasize increased employee involvement and teamwork, continuous improvement, meeting customers’ requirements, team-based problem-solving, constant measurement of results, closer relationship with suppliers, and so on (Ross, 1993).
Short and Rahim (1995) www. intechopen. com Six sigma and Total Quality Management 11 have agreed that TQM can be viewed as a set of philosophies and methods used by an organization to guide it in continuous improvement in all aspects of its business. McAdam and McKeown (1999) have concluded that customer focus, employee involvement, empowerment, teamwork, measurement tools, training, quality systems, and top management commitment are all key factors in the successful implementation of TQM.
Boaden (1997) also examine the critical elements of TQM based on some early studies. It is worthwhile to refer to the research of Sila & Ebrahimpour (2002), they conduct a huge investigation of elements of TQM survey based on 347 researches published between 1989 and 2000. These views indicate that, although various researchers approach the issues of TQM from different perspectives, there is a general consensus regarding the essential principles, practices, and values of TQM (Hellsten & Klefsjo, 2000).
On the basis of these various approaches, especially the research of Sila & Ebrahimpour (2002) and Yang (2003a), the present subsection asserts the following to be essential agreed elements of TQM: * customer focus and satisfaction; * training and education; * top management commitment, support, and leadership; * teamwork; * employee involvement; * quality assurance; * quality information system and application; * continuous improvement; * flexibility * benchmarking and strategy planning; * process management; * product and service design and quality control; * employee management and empowerment; * corporate quality culture; 3. Comparison between TQM and GE-6? As previously noted, the passion for TQM has apparently declined, whereas GE-6? has been receiving increased attention (Anonymous, 1996; Pande et al. , 2000). As a result, there are several assertions related to the relationship between TQM and GE-6? appeared, especially the treatise that TQM will be replaced by GE-6?. However, there are very few studies in the literature that directly compare TQM with GE-6? completely, and in the limited studies that do exist, conclusions on the relationship between TQM and GE-6? have differed significantly.
Harry (2000b) has claimed that Six Sigma represents a new, holistic, multidimensional systems approach to quality that replaces the “form, fit and function specification” of the past. However, it is not readily apparent from Harry (2000a) which aspects of this multidimensional systems approach are presumed to be absent from TQM. Breyfegle III et al. (2001) have stated that Six Sigma is more than a simple repacking of the best from other TQM programs. Pande et al. (2000) had already taken a similar approach when they provided a review of some of the major TQM gaffes, and then compared TQM and GE-6? n the light of these problems with a view to showing how successful implementation of Six Sigma can overcome these failures. However, it should be noted that www. intechopen. com 12 Quality Management and Six Sigma these gaffes are principally a result of inappropriate implementation processes, rather than being caused by inherent TQM concepts and practices. In view of a lack of consensus on the relationship between TQM and GE-6? , the present section wants to compare TQM and GE-6? by using complete perspectives.
The author reviewed several studies (Boaden, 1997; Hermel, 1997; Goh, 2002), and selected the appropriate criteria used in these researches, and then integrated into 12 dimensions. They are: (i) development; (ii) principles; (iii) features; (iv) operation; (v) focus; (vi) practices; (vii) techniques; (viii) leadership; (ix) rewards; (x) training; (xi) change; and (xii) culture (Yang, 2004). These are presented in Table 3. 1, which represents a comprehensive review of the similarities and differences between the two approaches. 3. 4 Integration of TQM and GE-6?
It has been suggested that the implementation of TQM results in an over-emphasis on customer satisfaction, with a relative neglect of the pursuit of profits (Anonymous, 1996). Indeed, several empirical studies have asserted that implementing TQM might not achieve any significant positive effect on profitability (Bergquist & Ramsing, 1999; Harry, 2000b; Breyfegle III et al. , 2001). Furthermore, Harry (2000a) has noted that “What’s good for the customer is not always good for the company”. In contrast, it is argued that GE-6? achieves both customer satisfaction and excellent financial performance.
The major problem with TQM is that there is a disconnection between management systems designed to measure customer satisfaction and those designed to measure business profitability, and this has often led to unwise investments in quality (Breyfegle III et al. , 2001). It should be recognized that the objective of TQM is to achieve customer satisfaction, in order to increase customer loyalty. To sustain competitiveness and long-term profitability, companies not only devote themselves to attracting new customers, but also to retaining old customers in a continuous business relationship with incremental additional purchasing.
For these reasons, increasing customer loyalty should be one of the main concerns of all companies (Gorst et al. , 1998). Any assessment of the effectiveness of TQM thus requires a system to measure customer loyalty. If a management system cannot raise business performance and profitability, it will obviously be abandoned by firms. It is therefore apparent that indicators of customer loyalty and business performance should be added to TQM measurement systems. It is well known that GE-6? pursues both customer satisfaction and high profits.
If an integrated model of TQM and GE-6? were developed, synergistic effects could be anticipated. In the integrated model proposed here, two major indicators are included—customer loyalty and high profit performance. www. intechopen. com Six sigma and Total Quality Management Dimension 1. Development TQM Started in the mid 1980s, influenced by Japanese CWQC developed in the 1970s GE-6? in 1987. GE adopted Six Sigma program in 1995, Comments at about the same time. TQM was widely and 13 First espoused by Motorola TQM and Six Sigma began resulting in many benefits. uickly adopted, but interest has now declined. The situation with GE-6? is the reverse. TQM over-emphasizes customer satisfaction, and this can sometimes negatively affect profits. GE-6? focuses on both customer satisfaction and financial performance. 2. Principles ? Customer satisfaction (satisfaction of ? Pursues zero-defect, quality customers’ needs) ? Pursues financial ? Focuses on voice of ? Emphasis moved from problem-solving to ? Rapid change problem prevention ? Pursues zero-defect customer performance ? Responsibility for ? Continuous improvements 3. Feature
A systematic approach to quality management by integrating concepts, methods, processes, and systems. Uses project management to perform thorough change and process re-engineering, which are integrated with the company’s vision and strategy. TQM is essentially a system of continuously improving the quality of every aspect of business life. GE-6? focuses on radical change (which is also integrated with vision and strategy). TQM emphasizes that every person is involved in quality improvement at all levels. GE-6? uses specially designed roles and disciplined training to progress the radical changes. . Operation Continuous improvement through employee involvement and teamwork in total quality activities. Specially designed roles and a highly disciplined training program using statistical methods to perform reengineering of key processes through project management. 5. Focus TQM focuses on all quality Key processes and systems TQM considers every activities, all processes, and are all driven by the voice all systems. of customers. aspect of quality. GE-6? initially emphasizes the key processes related to customer needs, but gradually extends its improvement scope. www. ntechopen. com 14 6. Practices ? QCC, QIT Quality Management and Six Sigma ? Project management TQM methods are more traditional, and are learnt from Japan. GE-6? uses methods that can produce more aggressive results. The statistical tools used in TQM and GE-6? are very similar. However, the statistical tools used in TQM are quite basic, whereas GE-6? uses more advanced SQC tools. Both TQM and GE-6? emphasize leadership, especially the commitment and support of top management. However, TQM has a bottom-up management style whereas GE-6? gives emphasis to top-own leadership. 40% of bonuses are tied to the results of ? Promotion dependent ? High status accorded to MBBs and BBs on project results 6? projects GE-6? programs have more motivations and rewards than TQM. ? SPC, TPM 7. Techniques ? Hoshin management ? Seven QC tools ? Daily control ? Project management ? Suggestion system ? Design of structural ? Analysis of variance regression roles ? Benchmarking ? DMAIC or DMADV ? BPR ? Kano’s model ? Managers ? New seven QC tools ? Cp, Cpk, ppm ? Taguchi methods ? DOE ? Control Chart ? Multiple linear ? DOE ? Kano’s model ? Reliability FMEA, QFD ? Cp, Cpk, ppm ? Taguchi methods 8. Leadership ? Top management stresses leadership demonstrate best behavior, and influence subordinates by ? Autonomic ? Decentralization and ? Empowerment 9. Rewards ? Promotion ? Motivation delegation management example ? Senior managers are ? Senior managers are ? Top management emphasize the execution of 6? -program mentors responsible ? Manager’s praise and encouragement ? Bonus rewards www. intechopen. com Six sigma and Total Quality Management 10. Training ? Education and training for every ? Focus on instilling ?
Leaders’ instruction ? Improvement tools ? Gradual and slow on daily basis quality consciousness person ? Vast investment in ? MBBs are the teachers ? BBs have training, combined with the ? GBs have training with the application 11. Change ? Vast change of improvement tools GE-6? emphasizes fast change and significant re-engineering. Change coming from TQM is progressive. TQM brings about a culture change with a quality focus and customer orientation. The culture change in GE-6? is fast, with an emphasis on pursuing customer satisfaction and business performance.
DMAIC process and mentors training Both TQM and GE-6? emphasize employee education and training, but GE-6? has more investment in training than TQM. In GE-6? , training and its application are combined 15 ? Improvement results are small, and do not bring big changes ? Change is fast, and its scope is large. ? Cultivation of a culture incorporating the concept of pursuing business ? The culture change is caused by the ? Innovation-awareness re-engineering performance ? Re-engineering 12. Culture ? Setting up of a quality culture with ?
Employees are autonomous customer focus ? Employees have a team-awareness Table 3. 1. Comparison between TQM and GE-6? 3. 4. 1 Integration of management principles Although the management principles of TQM and GE-6? are somewhat different, there is congruence among their quality principles, techniques, and culture (as was demonstrated in Table 3. 1). As a result, the integration of TQM and GE-6? is not as difficult as it might seem. The critical task is to combine the best aspects of TQM continuous improvement with those of GE-6? re-engineering.
Although the activities of a quality Control circle (QCC) and quality improvement team (QIT) cannot achieve significant effects in themselves, they can cultivate quality concepts and team awareness among employees. Therefore, QCC and QIT can be performed by the operators and junior staff members to progress continuous improvements while focusing on daily operations and processes. GE-6? projects can be applied by engineers and senior staff members to the key processes and systems that are related to customer requirements and the provision of performance in products and services.
For GE-6? projects, some aggressive goals can be set, in conjunction with rapid project completion times. The target performances can be set according to the criteria of the critical-to-quality (CTQ) of key process—which are, in turn, determined according to the voice of customers (VOC). In TQM, the improvements are based on a customer satisfaction www. intechopen. com 16 Quality Management and Six Sigma survey and an understanding of customers’ requirements (Yang, 2003b). In this fashion, these two ways of understanding customers’ needs and expectations can be combined. See Figure 3. for a depiction of the model. 3. 4. 2 Integration of implementation practices Having discussed integration of management principles, the discussion now turns to the integration of implementation practices between the two systems. Fig. 3. 1 Integrated framework of TQM and GE-6? Employee participation, teamwork, quality management system, human-resources management (HRM), quality principles, objectives, and strategies are the key enablers of TQM implementation. They are also the critical factors in upgrading business performance, www. intechopen. com Six sigma and Total Quality Management 7 and are therefore also required for the implementation of GE-6?. The practices of GE-6? are project management, role design and operation, statistical quality control (SQC) tools, leadership and motivation, full support from the CEO, and so on. Most of these practices are also integral to TQM implementation. The framework of the integration of these practices and related systems of TQM and GE-6? is shown in Figure 3. 1 (Yang, 2004). Both TQM and GE-6? emphasize employee education and training, and there is only slight difference in the details of such training.
Statistical tools and improvement methods are the main ingredients of the training contents for both TQM and GE-6?. Apart from these statistical tools, TQM and GE-6? have other shared training imperatives—including basic concepts, leadership and communication skills, and project management. Apart from these shared elements, in planning training for an integrated model of the two programs, it is necessary to cover the elements that are not shared in common. This is incorporated into the model. Moreover, a certification system for fulfilling the needs of the GE-6? scale can be developed. 3. 4. Integration of cultural changes Both the implementations of TQM and GE-6? will bring the culture changes of the organization (Boaden, 1997; Pande et al. , 2000; Klefsjo et al. , 2001). However, GE-6? also emphasizes an awareness of speed and innovation, and is heavily performance oriented. These cultural features are the critical factors in pursuing excellent performance, and in raising competitiveness. In contrast, these have been somewhat neglected previously by TQM. In the integrated model presented here, these cultural features will enhance the performance effects of TQM implementation.
Summarily, in this integrated model, continuous improvement and 6? -reengineering are the key activities, located in the center of Figure 3. 1, and the customers’ needs and the voice of the customers are the derivers of the improvement and reengineering. The initiatives of TQM and those of GE-6? , located in the two sides separately, can be integrated as the enablers of the integrated system. Comprehensive education and training with certification to the employees are the powerful force in the realization of these practices. Finally, the culture changes with the features described in the base of Figure 3. are the fundaments of the successful implementation of this system. The overall objective of this integrated model is to reach both the customers’ loyalty and excellent performance. 3. 4. 4 Practical examples and conclusion TQM and GE-6? can certainly be integrated very well, as the following two examples illustrate. INVENTEC is a hi-tech company in Taiwan that has implemented TQM for many years. Indeed, the company won the National Quality Award in Taiwan in 1995. In addition to its long-standing practice of TQM, INVENTEC also introduced the GE-6? rogram in 2000. It then integrated this with its existing TQM system. The Ford Motor Company in Taiwan is another successful example of the integration of GE-6? with TQM. These two examples confirm that an integrated model of TQM and GE-6? is feasible and practical. The successful application cased show that this integrated model will be a powerful and practical approach with great potential for all industries. This integrated model is also could be a suitable quality management system for the non-profit www. intechopen. com 18 Quality Management and Six Sigma rganizations. The integration of TQM and GE-6? is an important trend, and should receive a favourable response from both practitioners and academics. 4. An Integrated Model of Business Excellence System The integration of Six Sigma into overall business strategy is another important issue for quality researchers and practitioners. Harry & Schroeder (2000) emphasized that Six Sigma provides maximum value to companies—in the form of increased profits and maximum value to the consumer through high-quality products or service at the lowest possible cost.
It is a business strategy and philosophy built around the concept that companies can gain a competitive edge by integrating Six-Sigma program with the organization’s vision and strategy. In this section, we want to discuss the integration of Six-Sigma with the strategy management, Hoshin management, and Balanced Scorecard. 4. 1 The issue of the integration of Six-Sigma with other strategic management systems If the implementation of Six Sigma is to be successful, Blakeslee and Jerome (1999) suggested that “Six Sigma efforts must be integrated with existing initiatives in business strategy, and key performance measures”.
They also provided an implementation model by integrating Six Sigma with business strategy. Smith & Blakeslee (2002) emphasized the potential of Six Sigma in helping companies to formulate and deploy business strategies and bring about broad transformational change. Thus, strategic Six Sigma principles and practices can help companies to formulate, integrate, and execute new and existing business strategies and missions (Smith & Blakeslee, 2002).
A growing number of companies is beginning to realize the full implications of Six Sigma as an engine to accelerate corporate strategy and organizational transformation (Smith & Blakeslee, 2002). It is thus apparent that the implementation of Six Sigma must be integrated with a company’s business strategy. However, in this context there are several issues to be resolved. These include: ? How can the organization’s vision, business strategies, and strategic goals be converted into specific Six Sigma projects? ? How can Six Sigma projects be focused on the ‘voice of customer’ and the organization’s critical success factors? How can the strategic goals be communicated to lower divisions and departments in the organization, and further deploy the strategic goals to the Six Sigma projects and organize the project teams? ? How can project teams monitor and control the progression of Six Sigma projects? In response to these issues, businesses are increasingly making use of a variety of management systems, methodologies, and tools—including ISO 9000, total quality management (TQM), Hoshin management, Six Sigma, and the balanced scorecard (BSC). In all of these practices, quality is the main focus.
Quality is no longer confined to the actual product or service; rather, the concept of quality is now applied to delivery, administration, customer service, and myriad other aspects of a firm’s business activities (Yang, 2009). Indeed, the concept of ‘quality’ now encompasses all the ways in which a company meets www. intechopen. com Six sigma and Total Quality Management 19 the needs and expectations of its customers, its employees, its financial stakeholders, and the community in which it operates (Tan, 2002). The effective management of such ‘quality’ is essential to competitiveness in the global market (Scheuermann et al. 1997; Prybutok & Cutshall, 2004). The implementation of ISO 9000 and TQM systems can be used to improve the quality of products and services and to raise the effectiveness of process management; implementation of the Six Sigma program can raise the level of customer satisfaction, process performance, and resources management; the implementation of BSC can improve strategy planning and long-term profitability; and so on. However, choosing and implementing these various programs is complicated by the fact that several of them have closely related concerns.
For example, TQM, BSC, and Six Sigma are all involved with an organization’s vision and strategy, whereas quality control circles (QCCs) and Six Sigma are both related to process improvement. These various similarities and differences can create difficulties if a firm implements several of these management systems simultaneously in an attempt to improve performance in all quality activities. In these circumstances, employees will become confused by the conflicting demands placed upon them, and this will produce a number of significant problems. For example: * In the mplementation of TQM, a firm is first required to set up quality objectives and action plans; * In the BSC system, a firm must first develop its vision and strategies, and then deploy them in terms of performance indicators in four perspectives (financial, customer, internal process, and innovation and learning); and * In the Six Sigma program, a firm will first consider its key performance indicators (KPIs), before linking them to a Six Sigma improvement project. If a firm were to undertake all of these simultaneously, it would be faced with many objectives to be reached, and many strategies and action plans to be implemented.
Given the finite limitations that exist in the resources of any organization, it is practically impossible for any firm to perform all of these tasks effectively. The ideal solution would be to integrate these various management systems and methods, thus enabling a firm to concentrate its focus and to navigate a unique course in the right direction. 4. 2 Development of an integrated business-excellence system An integrated model of business-excellence system has been developed in this section, see Figure 4. 1.
The critical task in developing a holistic business-excellence system is to combine the best aspects of continuous improvement in TQM with those of GE-Six Sigma reengineering. The improvement processes in TQM and Six Sigma projects can thus be integrated and implemented simultaneously (Yang, 2003b) (see Figure 4. 1). Employee participation and teamwork are the prerequisite of the effective implementation of the continuous improvements. Besides, it is needed to instill the quality concepts and problem consciousness into the employees’ mind. www. intechopen. com 20 Quality Management and Six Sigma
Fig. 4. 1. Framework of integrated model of business excellence system 4. 2. 1 Integration of relevant concepts and systems While implementing these programs, it is necessary to monitor process quality using various methods of statistical quality control (SQC). However, a prerequisite to any quality improvement is effective human-resource management (HRM). The key enablers of TQM implementation are therefore HRM and a comprehensive quality-management system. The concepts, initiatives, and systems described above are also necessary for the implementation of the GE-Six Sigma program.
In addition, Six Sigma also has its own unique features, including (Pande et al. , 2000; Breyfegle III et al. , 2001): * the systematic operational processes of ‘define, measure, analyze, improve, and control’ (DMAIC) and ‘define, measure, analyze, design and verify’ (DMADV); www. intechopen. com Six sigma and Total Quality Management 21 * the staff roles design of ‘champion’, ‘master black belt’ (MBB), ‘black belt’ (BB), and ‘green belt’ (GB); and * the utilization of advanced tools. It is necessary to integrate all of these into the new model proposed here.
In addition, strategic leadership is a key factor in the implementation of Six Sigma. In most cases, QCC or QIT are conducted ‘bottom–up’, but in Six Sigma they are conducted ‘top–down’. In these circumstances, authoritative leadership is required. The chief executive officer (CEO) is usually the driving force who sets up the vision, develops the strategies, drives the changes, imposes the projects, and motivates the employees. Most Six Sigma projects pursue significant financial benefits from meeting and exceeding the critical requirements of customers.
If the organization is to produce and deliver attractive and value-added products and services to customers speedily, it is essential that business operations be customer-focused and market-focused. Six Sigma projects must therefore be linked to the development of ‘lean production’, in which research and development (R&D) and innovation (product innovation, process innovation, and business innovation) are all key factors. R&D and innovation are also the drivers of productivity. R&D and innovation should thus be covered in this holistic model.
In passing, it is noted that these practices are not restricted to the Six Sigma program; they are also important drivers in the implementation of TQM. TQM programs are based on ‘measurement by fact’, and measurement is also a key step in a Six Sigma project. Various data are collected and analyzed, including product data, customer data, business data, technique data, R&D data, service data, and so on. To use the data effectively and efficiently, an organization requires an effective information technology (IT) system.
The utilization of such data represents an intangible asset, along with other intangible assets—such as skills, techniques, experience, intellectual property, know-how, knowledge, customer relationships, and so on. These intangible assets represent a valuable organizational resource, and they must be managed and applied in an effective knowledge-management (KM) system. The firm’s IT system and its KM system are also powerful tools in the development of new products and services, and in ensuring the quality of the present customer service.
Information technology has become an essential element in securing a competitive advantage—by facilitating the development of new products and services, assisting in adaptation to rapid market changes, incorporating new knowledge, and reducing times and costs in reaching customers (Bianchi, 2001). 4. 2. 2 Fundamental principles The objective of integrating TQM, Six Sigma, and several other major management systems is to pursue business excellence (Yang, 2009). However, the basic decision to be made is determination of the direction of development at the outset.
Mission and vision statements set the general goals and direction for the organization, and they assist shareholders, customers, and employees in understanding what the company is about and what it intends to achieve (Kaplan & Norton, 2004). A mission statement sets out the overall reason for existence and objectives of the organization. As Welch asserted: “…an effective mission statement basically answers one question: How do we intend to win in this business? ” (Welch and Welch, 2005). A vision statement is a concise statement that defines the ww. intechopen. com 22 Quality Management and Six Sigma medium-to-long-term goals of the organization. The vision should be market-oriented and should express how the organization wants to be perceived by the world (Kaplan & Norton, 2004). The enunciation of the mission and the development of the vision are usually the responsibility of senior management (Welch and Welch, 2005). Actually, the vision is linked to the mission. In the realization of the mission and vision, the values, attitudes, and activities of employees are critical.
According to Kaplan & Norton (2004), the actions of employees are guided by their values, and it is therefore important that the values proclaimed by the organization are accepted by the employees if those values are to be influential in guiding the thinking and behavior of the employees. Thus, in contrast to the creation of a mission, which is the responsibility of senior management, everyone in a company should have something to say about values (Welch and Welch, 2005).
Organizations can use company-wide meetings and training sessions to encourage as much personal discussion as possible in developing organizational values (Welch and Welch, 2005). The vision and values of the organization should thus motivate individuals and serve as a guide for allocating resources (Smith et al. , 1991). Effective leadership and successful execution are the prerequisites for achieving the organization’s vision. Execution has to be embedded in the reward systems and in the norms of behaviour that everyone practices.
So, focusing on execution is not only an essential part of a business’s culture, it is the one sure way to create meaningful culture change (Bossidy and Charan, 2002) Mission, values, vision, leadership, execution, and organizational culture are all linked. Taken together, they represent the guiding principles for the successful implementation of an integrated business-excellence system. 4. 2. 3 Implementation of strategic performance-management system Drucker (1999) stated that the starting point both in theory and in practice may have to be “managing for performance”.
The goal of an integrated business-excellence system is to go beyond mere ‘customer satisfaction’ to achieve customer loyalty through excellent performance (see Figure 4. 1). The management systems, programs, and practices of this integrated model are the tools that can be used to achieve this goal. However, an appropriate performance-management system is needed to monitor and evaluate the performance generated by this integrated business-excellence system. Strategic planning and Hoshin management are two popular strategic management tools (Glaister & Falshaw, 1999; Lee & Dale, 1998), and many organizations implement the two simultaneously.
Firms commonly perform a SWOT analysis and develop a vision, objectives, and strategies according to the methodology of strategic management, before deploying the organization’s objectives and strategies to the departments or units by the way of Hoshin management. During the implementation process, they commonly conduct a quality audit according to Hoshin management to produce progress reviews and an annual review. These organizations thus use an integrated model of strategic planning and Hoshin management to evaluate the performance of TQM (Kondo, 1998).
Balanced scorecard (BSC) was launched in 1992 as a framework of performance measurement that was expected to overcome some of the deficiencies of traditional performance measurement. It gives a holistic view of an organization by simultaneously looking at four important perspectives: (i) financial; (ii) customer; (iii) internal process; and (iv) innovation and learning (Kaplan & Norton, 1992). The main benefit of the BSC is its www. intechopen. com Six sigma and Total Quality Management 23 bility to translate an organization’s vision and strategy into tangible objectives and measures (Kanji & SA, 2002). The process of building a scorecard clarifies the strategic objectives, and identifies the critical few drivers for strategic success. The BSC is thus more than a performance-measurement system, and is commonly adopted as a strategic management system (Kaplan & Norton, 1992, 1996; McClintock, 2000). If a firm has adopted other performance management systems or programs before adopting BSC, it is necessary to integrate BSC with any existing systems.
Companies that wish to embark on the BSC while continuing to implement strategic planning and Hoshin management need to integrate the three systems. To do so effectively, it is necessary to understand the important features of each of these three performance management systems. They can be summarized as follow: * All three can be used in the development of vision, objectives, and strategies, and in the evaluation of execution performance. * Both strategic planning and the BSC involve strategic analysis, and the linkages among the objectives and strategies. Both strategic planning and Hoshin management impose action plans, and the allocation of resources to support the execution of these action plans. * Both BSC and Hoshin management emphasize goal-setting, the achievement of milestones, and the measurement of progress towards the achievement of strategic objectives. * Strategic planning focuses on the strategy of business development and competition. In this regard, environmental analysis and SWOT analysis are essential. * BSC emphasizes long-term development, and uses a scorecard of the key performance indicators (KPIs). Hoshin management converts the policies and objectives of senior management to departments, and pays much attention to the daily execution of policies. The features and relationships of strategic planning, Hoshin management, and BSC indicates that it is feasible to integrate these systems, and it is reasonable to expect that such an integrated model will be more comprehensive and powerful than each individual system acting alone. This integrated performance-management system is illustrated in Figure 4. 2. www. intechopen. com 24 Quality Management and Six Sigma Strategic Planning Divisions, Business, Units
Financial perspective Customer perspective Process perspective Innovation perspective Do, Check, Action Fig. 4. 2. Integrated model of strategic planning, BSC, and Hoshin management In this integrated performance-management system, BSC remains the major construct. According to the model, strategic planning is used to perform an environmental analysis and a SWOT analysis, and to develop the vision and strategies for the organization. Having established its vision and strategies, the firm can then develop a strategy map and performance indicators according to the four perspectives of BSC.
The firm can then use the methods of Hoshin management to deploy the strategies and the KPIs of the four perspectives to the departments and units within the organization. In this way, every individual receives the KPIs and a relevant action plan. The audit method of Hoshin management can then be used to manage and monitor the execution of this