Could Six Sigma Improve Our Governments Performance?

Useless-Knowledge.com

By Michelle Malsbury
Nov. 27, 2005

Jack Welsh from GE was one of the forerunners with regard to the use of Six Sigma to improve his organizations performance. It was a sweeping success story and one that all realms of business, including our government, can learn some valuable lessons from.

Six Sigma begins with specifically defining one's project or objectives. From there one needs to outline how best to measure the performance of your project or it's objectives. This is a critical point in any projects success because without the most comprehensive and significant measures you can not effectively control or steer your project toward certain success. Next, you analyze the critical success factors to see where you can improve your desired results. Control is the next function in this process. Control comes from having some set standards of performance (benchmarking, etc.), being able to measure that performance, identify any deviations, and take the necessary corrective action. (MGT 578, Chapter 9, UOP eResource)

I doubt any of us can debate that our government is filled to the brim with inefficiencies that need correcting. A local example of such-A friend of mine that went to work for the local government in the Keys once told me that his direct supervisor told him to take things slow and easy so he didn't make the rest of the workers look like the were slacking off-even though they most certainly were. This type of behavior is the backbone for nearly all governmental agencies and needs to be changed so we can cut some of the fat from our budgets, tighten our belts, and begin to foster some sort of fiscal responsibility for the future. Our national debt is higher and more out of control than it has ever been before. Without an eye on efficiency and performance we have no where to go except further down and farther in debt.

I propose that we revamp all job descriptions (from the top down-this means the White House too) and create a balanced scorecard that can accurately depict and reflect the optimum performance for any given position within our government. From there we cut all unnecessary jobs and begin to close the gap in their lost performance. We reward those that are performing at or above optimum and use their performance as the benchmark for those that are not towing the line. If there is duplication of jobs or overlap of duties, let's consolidate jobs and foster a more team based approach to getting those jobs done via cross-training and sharing the data/information collected (this should include all forms of intelligence gathering agencies too). Just because we can (and always do) increase the budget the following year and hire more people to continue and perpetuate the cycle that was founded upon those inefficient employees with pathetic work habits does not mean we should do so. Leave the money on the table and work within the means you already have. Sometimes less is more! Let's see what we can accomplish if we try.

This unfounded and misguided war with Iraq is costing the American public Billions of dollars each month. Billions of dollars that could better be used to help the people of America. The same principles of Six Sigma can be applied here.

With the Billions of dollars wasted on this war folly we could have comprehensive health care for ALL Americans. Eliminate outside insurance and create a government based insurance that offers the same coverage to ALL American's. Allow people to see whatever doctor they prefer instead of forcing them into only those that are aligned with the insurance agencies. Streamline the pricing and set a fixed number for any given service that might be provided. Set caps for lawsuits targeted at mal-practice. Bring all mal-practice insurance under the government umbrella so it is affordable and does not drive up the cost of healthcare. Provide all healthcare institutions with state of the art equipment that can help to diagnose and treat illnesses faster and better. We need to reward and fund institutions that provide valuable research and alternative cures for life-threatening diseases (this should include stem cell research). Level the playing field where drug companies are concerned and don't force our people to go outside of our borders to obtain their medicines at better or more competitive prices.

We can wipe the slate clean from illiteracy and provide a quality education for all children. We just need to define the things that are most important and set forth a strategic and tactical plan for achieving them. The “No child Left Behind” has left more children behind than any other piece of legislation. We are no longer teaching the basic things that a child needs to get along in life, but are instead teaching a test that should be forgotten. We need to be able to recruit and hire the best qualified teachers and create a nation wide educational system where the same criteria is taught across the board and leaves no gap between states, counties, or locales. Without our children we cannot progress. We cannot advance technologically and will surely be surpassed by those nations that embrace education and have nonexistent illiteracy rates.

All of this costs money. IT takes a concerted effort and takes planning on behalf of those charged with making this a better America. If we work more efficiently, cut the fat from our national budget, withdraw from Iraq, and concentrate on our issues here at home we can prosper! So I say tell your local congress/representatives that they have forgotten about the people that entrusted them to office. They have let their opinions be shaped by those welding the most power and influence. Let's get back to the basics and move America forward before it is too late!

Reference: MGT 578, Chapter 9, UOP eResource

The Six Sigma Syndrome

Express Hospitality

Six Sigma (6s) - a disciplined management methodology remains a mystical term in the corporate sector. The tool enables the organisation to continuously improve its work culture and processes. Saurabh Jaggi divulges ways of its implementation and benefits to the hospitality industry



Six Sigma (6s) - even after years of its existence and hundreds of articles splashed all over, remains one of the mysterious buzzwords in the corporate sector. The 6s team is an integral part of the quality set up in any organisation, aiming at establishing a continuous improvement culture.

Which brings me to an interesting and unusual question - What is 6s?

Is it a metric, a tool, a methodology or a discipline?

The answer is - all of the above.

Sigma is a Greek alphabet used to designate the distribution around the mean of any process.

History:

Six Sigma is a management tool developed by Motorola in the mid-1980s that helped it realise superior performance results in the organisation. GE, Allied Signals (now Honeywell), Ford, American Express, Chase JP Morgan followed suit and saved millions of dollars through this quality methodology. Mikel Harry who is also known as the Godfather of this methodology, though he did not invent it, is acknowledged as a leading authority in theory and practice. He is recognised for preaching and popularising it. While Dr Deming's theory of profound knowledge built management awareness and Dr Juran established the foundation of Quality Science, Dr Harry demonstrated how to transform theory into practice at companies like Motorola, GE and Allied Signal. The credit for assigning the name Six Sigma goes to a Motorola engineer named Bill Smith who worked with Harry at Motorola.

My past few years in this field taught me that it is a rigorous and disciplined data-driven approach to improve processes by reducing variation and eliminating defects from a product and/or service. It helps an organisation realise breakthrough achievements to do things faster, better and cheaper and most importantly aims at achieving and exceeding customer expectations. The bouquet of tools that are offered coupled with its approach make it different from the other methodologies that have been existing for some time. To put it in simple terms, it is a metric that indicates how well a process is performing. The higher the Sigma value, the better.

The 3 commandments of this philosophy are: -

* The Customer is the King
* In God only we trust, rest all gather data
* Variation is the enemy of all processes

Manufacturing, automobile, aviation, medical transcription, software, ITES, banks and even other financial institutions are following this methodology.

The question then is why not Hotels?

If the first commandment of Six Sigma talks about the customer, how can we leave out an industry which is the epitome of customer service and thrives purely on achieving customer delight consistently.
The call of the hour is to welcome Six Sigma in this industry and utilise the skill to enhance employee efficiency and customer satisfaction

The call of the hour is to welcome Six Sigma in this industry and utilise the skill to enhance employee efficiency and customer satisfaction. Increasing competition from other organisations and intensive work reaffirms the above hypothesis.

In an industry where customer interactions occur on an hourly basis, each customer touch point is critical for building personalised service credibility and developing customer affinity.

Some of the areas/ processes where this approach may add value: -

Hotel-wide

* Enhance Customer Loyalty
* Reduce Employee attrition
* Productivity/Efficiency Improvement
* Improve Work-life balance
* Reduce Billing errors/losses
* Developing better performance measures/ metrics
* Increase Revenue
* Reduce Cost
* Capture 'Voice of Customer' data

Front Office Operations/ Sales & Marketing

* Reduce wait time during peak check-in time
* Reduce wait time during peak check-out time
* Eliminate billing errors and improve accuracy
* Reduce No shows
* Increase Occupancy
* Optimal utilisation of the current product mix (rooms) to increase revenue
* Increase customer delight at the Executive Club
* Reduce/eliminate loss calls (Operators area)
* Accuracy of information

Food and Beverage Service / Production

* To maintain optimal inventory
* Minimise wastage/pilferage
* Standardised output of Food and Beverage
* Reduce the time from order to service
* Optimal utilisation of current product mix (F&B/Outlets) to increase revenue

Accommodation Operation (Housekeeping)

* Reduce the turnaround time of making/turning down a room
* Standardisation of cleanliness across areas

Purchase/Stores

* Reduce Inventory surplus
* Cost Benefit Analysis between cost of inventory and cost of storage of products where prices vary seasonally
* Standardise the operating procedure of issuance to various departments
* Reduce the turnaround time of issuance to various departments

Human Resources/ Personnel

* Accuracy of payroll
* Documentation management
* Reduce the turnaround time of recruitment
* Reduce the turnaround time of relieving
* Increase the employee satisfaction rate

Throughout the hotel industry, the gospel of excellence is the key ingredient to success. In search of performance management excellence, Hilton Hotels corporation has implemented a Balanced Scorecard that incorporates revenue maximisation, operational effectiveness and brand management. The culture at Marriott International, Inc prides itself on its reputation for superior customer service - 'people serving people'. Starwood hotels and resorts worldwide Inc is the first hospitality company in the world to embrace Six Sigma since 2001 and extends this best practice to all properties worldwide, including the Sheraton Hong Kong Hotel & Tower.

Barry S. Sternlicht, chairman and CEO, Starwood Hotels and Resorts had stated, "The launch of Six Sigma is one of the most important strategic initiatives since the formation of our company," he continued. "It is our goal for every Westin, Sheraton, W, Four Points by Sheraton, Starwood Vacation Ownership and St. Regis /Luxury Collection guests to have a flawless experience during each and every visit. Six Sigma will help us reach that goal."

Starwood had also enlisted the expertise of the Six Sigma specialist and renowned author Peter Pande to assist with the launch. The Sheraton Miramar resort had the highest overall performance in 2004 in each of the five key metric measurements including the Guest Satisfaction index. They were recognised as the Hotel of the Year in EAME (East Africa and Middle East) region.

Starwood has run over 3000 projects worldwide to date in areas such as productivity, menu re-design, resort concierge, email marketing and launching a worldwide sales initiative. Another of its chain of hotels, The Westin Turnberry resort in Scotland won the IQPC's 5th Annual European Six-Sigma summit in London in April 2004. It won the European award in the category 'Design for Six Sigma' for a reservation project. Recently I read about the Sheraton Lagos Hotel & Tower having adopted 6s as the driving force for its business in 2003. Within this period it had experienced improvement in every facet of the business from the product delivery to service delivery to guest and employee satisfaction all of which impacted the bottom line positively. A major part of the credit for this transformation goes to Keith Ferrazi, a Harvard MBA and the youngest partner at Deloitte Consulting, joined the Starwood group as the chief marketing officer.

Leveraging the approach of the Starwood group, our leading hotel chains in India viz. Oberoi, Taj, Hyatt, Meridien, Intercontinental, ITC, Leela, Park etc can also benefit from this program. In order to enhance Customer Experience and Reduce Cost, all they need to do is welcome Six Sigma with open arms and make it a part of their culture.A number of Hotel Management graduates like me are today a part of the Six Sigma galaxy and we wait for the day when Six Sigma becomes a household name in the hotel fraternity - an industry which launched their careers, an industry which would remain their first love.

Lonmin lifts year earnings

iafrica.com

Justin Brown
Wed, 16 Nov 2005

World number three platinum miner Lonmin on Wednesday announced that it had generated earnings per share of 115 US cents for the year to September 2005, up 32 percent from 87 US cents in the previous comparative period.

Underlying earnings per share increased by 20 percent to 116.4 US cents compared with 96.9 US cents previously.

Lonmin's full year dividend remained unchanged at 72 US cents.

The group's total platinum production was 916 420 troy ounces, practically unchanged from the previous year's 916 757 oz.

Total platinum group metal output rose 1.7 percent to 1.704 million oz from 1.677 million oz in the previous year.

Turnover

Turnover rose to $1.128-billion from $1.030-billion previously. Profit before tax was $353-million, up from $303-million before.

"This year has seen us recover fully from last November's smelter accident and our furnace is now performing at record levels of throughput. With the acquisition of Southern Platinum, we now have the resource base to deliver around one million ounces of platinum production in our 2006 financial year," Lonmin's Chief Executive Brad Mills said in a statement.

By 2010, Lonmin is aiming to increase its annual platinum production to 1.3 million oz.

"We are creating a Lonmin culture that is committed to safety and operational excellence which fully reflects the demographics of South Africa.

"Our Six Sigma programme has had a very successful year delivering net benefits well ahead of our target. We will continue to focus on cost containment in 2006 with the expansion of our Six Sigma programme, the introduction of Shared Business Services, our New Era Labour Agreement and the continued de- bottlenecking of our operations.

"We expect to make considerable progress with the mechanisation of our operations in 2006 with around eight percent of our ore delivery coming from fully mechanized stopping panels by year end," Mills added.

Lonmin's Six Sigma programme delivered net benefits of R206-million in the 2005 year, R70-million ahead of the group's target.

Safety record

During the year, there were six fatalities at Lonmin and two children drowned in a mine water reclaim pond prior to it being fenced.

"Historically, the Limpopo operations had a very poor safety record due both to poor operating discipline and the mining method being used. Since taking control of the mine, we have made great progress in reforming the operating practices which has materially reduced the number of long time injuries and the severity of the incidents," Lonmin said.

Lonmin took control of its Limpopo operations on June 15.

Platinum market

The global market for platinum has continued to be robust with strong demand for auto catalysts and from other industrial uses, Lonmin said.

Earlier on Wednesday, platinum moved to a fresh 25-year high of $988/oz.

Supply has remained constrained due to the strength of the rand, which has limited the development of new sources of platinum production in South Africa, the group said.

"We expect these dynamics to continue to drive the market in 2006 and we continue to be very positive about the outlook for platinum and rhodium. We expect both these metals to experience continued strong growth in demand over the next few years," Lonmin added.

Turning to the outlook, Lonmin said that the group expected its cost of metal produced net of base metal by product credits in 2006 at its Marikana operations to be between R2300 and R2400 per PGM ounce.

At Lonmin's Limpopo mine for 2006, the company is forecasting an average cost of R2900 per saleable PGM ounce in concentrate.

I-Net Bridge

Slip Additive Eliminates Variable in Flexible Packaging

jobwerx.com

New slip additive keeps PET and other polymers for flexible packaging friction level from rising after adhesive lamination.

Ampacet 102794, a new slip additive for polyethylene-based packaging films, allows such films to be adhesive laminated to those made of polyethylene terephthalate (PET) or another polymer with little or no change in coefficient of friction (COF) after lamination. The slip resolves a common problem in the production of flexible packaging in which COF increases as the adhesive and often the PET film draw slip out of the polyethylene layers.

A masterbatch that makes it easier to use multilayer polyethylene film in packaging. The new product keeps coefficient of friction steady after lamination, so films handle well and move through packaging steps with less problems.

A series of 30-day tests have shown that the new slip holds COF steady before and after lamination, unlike standard erucamide slips. The measurements involved 2-mil, coextruded films having a metallocene LLDPE sealant layer. Each slip was placed throughout the structure along with an antiblock in the skin layers. The multilayer films were laminated to PET film using a solvent-based polyurethane adhesive.

COF in the samples containing Ampacet 102794 slip were 0.2 before and after lamination. The film with the standard slip saw COF rise from 0.12 before lamination to 0.72 to 0.85 afterward.

"We formulated Ampacet 102794 using a special additive that seems to have little interaction with the polyurethane adhesive commonly used in lamination," says Dr. Nilesh Savargaonkar, Physical Testing Lab Manager. "This means the new slip should work well with a variety of film structures, including coextruded LLDPE and ethylene vinyl acetate films. Our tests showed that COF with the new slip settled in at about 0.2 after just one day, indicating that it requires little or no conditioning time."

Brian McKinley, Strategic Business Manager for Films, says the new consistent slip should be welcomed by packagers who want to keep film movement through their form, fill and seal machines and other equipment predictable and problem free.

"Ampacet 102794 is cost effective," McKinley says," because it can be used at a letdown ratio of about 2 percent, which is lower than that usually needed with other slips. In addition, there is no need to overdose it to compensate for lubricant migration from the sealant layer after lamination.

"We designed Ampacet 102794 using our six sigma process from start to finish to ensure we created a well-targeted product. This began with a 'voice of the customer' survey in which consistent COF emerged as the most important concern among converters and packagers."

Slip additives are used to reduce a films resistance to sliding over itself to make it easier to use, or to help increase process line speed or to enhance a packagers machine operations.

There are two types of slip additives: "fast" blooming slip is used to make bags in line and a "slow" blooming slip is used to make roll stock.

What should manufacturers do to gain competitiveness?

ferret.com.au

By Justin Greig

NEWS of factory closures, loss of jobs, rationalisation and consolidation pepper the headlines and business periodicals with alarming regularity. Customer demands for higher quality, quicker delivery and lower prices are unrelenting, but no matter how ridiculous the demands become, there always seems to be someone willing to compete vigorously for the privilege of service.

And indications are that conditions will get tougher. A recent survey conducted by the Australian Industry Group, estimates that manufacturers lost an annual $560m in income as a result of increased Chinese competition in the domestic market. Around 28% of respondents indicated that they were competing against Chinese products that were priced below cost.

Faced with a small domestic market, relatively expensive labour force and large geographic distances to many major world markets – many Australian manufacturers may feel that the odds are stacked against them.

But Australia has a proud history of overcoming the odds – witness the disproportionate per-capita medal tally at the Athens Olympics as an example. So what lessons can be learned?

Our work with manufacturers globally and in Australia across a range of industries suggests five areas of focus: be clear on what game you are playing; don’t try to play every position; go for the gold medal; collaborate; and innovate.

WHAT GAME ARE YOU PLAYING? – manufacturing strategy must be set in the context of marketing strategy and corporate goals. Do customers want lowest cost? What attributes add value from a customer perspective? How stable are market segments and trends? Answers to these questions guide manufacturing scale, location and technological choices. For example, we recently completed a strategic review of a manufacturing network of a large Australian food company and concluded that manufacturing capability and capacity had become misaligned to marketing strategy for several commoditised product groups. Significant costs savings were identified from the resulting rationalisation.

DON ’ T TRY TO PLAY EVERY POSI TION – Only make those parts of the overall product that you can do better than anyone else in your market (it helps if you think globally here – many of your competitors do!).

The trend towards outsourcing is well established. Many multi-national manufacturing giants such as Sony, Kraft Foods and Ford Motors have already outsourced operations to third parties, from procurement and manufacturing through to logistics.

Significant savings can be generated by adopting a global view of outsourcing opportunities and carefully evaluating opportunities in low cost countries. Our work in the area of low cost country sourcing (LCCS) suggests that savings of up to 35% can be achieved, provided that total acquisition cost management, tax management and operational co-ordination mechanisms are carefully designed.

GO FOR THE GOLD – the prize for second place is increasingly unattractive. To gain competitiveness, Australian manufacturers must look for excellence in every aspect of their manufacturing operations.

For those aspects manufactured in-house, quality should continually be improved through lean principles and disciplined programs such as Six Sigma. Where aspects of manufacturing are outsourced, organisations must strive for excellence in supplier relationship management.

COLLABORATE – it is simply not possible to win repeatedly on your own. Unfortunately, many Australian companies still struggle to achieve internal collaboration amongst finance, marketing, sales and operations stakeholders.

Our work with several manufacturers suggests that effective integrated business planning is a pre-requisite for manufacturing success. Australian manufacturers must go farther and integrate manufacturing operations as part of the extended supply chain to enable effective collaboration and exception management among suppliers, distributors and customers within their business network.

One of our large high-tech clients has internet-enabled connectivity with trading partners. Information such as customer orders, forecasts, shipment data and production requirements are available 24/7. They have significantly reduced manufacturing cycle time from design to finished product and achieved higher levels of customer service as a result.

INNOVATE! – whatever you are doing well today is not enough to guarantee your success tomorrow. Innovation should be factored into your manufacturing program at multiple levels. First, the manufacturing footprint needs to support and enable corporate and marketing innovation goals.

For many companies this means capacity appropriately allocated to support rapid trials, quicker launches and more tailored products. Sales and operations planning processes and software need to factor in new product development activity seamlessly and be extensible to cover the operations of collaborative manufacturing partners, joint venture partners and / or new acquisitions.

Second, manufacturers need to foster a culture of innovation and creativity within their staff. Our recent work with a large telecommunications supplier has shown that relatively simple change management techniques can translate into radical improvements in time to market.

Conditions may be tough, but those Australian manufacturers who are willing to think globally and transform their businesses based on the five principles above can be tougher!

*Justin Greig is director, supply chain management practice, Capgemini Australia.

8 November 2005

How GE Money is making it big in Asia

Rediff.com

Assif Shameen in Bangkok and Diane Brady in New York | November 07, 2005 | 11:35 IST

Tucked away in a corner of a post office in downtown Singapore is a free-standing booth operated by an employee of GE Money, the consumer finance arm of General Electric Co.

It's a modest display, but a popular one. Lunchtime customers wait patiently in line to apply for personal loans. The GE unit began marketing uncollateralised loans -- with hefty 14 per cent annualised rates -- through SingPost just six months ago. And with just a few dozen well-placed booths offering cash on the spot, it has already carved out a lucrative niche in Singapore's well-developed banking market.

"We are delivering [financial] products to Singaporeans right where they need them," says Greg O'Callaghan, Singapore chief of GE Money, the brand name of the old GE Consumer Finance in most major markets.

That speaks volumes about the kind of smart tactics GE is using to grab a piece of Asia's booming financial marketplace. Lured by soaring regional growth rates, low capital costs, and credit-starved retail markets, officials at the $15.7 billion GE unit say expansion in emerging Asia is their top priority.

Despite being years behind rivals like Citigroup and HSBC, GE is catching up fast. After just two years in India, for example, GE Money became the No. 2 credit-card issuer in 2002. And to jump-start its business in China, GE bought a 7 per cent stake in Shenzhen Development Bank on Oct. 21. "We're trying to move our centre of gravity to Asia," says David R Nissen, president and CEO of GE Money. "The growth rates in Thailand are double what we have in the mature countries of Europe."

Nissen, who 12 years ago helped set up GE Consumer Finance (now branded GE Money), says that as growth has slowed in mature markets such as Western Europe and Japan, Asia has become increasingly attractive.

In the first nine months of this year, consumer finance accounted for 12 per cent of GE's $123 billion in sales and 13 per cent of its $17 billion in profits. Asia is expected to make up less than one-quarter, or $698 million, of GE's total consumer finance earnings this year.

But it is the fastest-growing segment, up 14 per cent from last year's $610 million. To expand its Asian toehold, over the past 12 months GE has spent nearly $1.3 billion snapping up midsize finance firms in China, the Philippines, and South Korea.

The idea is to leverage widespread awareness of the GE name by tapping into a growing demand from middle-class Asians for credit to pay for everything from cars to groceries to weekend flings on the installment plan.

Until now, that market has been dominated by a handful of players such as Citigroup's CitiFinancial and less reputable firms just a step up from loan sharks. "GE has done well in the region by cherry-picking segments that many of the larger players had overlooked," says Paul Bartholomew, Asian banking consultant at East & Partners Ltd. in Sydney.

Ultimately, GE sees itself becoming a financial supermarket in Asia that offers services ranging from plain-vanilla bank accounts to sophisticated investments such as insurance and securities. But where GE has struck gold first is the market for credit cards and short-term unsecured cash loans in amounts up to $10,000.

A staple among consumers in Japan -- where GE fine-tuned its business model -- unsecured loans are finding a following elsewhere in Asia for those who prefer borrowed cash to plastic.

One reason is that interest rates on these loans average between 8 per cent and 15 per cent, less than the standard 16 per cent to 22 per cent on outstanding card balances.

Default rates, a potential land mine since the loans are uncollateralised, are kept below 4 per cent with rigorous spot checks based on computerized credit data supplied by regional credit bureaus. "The biggest opportunity in Asia[n finance], we believe, is in the consumer-finance business," says Yoshiaki Fujimori, president of GE Money Asia.

With just 1 per cent of the Asian consumer-finance market, Fujimori sees plenty of room for growth in a fragmented playing field. GE also doesn't hesitate to seek out allies. In India, a seriously underserved credit market, GE has teamed up with large banks.

A key partner is the State Bank of India, with which it launched a joint credit-card program in 1999. That has vaulted GE into a position as India's second-largest card issuer, with nearly 2 million cards in India and $1.2 billion in assets. GE has won fans in India thanks to a speedy application process using Six Sigma quality techniques that cut the wait for a card from weeks down to just days.

To lay the groundwork for a much broader push into Asian finance, GE has been bulking up. Its deal for a piece of China's Shenzhen Development Bank gives it a platform not only for credit cards but also for wealth management.

The Chinese deal came on the heels of the purchase of the Philippines' oldest savings institution -- midsize Keppel Bank -- in October. And GE is negotiating to buy up to 33 per cent of Taiwan's midsize Cosmos Bank. And late last year, it spent $1.2 billion for 43 per cent stakes in two South Korean companies: top auto-financing firm Hyundai Capital Services and No. 3-ranked credit-card issuer Hyundai Card. None of these acquisitions stand out for high margins or rapidly expanding revenue streams. But that's precisely what GE wants. "We don't buy growth," says Nissen. "We grow what we buy."

All the same, Asia's retail banking market is fiercely competitive. Large local players dominate most markets, and megabanks such as Citibank, HSBC, and Standard Chartered have built up substantial operations over the decades.

In addition, other Western banks are rushing into Asia, and that is bound to increase the competition and erode margins. So GE tries to be innovative. For instance, it has linked up its credit-card operations with several retailers and other companies, including Tesco, Hyundai Motor, and Thailand's Central Department Store.

Going Wal-Mart's way

GE officials say the company plans to expand that strategy to markets such as China through partnerships with Wal-Mart and French retailer Carrefour. But some analysts say tie-ups and small-bore investments are no substitute for a vast retail banking network. London-based Asia veteran Standard Chartered PLC has been mentioned as a possible acquisition target that would instantly transform GE into a giant in Asia. GE officials won't comment.

In any event, such a deal would go against the grain of not paying for growth, since Standard Chartered has a market capitalisation north of $25 billion. Instead, GE seems more likely to stick to its playbook of nurturing business in Asia by mixing two parts midsize deals with one part organic growth.

Mumbai's amazing dabbawalas

The Smart Manager

Pradip Thakker, Smart Manager | November 11, 2005

Four thousand five hundred semi-literate dabbawalas collect and deliver 175,000 packages within hours. What should we learn from this unique, simple and highly efficient 120-year-old logistics system?

Hungry kya? What would you like: pizza from the local Domino's (30 minute delivery) or a fresh, hot meal from home? Most managers don't have a choice. It's either a packed lunch or junk food grabbed from a fast food outlet. Unless you live in Mumbai, that is, where a small army of 'dabbawalas' picks up 175,000 lunches from homes and delivers them to harried students, managers and workers on every working day. At your desk. 12.30 pm on the dot. Served hot, of course. And now you can even order through the Internet.

The Mumbai Tiffin Box Suppliers Association is a streamlined 120-year-old organisation with 4,500 semi-literate members providing a quality door-to-door service to a large and loyal customer base.

How has MTBSA managed to survive through these tumultuous years? The answer lies in a twin process that combines competitive collaboration between team members with a high level of technical efficiency in logistics management. It works like this...

After the customer leaves for work, her lunch is packed into a tiffin provided by the dabbawala. A color-coded notation on the handle identifies its owner and destination. Once the dabbawala has picked up the tiffin, he moves fast using a combination of bicycles, trains and his two feet.

A BBC crew filming dabbawalas in action was amazed at their speed. "Following our dabbawala wasn't easy, our film crew quickly lost him in the congestion of the train station. At Victoria Terminus we found other fast moving dabbawalas, but not our subject... and at Mr Bhapat's ayurvedic pharmacy, the lunch had arrived long before the film crew," the documentary noted wryly. So, how do they work so efficiently?

Team work

The entire system depends on teamwork and meticulous timing. Tiffins are collected from homes between 7.00 am and 9.00 am, and taken to the nearest railway station. At various intermediary stations, they are hauled onto platforms and sorted out for area-wise distribution, so that a single tiffin could change hands three to four times in the course of its daily journey.

At Mumbai's downtown stations, the last link in the chain, a final relay of dabbawalas fan out to the tiffins' destined bellies. Lunch hour over, the whole process moves into reverse and the tiffins return to suburban homes by 6.00 pm.



To better understand the complex sorting process, let's take an example. At Vile Parle Station, there are four groups of dabbawalas, each has twenty members and each member services 40 customers. That makes 3,200 tiffins in all. These 3,200 tiffins are collected by 9.00 am, reach the station and are sorted according to their destinations by 10.00 am when the 'Dabbawala Special' train arrives.

The railway provides sorting areas on platforms as well as special compartments on trains traveling south between 10.00 am and 11.30 am.

During the journey, these 80 dabbawalas regroup according to the number of tiffins to be delivered in a particular area, and not according to the groups they actually belong to. If 150 tiffins are to be delivered in the Grant Road Station area, then four people are assigned to that station, keeping in mind one person can carry no more than 35-40 tiffins.

During the earlier sorting process, each dabbawala would have concentrated on locating only those 40 tiffins under his charge, wherever they come from, and this specialisation makes the entire system efficient and error-free. Typically it takes about ten to fifteen minutes to search, assemble and arrange 40 tiffins onto a crate, and by 12.30 pm they are delivered to offices.

In a way, MTBSA's system is like the Internet. The Internet relies on a concept called packet switching. In packet switched networks, voice or data files are sliced into tiny sachets, each with its own coded address which directs its routing.

These packets are then ferried in bursts, independent of other packets and possibly taking different routes, across the country or the world, and re-assembled at their destination. Packet switching maximises network density, but there is a downside: your packets intermingle with other packets and if the network is overburdened, packets can collide with others, even get misdirected or lost in cyberspace, and almost certainly not arrive on time.

Elegant logistics

In the dabbawalas' elegant logistics system, using 25 kms of public transport, 10 km of footwork and involving multiple transfer points, mistakes rarely happen. According to a Forbes 1998 article, one mistake for every eight million deliveries is the norm. How do they achieve virtual six-sigma quality with zero documentation? For one, the system limits the routing and sorting to a few central points. Secondly, a simple color code determines not only packet routing but packet prioritising as lunches transfer from train to bicycle to foot.

Who are the dabbawalas?

Descendants of soldiers of the legendary Maharashtrian warrior-king Shivaji, dabbawalas belong to the Malva caste, and arrive in Mumbai from places like Rajgurunagar, Akola, Ambegaon, Junnar and Maashi. "We believe in employing people from our own community. So whenever there is a vacancy, elders recommend a relative from their village," says Madhba, a dabbawala.

"Farming earns a pittance, compelling us to move to the city. And the tiffin service is a business of repute since we are not working under anyone. It's our own business, we are partners, it confers a higher status in society," says Sambhaji, another dabbawala. "We earn more than many padha-likha (educated) graduates," adds Khengle smugly.

The proud owner of a BA (Hons) degree, Raghunath Meghe, president of MTBSA, is a rare graduate. He wanted to be a chartered accountant but couldn't complete the course because of family problems. Of his three children, his daughter is a graduate working at ICICI, one son is a dabbawala and the younger son is still studying.

Education till standard seven is a minimum prerequisite. According to Meghe, "This system accommodates those who didn't or couldn't finish their studies. It's obvious that those who score good marks go for higher education and not to do this job, but we have people who have studied up to standard twelve who couldn't find respectable jobs." There are only two women dabbawalas.

Apart from commitment and dedication, each dabbawala, like any businessman, has to bring some capital with him. The mini-mum investment is two bicycles (approximately Rs 4,000), a wooden crate for the tiffins (Rs 500), at least one white cotton kurta-pyjama (Rs 600), and Rs 20 for the trademark Gandhi topi.

Competitive collaboration

MTBSA is a remarkably flat organisation with just three tiers: the governing council (president, vice president, general secretary, treasurer and nine directors), the mukadams and the dabbawalas. Its first office was at Grant Road. Today it has offices near most railway stations.

Here nobody is an employer and none are employees. Each dabbawala considers himself a shareholder and entrepreneur.

Surprisingly MTBSA is a fairly recent entity: the service is believed to have started in the 1880s but officially registered itself only in 1968. Growth in membership is organic and dependent on market conditions.

This decentralised organisation assumed its current form in 1970, the most recent date of restructuring. Dabbawalas are divided into sub-groups of fifteen to 25, each supervised by four mukadams. Experienced old-timers, the mukadams are familiar with the colors and codings used in the complex logistics process.

Their key responsibility is sorting tiffins but they play a critical role in resolving disputes; maintaining records of receipts and payments; acquiring new customers; and training junior dabbawalas on handling new customers on their first day.

Each group is financially independent but coordinates with others for deliveries: the service could not exist otherwise. The process is competitive at the customers' end and united at the delivery end.

Each group is also responsible for day-to-day functioning. And, more important, there is no organisational structure, managerial layers or explicit control mechanisms. The rationale behind the business model is to push internal competitiveness, which means that the four Vile Parle groups vie with each other to acquire new customers.

Building a clientele

The range of customers includes students (both college and school), entrepreneurs of small businesses, managers, especially bank staff, and mill workers.

They generally tend to be middle-class citizens who, for reasons of economy, hygiene, caste and dietary restrictions or simply because they prefer whole-some food from their kitchen, rely on the dabbawala to deliver a home cooked mid-day meal.

New customers are generally acquired through referrals. Some are solicited by dabbawalas on railway platforms. Addresses are passed on to the dabbawala operating in the specific area, who then visits the customer to finalize arrangements. Today customers can also log onto the website www.webrishi.com to access the service.

Service charges vary from Rs 150 to Rs 300 per tiffin per month, depending on location and collection time. Money is collected in the first week of every month and remitted to the mukadam on the first Sunday. He then divides the money equally among members of that group. It is assumed that one dabbawala can handle not more than 30-35 customers given that each tiffin weighs around 2 kgs. And this is the benchmark that every group tries to achieve.

Typically, a twenty member group has 675 customers and earns Rs 100,000 per month which is divided equally even if one dabbawala has 40 customers while another has 30. Groups compete with each other, but members within a group do not. It's common sense, points out one dabbawala.

One dabbawala could collect 40 tiffins in the same time that it takes another to collect 30. From his earnings of between Rs 5,000 to Rs 6,000, every dabbawala contributes Rs15 per month to the association. The amount is utilised for the community's upliftment, loans and marriage halls at concessional rates. All problems are usually resolved by association officials whose ruling is binding.

Meetings are held in the office on the 15th of every month at the Dadar. During these meetings, particular emphasis is paid to customer service. If a tiffin is lost or stolen, an investigation is promptly instituted. Customers are allowed to deduct costs from any dabbawala found guilty of such a charge.

If a customer complains of poor service, the association can shift the customer's account to another dabbawala. No dabbawala is allowed to undercut another.

Before looking into internal disputes, the association charges a token Rs 100 to ensure that only genuinely aggrieved members interested in a solution come to it with their problems, and the officials' time is not wasted on petty bickering.

Learnings

Logistics is the new mantra for building competitive advantage, the world over. Mumbai's dabbawalas developed their home-grown version long before the term was coined.

Their attitude of competitive collaboration is equally unusual, particularly in India. The operation process is competitive at the customers' end but united at the delivery end, ensuring their survival since a century and more. Is their business model worth replicating in the digital age is the big question.

Ford Ramping up Capacity for Hybrids

Azom.com

Ford Motor Company has announced that it has begun engineering a hybrid transaxle for its next generation of hybrid vehicles and revealed that its new 3.5-liter V-6 engine will be hybrid capable. Both components will play key roles in the company's commitment to increase hybrid production to 250,000 by 2010.

"We are ramping up our capacity for hybrids and working to improve the business equation for hybrids," said Dr. Gerhard Schmidt, vice president, Ford Research and Advanced Engineering. "This involves not only the new transaxle, but continuing to research advanced technologies to improve hybrid technology to make our vehicles even more efficient."

The new 250 horsepower, 3.5-liter V-6, also known as the Duratec 35, will be built at the Lima (Ohio) Engine Plant. In addition to offering hybrid capability, the new engine also is capable of meeting the Partial Zero Emissions Vehicle standard and can easily accommodate other technologies, such as gasoline direct-injection and turbo charging with direct-injection. It will debut in conventional gasoline-internal-combustion form in the all-new 2007 Ford Edge and Lincoln Aviator crossover utility vehicles. By the end of the decade, the new 3.5-liter V-6 architecture will power more than half of the Ford, Lincoln and Mercury crossover and car lineup.

The new 3.5-liter V-6 represents Ford's first use of Design For Six Sigma (DFSS) in a major powertrain program. Traditionally used as a find-and-fix, data-driven methodology, DFSS utilizes Six Sigma principles in the design phase to produce more robust components and systems from the very beginning.

The Lima Engine Plant will use two innovative environmental manufacturing technologies to help produce the new engine. Minimum Quantity Lubrication (MQL) will be used for the machining of crankshafts. The MQL process uses far less coolant than conventional wet-machining, provides a cleaner plant environment, improves the longevity of machining equipment and saves a significant amount of money.

http://www.ford.com

Posted 10th November 2005

Technology Alone Won’t Bring Product Launch Success

AMR Research

Wednesday, November 09, 2005
Michael Burkett

Business process improvement is leading the adoption of PLM, as manufacturers question how to be successful with their technology investments. The trend is joining together traditional process improvement initiatives with large-scale enterprise technology projects. Manufacturers are pushing these improvements through internal teams, as well as seeking greater service support from technology partners.

Application vendors see increased demand for services

As manufacturers seek greater assistance in getting the most value from their PLM investments, application vendors are having to respond. The result is an increase in the services components of vendor revenue, as well as aggressive partnering with service providers. PTC partly credited a 39% increase in 4Q05 in consulting and training revenue for its strong year-end performance. For several years, Dassault Systemes and IBM PLM have successfully joined service and software, and UGS, Agile, MatrixOne, SAP, and Oracle are all placing more emphasis on services to ensure deployment results.

These efforts are further supported by increasing PLM practices within third-party consulting firms, including Accenture, BearingPoint, Capgemini, Deloitte, EDS, and HP. Specialty firms that have focused exclusively on product development are PRTM and Stage-Gate. Finally, offshore firms, including Infosys and Wipro, are adding support to this mix as well.

Internal Six Sigma programs define technology supported improvements

Six Sigma is best recognized for improving process and quality at General Electric and Motorola. At the recent Product Development Management Association (PDMA) conference in San Diego, Honeywell presented the success it has achieved in Design-for-Six-Sigma to reduce the risk and downstream costs of New Product Introduction (NPI) in its Aerospace division. By applying the structured methodology to the product design process, Honeywell has improved modular design and platform reuse to reduce high-risk development programs, and achieved 26% part cost savings and a 60% reduction in product development cycle time. Technology institutionalizes the process through component supplier management, workflow automation, and easy access to product data.

Organizational structure must support process improvement across silos

One key to success is to focus not on the technology application category, but on the business process, which often crosses organizational- or department-level boundaries. To be successful, however, manufacturers must have the organizational structure in place to make improvements across these business silos. A best practice learned from Six Sigma is that projects are monitored at an executive level and prioritized based upon the business problem defined, where data analysis leads to the recommended improvement. Product launch is an example of a process that crosses organizational boundaries, requiring a process owner to define the best improvement opportunities and appropriate technology to support these improvements (see the AMR Research Report “The CIO’s Guide to the PERFECT Product Launch: Translating Innovation to Business Benefit”). Leading with the business result and not the technology will ultimately lead to user adoption and the desired results.

© Copyright 2005 by AMR Research, Inc.

AMR Research® is a registered trademark of AMR Research, Inc.

Leading Retail Services Provider Moves Forward with Six Sigma Training for Nationwide Workforce

PR Newswire

SARASOTA, Fla., Nov. 10 /PRNewswire/ -- National In-Store (NIS), the
world's fastest-growing retail services company, has added 42 new Six Sigma
Yellow Belts to its roster. As the first retail services provider to
incorporate Six Sigma into its cache of management protocols, NIS is firmly on
its way to meeting its goal of training hundreds of associates across the
country in the management tool designed to reduce costs, increase
efficiencies, and bolster customer service.

Six Sigma first entered the corporate lexicon in the 1980s and many of the
world's most successful organizations, including manufacturers, health care
providers, and even government agencies, adhere to its principles. Personnel
trained in Six Sigma obtain yellow, green and black belts, which indicate
their level of training and proficiency in the Six Sigma philosophy. Today,
Six Sigma remains a staple in many corporate cultures and has penetrated the
country's top retail sales organizations. By incorporating Six Sigma into its
culture, NIS is assuring its client base that effective processes will be used
to increase efficiencies and positively impact the bottom line.

"NIS is a pioneer when it comes to incorporating Six Sigma into retail
services," explains CEO and founder Tom Dowdy. "Our major retailer and
consumer product company clients expect us to manage their accounts
efficiently and provide quick results. Our philosophy is centered around
working better, faster and smarter for our customers," Dowdy adds. "Six Sigma
is all about taking processes and re-engineering them to meet the customers'
key requirements. It fits perfectly with NIS' customer-centric approach to
quality retail service."

Special: Six Sigma, the way almost to perfection

The Nation

Published on October 31, 2005

A leading Six Sigma author and exponent explains his craft to KI Woo on a recent visit to Bangkok

Six Sigma today has evolved into a management process brand that is attached to a system of concepts, tools and attitudes

Six Sigma is an oft-mentioned term in Thai management circles. One just needs to browse the business sections of Bangkok bookstores to realise it is a very hot topic in Thailand.

Peter Pande, a noted Six Sigma author and exponent recently told The Nation that Six Sigma had become a global movement to enhance the mechanisms for improving businesses.

“Six Sigma has a lot of legacy tied to previous management-improvement efforts such as reengineering, total quality management and other techniques,” he said.

According to Pande, Six Sigma as a management-process methodology was first coined at Motorola in the 1980s when that company was trying to improve the quality of its products. “At that time Motorola’s product quality was so poor that the Japanese were basically taking away their market share,” he said

Motorola, Pande said, began using Six Sigma as a theme in 1987 when the company was trying to find an easy way to measure the performance levels of its processes. “Sigma is a letter that is used to designate standard deviation in statistics,” he said.

Basically, Pande said, the Motorola people surmised that if they could fit six standard deviations within a customer's requirements, the probability of delivering a defect to the customer would practically be zero. “So it’s a sort of statistical measure that indicates almost perfection,” he said.

A Six Sigma process would mean statistically a company manufactures no more than 3.4 defective pieces per million in manufacturing operations, said Pande. He added that Six Sigma today had evolved into a management concept that promoted an ideal or goal that all companies had to strive for in their operations. “Today, Six Sigma is about how a company makes change a core competency of the business,” he said.

Management consultants such as Pande recognise that in reality most business processes are nowhere close to Six Sigma. Customer requirements change constantly, and a company is always measuring its performance against these changing customer requirements.

“If a customer tightens its requirements or demands more from a company’s processes, a company can go from Six Sigma to Three Sigma in a heartbeat,” he said.

So how does a company implement Six Sigma and make the ability to change a core competency of the business?

Pande said Six Sigma tried to look at the business and its process as a system. “Six Sigma is really about improving the end-to-end processes of the business,” he said.

Six Sigma tries to understand the high-level processes that are really driving a company’s performances. “More importantly, it must all start with focussing on the external customer. Many other management techniques spend too much time focussing on improving specific techniques that really are not connected with satisfying the external customers’ needs,” he said.

Therefore Six Sigma processes should really be focusing on how these improvements add value to the business’ end results. “If a company doesn’t know who its external customers are, Six Sigma probably won’t help,” he said.

Six Sigma processes, Pande said, enable companies to be prepared for and respond quickly to changes in their environments. “Fundamentally, the Six Sigma concept helps management effectively identify and implement common sense, smart business practices.”

As a result, Six Sigma today has evolved into a management-process brand attached to a system of concepts, tools and attitudes about management. “Underlying all that, you will find different versions, flavours and approaches to Six Sigma that depend on how each company decides to apply it within its own context,” he said.

“In general, successful companies applying Six Sigma concepts and principles must really learn to understand their customers, know where they are going and really comprehend how well the company is serving them today.

“Lastly, since we profitably deliver these services at the performance calibre our customers are looking for, we must be flexible as their needs change and most importantly have the ability to identify what’s really happening today so we can readily change and successfully compete in the future.” he said.

ROI on Six Sigma Programs Directly Related to Investment Size,....

www.marketwire.com

ROI on Six Sigma Programs Directly Related to Investment Size, Survey Shows
Investments in Six Sigma Above $2 Million More Likely to Generate a Six-Fold Return; Executive Compensation Likely Plays a Role

BAINBRIDGE ISLAND, WA -- (MARKET WIRE) -- 11/03/2005 -- A new survey of almost 1200 Six Sigma professionals shows that the more companies invest, the greater the return. In the survey, released in the November/December issue of iSixSigma Magazine (www.isixsigma-magazine.com), companies that invested less than $500,000 in their program were most likely to break even at best. "But companies that invested $2 million or more in their Six Sigma programs were most likely to see at least a two- to five-fold return," commented Michael Cyger, CEO and publisher of iSixSigma Magazine and www.iSixSigma.com, "and about a quarter to a third of those companies saw a six-fold return."

The survey also proved what experts have been saying for a decade or more. "The single most important factor in success is executive support," said Michael Marx, research manager for iSixSigma. "The higher the level of executive commitment, the more successful the program." Respondents who rated their programs as "poor" said that 56 percent of their executives were uncommitted. Conversely, when respondents said their programs were somewhat or highly successful, "Nearly 87 percent of their executives were somewhat to highly committed," added Marx.

This commitment may be tied to executive compensation. "Over 84 percent of respondents who rated their programs as 'unsuccessful' in the first two years had no executive compensation tied to Six Sigma results," explained Cyger.

Those figures changed dramatically if companies had even 1 percent of executive compensation tied to Six Sigma. "Over a third of the respondents who rated their programs as somewhat successful met that minimal criteria," he said. "And more than 60 percent of the self-rated highly successful programs had executive compensation."

One surprising result from the survey was the success of enterprise-wide deployments compared to pilot programs. "For decades, some experts have been telling companies to start small, to do a pilot test so they can learn what works and what doesn't before they roll out Six Sigma across the entire company," said Cyger. "But our survey results contradict that advice."

Only 42 percent of respondents said their companies started with a full deployment. But those programs were three times more likely to report an eight-fold ROI in the first two years.

The conclusion from all these results is obvious. "You get what you pay for," said Marx. "A higher level of investment results in a higher return on investment."

The executive summary of this research can be found online at http://www.isixsigma.com/library/content/startup.asp.

Six Sigma Roadmap for Noise Exposure Analysis

occupationalhazards.com

Using Six Sigma methodology, a company is able to move from a blanket hearing conservation program to one targeted on actual exposures.

by Donald L. Cain

OSHA requires that employees who are subjected to an 8-hour time weighted average (TWA) noise exposure of more than 85 dB must be enrolled in a hearing conservation program. Because of insufficient monitoring and potentially a lack of solid data analysis, many employers place their entire work force in such a program. The practice is an admission that all employees are being exposed to hazardous noise levels, when in fact many are not. It also is a “blanket” administrative control and reduces the focus of effort on improving and eliminating the sources of high noise levels.

Instead of this blanket approach, the Six Sigma “DMAIC” roadmap can be employed to properly measure the noise exposure of the employees and prioritize the best approaches for reducing noise levels. The goal is to maintain levels below the OSHA limits and reduce the need to enroll employees in the hearing conservation program.

Following the Roadmap

W.R. Grace & Co. is a specialty chemical manufacturing company based in Columbia, Md. It has manufacturing sites across the globe and employs more than 6,000 people. Grace's manufacturing site at Curtis Bay (Baltimore) operates four separate plants and employs 400 hourly and 200 salaried workers. All employees at the site are enrolled in the hearing conservation program. Audiometric tests are completed annually by the medical department and a history is maintained for each employee.

In an effort to improve working conditions at the site, a team was established to analyze the conditions in one of the manufacturing plants. The team was composed of plant personnel, a representative from the Curtis Bay safety department and a Six Sigma Black Belt. An industrial hygienist from Grace's corporate location also was used as a resource.

The team followed the Six Sigma “DMAIC” roadmap. DMAIC stands for Define, Measure, Analyze, Improve and Control. All Six Sigma efforts start with a practical problem. The next step is to translate this into a statistical problem by finding baseline data or creating a quantifiable, measuring system for the key inputs and outputs. From the statistical analysis, priorities are set and a “statistical solution” is developed. Finally, the numbers are translated into a “practical solution” and implemented through the use of a solid “control plan.”

With this methodology as the guide, the team reviewed the existing operations in the plant. They consisted of three separate production lines and one warehouse operation. A total of 11 operators per shift ran the plant during each of three daily shifts. Process mapping was used to list all of the key process output and key process input variables (KPOVs and KPIVs). The outputs were concerns such as the noise exposure levels, safety, production rates, profitability and cost of hearing loss to employees and the company. The KPIVs consisted of the 11 individual job responsibilities, the shift and the equipment in the plant.

Cause and effect matrices took the information from the process map and prioritized the KPIVs in order of their impact on the noise levels for the operators. This was done for each job in the plant. In addition to the C&E matrix, historical noise exposure data was reviewed through the use of I-MR control charts. The statistical and visual information provided by these charts allowed the team to see how certain jobs varied and provide a new way to look at the problem of noise exposure.

For example, Chart 1 is for an operator who averages 78 dB on an 8-hour shift. Note that the variation in noise exposure was high, indicating that the individual performing this job is constantly moving in and out of areas with different noise levels. Chart 2, however, indicates a very different situation. For an 8-hour shift, this operator was exposed to an average of nearly 86 dB, with a much lower standard deviation than the first one. From the chart, it appears that around points 125-150 the operator was in a much quieter area, more than likely a meal break.

The qualifying information provided by the process maps, cause and effects matrices and failure modes and effects analysis when used in accordance with the statistical analysis (I-MR charts, basic statistics and analysis of variance) lead to a conclusion that the 11 jobs in the plant should not be grouped together in a hearing conservation program because each individual has very different exposures to noise. By using analysis of variance, it was easy to see a statistical difference among the jobs. From this information the team divided the operators into “similar exposure groups” or SEGs.

Sampling Methodology

Through the define, measure and analysis steps of the roadmaps, the team was able to list the key sources of variation in noise exposure. From this, the team developed a sampling methodology that would provide the statistical information necessary to conclude, at a 95 percent confidence level, that an individual was or was not being exposed to an 8-hour noise TWA of 85 dB or more. A plan was developed using “nested analysis of variance.” The key sources of variation to be analyzed were the SEG, in this case each of the jobs, the shift (7-3, 3-11 or 11-7) and the dosimeter being used to measure the levels. A sampling plan was created using 18 or 24 samples to account for the variation and provide the necessary statistical significance. The more samples taken the higher the level of confidence, but the more difficult to complete in the plants. Chart 3 below shows the structure of the sampling plan.

Once the data had been collected, it was analyzed using Minitab or a similar statistical software package. It was determined that 75 percent of the variability was attributable to operator responsibilities. This helps to verify the division of SEGs. The shift was not a significant variable in the model. The dosimeter represented just over 23 percent of the process variation. Based on the Six Sigma rule of thumb, if the measurement system represents less than or equal to 30 percent, it is adequate for the process and not a critical area for process improvement.

Based on the measurements taken, it was possible to conclude that only three of the 11 operators were potentially exposed to an 8-hour TWA of greater than 85 dB. The results of the nested analysis of variance provide an average and an upper and lower control limit at the 95 percent confidence level. If the SEG (operator job) had an upper control limit of greater than or equal to 85 dB, the group would be enrolled in the hearing conservation program. If not, the group would not have to be included in the program.

The method provides statistical support for management decisions. The information provided during the completion of the DMAIC roadmap also provides a means to prioritize improvement projects. The failure modes and effects analysis provides a living document and action plan to make changes. In the past, the plant supervisors would consider posting “Hearing Protection Required” signs or purchasing noise abatement equipment. This roadmap adds other options such as hard-wiring interlocks to turn off loud equipment when not required, modifying job responsibilities or ergonomic alterations to provide relief from noise. The sampling plans also provide a means to quantify the effects of the improvements and to reprioritize.

The use of the Six Sigma method is applicable to other areas of environmental, health and safety. The roadmap provides the data required to make the best decisions. The control phase requires work to be assigned and completed. The tools used also provide the documentation and means to follow the success of the improvements.

Donald L. Cain, P.E., is a Six Sigma Master Black Belt with W.R. Grace & Co. He has a bachelor's degree in mechanical engineering from Villanova University and a masters's degree in business administration from Loyola College of Maryland.