Six Sigma Beyond the Factory Floor : Deployment Strategies for Financial Services, Health Care, and the Rest of the Real Economy

by Snee, Ron D.; Hoerl, Roger W.

• ISBN13: 9780131439887
• ISBN10: 013143988X
• Edition: 1st
• Format: Hardcover
• Copyright: 2005-01-01
• Publisher: FT Press

Summary

"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 & 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&D, education, nonprofits... every nonmanufacturing organization and function
• Expert deployment planning strategies, proven execution tactics
• Statistical methods, tools, and best practices–customized for nonmanufacturing organizations
• Something for every Six Sigma implementer–from beginners to leaders, champions, green belts, black belts, and master black belts
• Coauthored by Roger W. Hoerl, a leader in implementing Six Sigma at GE, including in corporate finance

Nonmanufacturing organizations are rapidly discovering Six Sigma's immense potential to reduce costs, improve performance, grow revenue, strengthen focus, and empower people. To achieve these results in your organization, start right here.

Drawing on new case studies, renowned practitioners Ron Snee and Roger Hoerl cover up-front planning and strategy... team building and executive sponsorship... project execution... methods, statistical tools, and metrics... overcoming obstacles... and much more. Their advice and best practices can guide you through any stage of the process, whether you're just starting out or extending an existing initiative. With their help, scores of world-class enterprises have delivered on the promise of Six Sigma. With this book, you can, too.

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 of 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.

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

Author Biography

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.

Table of Contents

Preface	xv
Part I The Case for Six Sigma Beyond the Factory Floor
A Holistic View of Six Sigma	3	(28)
The Impact of Six Sigma Beyond the Factory Floor	8	(5)
Intangible Impact	12	(1)
Integration of Process Design, Process Improvement, and Process Control	13	(2)
The Essence of Six Sigma	15	(9)
Deployment Aspects	16	(2)
Improvement Projects	18	(2)
Six Sigma Methods and Tools	20	(4)
Roles of Six Sigma Leaders	24	(3)
The Rest of the Story	27	(1)
Summary	28	(1)
References	29	(2)
Addressing the Fundamental Barrier: ``We're Different!''	31	(36)
Why Six Sigma Hasn't Been Deployed Holistically	32	(6)
Some Potential Root Causes	33	(3)
The Fundamental Barrier	36	(2)
What's Different?	38	(11)
Conceptual Differences	39	(4)
Technical Differences	43	(6)
What's Similar?	49	(13)
What Is Process Thinking?	58	(4)
Summary	62	(1)
References	63	(4)
Part II Ensuring Successful Deployment
Deployment Case Studies	67	(36)
The Bank of America Story	68	(5)
Deployment Strategy	70	(2)
Next Steps	72	(1)
Commonwealth Health Corporation	73	(10)
Getting Started	74	(1)
Deployment Strategy and Initial Results	75	(4)
Expansion of the Effort and Current Status	79	(4)
Motorola Finance	83	(6)
Deployment Within the Audit Staff	84	(2)
Broader Deployment Within Finance	86	(3)
GE Research and Development	89	(8)
Corporate Research Gets Into the Act	90	(1)
A Strategy Takes Form	90	(2)
Design for Six Sigma	92	(4)
Some Unique Challenges	96	(1)
Key Deployment Lessons Learned	97	(3)
Summary	100	(1)
References	101	(2)
A Proven Deployment Road Map	103	(52)
Keys to Success	104	(8)
Committed and Involved Leadership	105	(2)
Top Talent	107	(2)
Supporting Infrastructure	109	(3)
Road Map for Leading Six Sigma	112	(10)
Launching the Initiative	115	(1)
Managing the Effort	116	(1)
Sustaining Momentum and Growing	117	(2)
The Way We Work	119	(3)
Tailoring the Road Map for Your Organization	122	(2)
Deployment Plan Elements	124	(12)
Strategy and Goals	125	(1)
Process Performance Measures	126	(2)
Project Selection Criteria	128	(1)
Project Identification and Prioritization System	129	(1)
Deployment Processes for Leaders	129	(1)
Roles of Leadership and Others	130	(1)
Curricula and Training System	130	(2)
Project and Six Sigma Initiative Review Schedule	132	(1)
Project Reporting and Tracking System	132	(1)
Audit System for Previously Closed Projects	133	(1)
Reward and Recognition Plan	134	(1)
Communication Plan	135	(1)
Application to Specific Businesses and Functions	136	(10)
Specific Business Application Areas	137	(3)
Specific Functions	140	(6)
Pitfalls to Avoid	146	(3)
``Begin with the End in Mind''---Take a Systems View	149	(2)
Summary	151	(1)
References	151	(4)
Part III Ensuring Project Success
Project Case Studies	155	(38)
A Six Sigma Approach to Predicting Corporate Defaults	157	(17)
Define	158	(1)
Measure	159	(2)
Analyze	161	(4)
Design	165	(4)
Verify	169	(4)
Conclusion	173	(1)
An Application to Legal Litigation	174	(7)
Background	174	(1)
Define	175	(1)
Measure	176	(1)
Analyze	177	(1)
Improve	178	(1)
Control	179	(1)
Conclusion	180	(1)
The Batch Records Case	181	(9)
Define	182	(1)
Measure	182	(3)
Analyze	185	(2)
Improve	187	(2)
Control	189	(1)
Conclusion	189	(1)
Summary	190	(1)
References	191	(2)
Improvement Happens Project by Project	193	(54)
Keys to Completing Successful Projects	194	(19)
Selecting Good Six Sigma Projects	197	(8)
Selecting the Right People	205	(1)
Using the Right Methodology	206	(1)
Management Project Reviews	207	(4)
Guidance from MBBs	211	(1)
Right Involvement by Functional Groups	211	(1)
Project Closure---Moving On to the Next Project	212	(1)
How Projects Can Fail	213	(5)
Failures in Specific Project Phases	215	(3)
A Holistic Model for Improvement	218	(7)
Integrating Process Improvement and Control	221	(4)
Creating the Improvement System	225	(6)
Using the DMADV and DMAIC Improvement Models	227	(2)
DMAIC Process Improvement Model	229	(2)
Solution-Known Projects	231	(1)
Training for Project Improvement	232	(6)
Training Beyond the Factory Floor	238	(3)
Summary	241	(1)
References	242	(5)
Part IV Overcoming Methods and Tools Challenges
Unique Technical Challenges in Applying the Methods and Tools	247	(48)
How to Think About the Tools	248	(4)
Additional Guidance for Real Economy Applications	252	(2)
Key Tools Beyond the Factory Floor	254	(23)
Tool Integration	254	(2)
Individual Tools	256	(17)
Some Additional Tools Particularly Useful Beyond the Factory Floor	273	(4)
Unique Technical Challenges Beyond the Factory Floor	277	(15)
Non-Normal Data Distributions	278	(2)
The Truth About the Normal Distribution and the Normality Assumption	280	(3)
Strategies For Handling Non-Normal Data	283	(4)
What About Discrete Data?	287	(3)
Lean Services?	290	(2)
Summary	292	(1)
References	293	(2)
Making Six Sigma Your Strategic Signature	295	(18)
The Strategic Signature	296	(2)
New Ways of Thinking	298	(13)
Use Six Sigma as a Leadership Development Tool	299	(1)
Not Only a Methodology, but Also an Infrastructure	300	(3)
Use Six Sigma Across All Functions, Including Customers and Suppliers	303	(2)
Use Six Sigma to Create a Common Corporate Culture	305	(1)
Manage Six Sigma Projects As a Portfolio	305	(3)
Think Improvement, Not Training	308	(2)
Putting a Stamp on the Organization	310	(1)
Summary	311	(1)
References	312	(1)
Appendix List of Acronyms	313	(2)
Index	315

Excerpts

Preface: Six Sigma Beyond the Factory Floor PrefaceThe 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 thereal 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, andhuman 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 bookStatistical 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.InLeading 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