Sixsig

Copyright Motorola Inc.
Quality Is Our Job, Customer Satisfaction Is Our Duty, Customer Loyalty Is Our Future
SIX SIGMA
Presented by
JOHN A. LUPIENSKI
Copyright Motorola Inc. Quality Is Our Job, Customer Satisfaction Is Our Duty, Customer Loyalty Is Our Future
What We Will Cover
Motorola Overview
Quality Journey
Six Sigma The Concept
Deployment
Results
The Future
Lessons Learned

1997 Sales $29.8 Billion (42% / 58%)
24th in Fortune 500
1st in Electronics Manufacturing
7th in Total Exports
142,000 Employees in 53 countries
Motorola Statistics

By Product By Region
1997 Sales
GSS
40%
SPS
21%
LMPS
16%
Other
10%
MIMS
13%
Europe
19%
Asia
Pacific
9%
11%
Japan
6%
Latin America,
Africa, ROW
13%
China/
Hong Kong
United
States
42%
The Rules of Engagement
The Past The Future
Product
Business Unit
Motorola
Customer/Consumer
Enterprise (Motorola)
Business Unit/Product
Communications Enterprise
PERSONAL
COMMUNICATIONS
SECTOR
NETWORK
MANAGEMENT
GROUP
COMMERCIAL,
GOVERNMENT
AND INDUSTRIAL
SOLUTIONS SECTOR
NETWORK
SOLUTIONS
SECTOR
GLOBAL TELECOM
SOLUTIONS
GROUP
INTERNET AND
NETWORKING
GROUP
THE
COMMUNICATIONS
ENTERPRISE
Cellular Phones
Pagers
Consumer 2-Way
Products
Accessories
Terrestrial
Network Operators
Satellite Network
Operators
Systems
Equipment
Software
Services
Applications
Content
Cellular
Infrastructures
Satellite
Infrastructures
Global Network
Operator Solutions
Integrate PCS &
NSS Products
Servers
S/W Applications
Internet Solutions
Data Networking
ACCES
AUTOMOTIVE
& INDUSTRIAL
ELECTRONICS
GROUP
COMPONENT
PRODUCTS
GROUP
ENERGY
SYSTEMS
GROUP
FLAT PANEL
DISPLAY
DIVISION
MOTOROLA
COMPUTER
GROUP
AUTOMOTIVE.COMPONENT,
COMPUTER AND
ENERGY SECTOR
Powertrain Controls
Autobody Controls
Sensors
Telematics
Ceramics
Lighting
Quartz Products
Oscillators
SAWs
Battery Products
Battery Chargers
Power Supplies
Flat Panel Displays Embedded Systems
Single Board PCs
SPS
TRANSPORTATION
SYSTEMS
GROUP
CONSUMER
SYSTEMS
GROUP
WIRELESS
SUBSCRIBER
SYSTEMS GROUP
NETWORK AND
COMPUTING
SYSTEMS GROUP
SEMICONDUCTOR
COMPONENTS
GROUP
SEMICONDUCTOR
PRODUCTS
SECTOR
Systems Electronics
Transportation
Technology
Industrial
Imaging
Displays & Modems
Storage
Entertainment
Consumer Media
Telephony
Messaging
Wireless
New Media
Modems
Switching
Networking
Customer Equipment
Base Stations
PC Technology
Key Components
Distribution
Contract
Manufacture
Emerging Markets
Motorola Products
Cellular Telephones
Two Way Communications
Pagers
Semiconductors
Automotive Electronic Modules and
Components
Modems and Integrated Management Systems
Cellular and Satellite Infrastructure Systems
SOUTH KOREA
Global Facilities
UNITED KINGDOM
DENMARK
GERMANY
FRANCE
JAPAN
HONG KONG
PHILIPPINES
AUSTRALIA MALAYSIA
ISRAEL
COSTA RICA
MEXICO
CANADA
Copenhagen
Flensburg, Munich
Taunusstein, Dresden
Angers, Bordeaux,
Toulouse
Aizu Wakamatsu,
Tokyo, Sendai
Seoul
Kowloon
Manila
Melbourne
Adelaide
Kuala Lumpur
Penang, Seremban
Tel Aviv
Arad
Guadeloupe
Guadalajara
Mexico City
Chihuahua

Brampton,
North York
Richmond
Basingstoke, Stotfold, Swindon
Easter Inch, East Kilbride
Cork, Swords
TAIWAN
Chung-Li
CHINA
Tianjin
INDIA
Bangalore
BRAZIL
Sao Paulo
SINGAPORE
Quality J ourney
Changing Motorola's Quality Culture
1979 "Our Quality Stinks."

The environment
- A U.S. Centered Company
- Japan Inc. Attacking
- Quality Control Mindset


1980 Corporate Quality Officer named
Business Leadership
- Senior Business Leader
- Change in focus


1981 Motorola Training Center established
5 year 10X improvement goal
Corporate Quality Council
- Senior Leaders
- Common culture
- Lead, Teach, Audit
CQO
Quality Council
Lead
Teach
Audit

Courseware
Management Board
- Lead
- Teach
- Audit
Motorola
University
Business Units
Suppliers
Education
Customers
Quality Reviews
Short term results
QSR
Process
Assess
The Corporate Quality Office
Recommendations on
vision and direction
5 year 10X improvement goal
MCQC

Quality System Review
- Common audit tool
- Set Standards of Excellence
- Process oriented
- Set direction, not methods
QSR Manual
Guidelines
April 1998
Sets a common goal of perfection
Drives progress to world class standards
Provides an awareness of quality process requirements
Cross-fertilization of ideas (knowledge sharing)
Teaching tool (auditors and auditees)
Assessment Vehicle for Total Organization
Q
S
R

H
I
S
T
O
R
Y
1981 Began focus on Quality

1982 MCQC began a process of biennial QSRs

1986 Six Sigma Quality and Total Customer Satisfaction introduced

1987 Software subsystem was added

1988 QSR was established for surveying suppliers quality systems
ISO 9001 Mapped unto QSR

1989 Weight of scores changed to emphasize Malcolm Baldrige criteria

1990 MCQC approved the use of cross-functional survey teams

1991 Internal and supplier QSRs are combined into the current
QSR forms and the QSR Guidelines

1994 Updated to include 1994 Revision of ISO 9001
Significant revisions to Subsystem 9, System 7

1995 Corporate Quality System Department formed

1996 Revision 4 includes Registrars Certification, Subsystem 11
and QS 9000 Supplement

1997 Revision 5 - Business Process Focus, QS 9000 approach
SEI Certification of SS 10
1. Quality System Management

2. New Product / Technology / Service Development Control

3. Supplier (Internal or External) Control

4. Process Operation and Control

5. Quality Data Programs

6. Problem Solving Techniques

7. Control of Quality Measurement Equipment and Systems

8. Human Resource Involvement

9. Customer Satisfaction Assessment

10. Software Quality Assurance

11. Legal and regulatory

12. QS 9000 checklist
Quality Subsystems
5 year, 10x quality improvement goal set
QSR Implemented

1985 Communications Sector begins total
defect per unit measurement
July - Manufactured Products
November - Sales Orders
Total defects per unit
Count Defects
Independent variable
Ownership
A Common Metric
IRS - Tax Advice (phone-in)
SIGMA
(with 1.5 Sigma Shift)
2 3 4 5 6 7
100K
10K
1K
100
10
1
(233 ppm)
Best in Class
Purchased Material
Lot Reject Rate
Domestic Airline
Flight Fatality Rate
(0.43 ppm)
Payroll Processing
Journal Vouchers
Wire Transfers
Air Line Baggage
Handling
Order Write-up
Average
Company
Restaurant Bills
Doctor Prescription Writing
(6210 ppm)
(3.4 ppm)
Benchmarking
(66810 ppm)
1987 Corporation adopts Six Sigma
2 year, 10x; 4 year, 100x quality improvement;
Six Sigma by 1992 goal is set

The Quality Evolution Continues!
KEY BELIEFS how we will always act
Constant Respect for People
Uncompromising Integrity

KEY GOALS what we must accomplish
Best in Class
People
Marketing
Technology
Product: Software, Hardware and
Systems
Manufacturing
Service
Increased Global Market Share
Superior Financial Results

KEY INITIATIVES how we will do it
Six Sigma Quality
Total Cycle Time Reduction
Product, Manufacturing and
Environmental

Leadership
Profit Improvement
Empowerment for all, in a Participative,
Cooperative and Creative Workplace
OUR FUNDAMENTAL OBJECTIVE
(Everyone's Overriding Responsibility
Total Customer Satisfaction
The Motorola Card

1988 Malcolm Baldrige National Quality Award

U.S. Government sponsored
Privately funded
Promote excellence in business
1988 Malcolm Baldrige National Quality Award
Mapped ISO 9001 into QSR

1990 TCS Team process starts Corporate wide

TDU focused problem solving
QCC/PPS provided platform
- QCC JUSE
- PPS Government
Narrow teams vs. broader virtual
- Multifunctional
- Virtual : problem centered
Competition: National scoring
1990 First Sector competition
1991 Corporate
Today: 6000 Teams - Customers & Suppliers
Total Customer Satisfaction Teams
Management of the Quality
Improvement Process
1981 1986
Diverse quality metrics results in different
improvement goals for each operation.
1987 1992
Common quality metric results in identical
improvement rate goal for all operations.
Manufacturing and non-manufacturing
Administration and operations
Factory and office
1992
- Winner: Malaysia National Quality Award
- Winner: NY State Excelsior Quality Award
-
1994
- Winner: Israel National Quality Award

1996
- Winner: Singapore National Quality Award
* All Patterned after MBNQA
Other Quality Awards Received *
Six Sigma The Concept
Output Variables
Manage the outputs.
A Traditional View
Sales Growth
Market Share
Profitability
Output Variables
Input Variables
Manage the inputs; respond to the outputs.
A Non-traditional View
Sales Growth
Market Share
Profitability
Customer Satisfaction
Product Quality
On-Time Delivery
COQ
Credit Terms
Relationships
Service
Customer
Training
The Concept of "Six Sigma" at Motorola
Different numbers of Opportunities ...
Manufacturing Processes
Customers or Suppliers
Administrative Areas
6
= A structural approach to continuous improvement
1 - Identify the product or service you provide
2 - Identify your customers & their requirements
3 - Determine your needs & suppliers
4 - Define the process for doing work
5 - Eliminate defect sources / optimize the process
6 - Continuously improve the Sigma level
( or Six steps toward excellence )
A Bit of Statistics ...
-
7
.
0

-
6
.
0

-
5
.
0

-
4
.
0

-
3
.
0

-
2
.
0

-
1
.
0

0
.
0

1
.
0

2
.
0

3
.
0

4
.
0

5
.
0

6
.
0

7
.
0

upper spec limit Lower spec limit
+1.5 Sigma -1.5 Sigma
3.4 ppm
or Zero
+
1
) (
2
n
x xi

Normal Distribution - Gaussian Curve

Sigma = = Deviation
( Square root of variance )
-
7

-
6

-
5

-
4

-
3

-
2

-
1

0

1

2

3

4

5

6

7

Axis graduated in Sigma
68.27 %
95.45 %
99.73 %
99.9937 %
99.999943 %
99.9999998 %
result: 317300 ppm outside
(deviation)
45500 ppm
2700 ppm
63 ppm
0.57 ppm
0.002 ppm
between + / - 1
between + / - 2
between + / - 3
between + / - 4
between + / - 5
between + / - 6

=
Six Sigma...And the Statistics

-
7
.
0

-
6
.
0

-
5
.
0

-
4
.
0

-
3
.
0

-
2
.
0

-
1
.
0

0
.
0

1
.
0

2
.
0

3
.
0

4
.
0

5
.
0

6
.
0

7
.
0

+1.5 Sigma -1.5 Sigma
3.4 ppm
or Zero
Upper spec. limit Lower spec. limit

Reduce the variation: when < = Design specification width / 12

Stabilize the process, without affecting the variance,
to limit the maximum process shift to +/- 1.5
Under these conditions, and in the worst case, there will be no more than a 3.4 ppm
defect (reject) level, with specification limits at 4.5 on one side and 7.5 on the other.

Note: One can see that the point corresponding to 6 on the graduated performance
scale above is measured in Sigmas (with 6 corresponding to a 3.4 ppm defect level).

Cp > = 2 and Cpk > = 1.5
Cp > = 2
Six Sigma...And Capability
1 2 3 4 5 6 7 8
Cp 0.33 0.66 1 1.33 1.66 2 2.33 2.66
Cpk -0.16 0.16 0.5 0.83 1.16 1.5 1.83 2.16
Cp =
Design specification width
6
3
Cpk = Min.
Mean - Spec Limit
With a maximum process shift of +/- 1.5
Different Numbers of Opportunities ...
Manufacturing Process
Customers or Suppliers
Administrative Areas
6
- Customers or Suppliers: One opportunity per product delivered or
per component purchased.
- Manufacturing process: Opportunities at each process step)
- Administrative areas: Number of opportunities for error for
each activity performed
The Opportunities...
Some Examples of Opportunity
Customer Perspective: 1 opportunity per product delivered
ex. 1 regulator = 1 opportunity
1 controller = 1 opportunity
Production lines:
Regulator = 160 opportunities
Controller = 1200 opportunities
Form( Payment, Purchase Order, .. ): Number of fields

Expedite / Delivery:
1 opportunity / packaging unit
A quality level of "6" corresponds to less
than 3.4 defects per million Opportunities
( i.e., correct 99.99966 % of the time )
Sigma and Opportunities
A Universal Measurement Scale ...
3
4
5
6
7
66810
6210
233
3.4

Sigma
DPMOp
On one condition :

Calculate the defects and
estimate the opportunities
in the same way...
Measurement With SIGMA Is Simple !!!
Estimate the
Opportunities
Count the
Defects
Follow the Indicator :
Defects per million Opportunities
Conversion into "Sigma" can
be accomplished with the help
of a statistical table .
6 = 3.4 dpmo
Converting Defect Levels to..... Sigma !
175 defects are identified while
producing 5000 controllers
The manufacture of one controller
allows for 1367 defect opportunities.
D.P.Op = 0.035 / 1367 = 0.0000256
An Example :
D.P.U = 175 / 5000 = 0.035
D.P.M.Op = 25.6
"Sigma" level : 5.55
Six Sigma: An Ambitious Objective?
Accurate to 99.99966 % ( less than 3.4 defects for each million
opportunities ) could appear excessive....!
99.9% is already VERY GOOD !
But what could happen at a quality level of 99.9% (i.e., 1000 ppm),
in our everyday lives (about 4.6)?

4000 wrong medical prescriptions each year
More than 3000 newborns accidentally falling
from the hands of nurses or doctors each year
Two long or short landings at American airports each day
400 letters per hour which never arrive at their destination
The Impact of Quality: 6 Sigma Suppliers
13 wrong drug prescriptions per year
10 newborn babies dropped by doctors/nurses
per year
Two short or long landings per year in all the
airports in the U.S.
One lost article of mail per hour
= A structured approach to continuous improvement
1 - Identify the product or service you provide
2 - Identify the customer & their requirements
3 - Determine your needs & suppliers
4 - Define the process for doing work
5 - Eliminate defect sources / optimize the process
6 - Continuously improve the Sigma level
( or Six steps toward excellence" )
Six Sigma and Continuous Improvement
Supplier
Customer
Enter
Needs
Exit
Product/Service
Process
Activity
1
2
3
4
5
6
Feedback
Defect Reduction: Peeling the Onion

Action Name Date
ACTION PLAN
PROCEDURE
CONTINUOUS IMPROVEMENT MODEL
TREND CHART
GOAL
T I M E
100%
BRAINSTORMING/
PARETO ANALYSIS/
ROOT CAUSE
IDENTIFICATION
RESULTS AND
INSTITUTIONALIZE
MEASURE
ANALYZE
PROBLEM SOLVE
Process
step 1
Process
step 3
Process
step 2

SUPPLIER
SUPPLIER SUPPLIER CUSTOMER
CUSTOMER CUSTOMER
RECORD
DEFECTS
RECORD
DEFECTS
RECORD
DEFECTS
RECORD
DEFECTS
RECORD
DEFECTS
Advantages of This Type of Approach
Have a common language
Sensitize the organization in the use of statistical tools
Develop the internal supplier/customer relationship
Benchmarking
Work on the most significant objectives
Promote working in teams
Deployment
The Process for Deployment
Management involvement

Empowered teams

Statistical black belts
Why Have We Been Successful...
The Management Process!
High level of management commitment and
involvement.
Aggressive improvement goals set by Management
Board and driven down through the organization.
Measurement of the total process from end to end.
Corporate-wide uniform goals and common metrics.
Management accountability for quality
improvement.
DATED JAN 15, 1987

IMPROVE PRODUCT AND SERVICES QUALITY

Ten times by 1989 and at least 100 fold by 1991

Achieve SIX SIGMA CAPABILITY by 1992
With a deep sense of urgency, spread dedication to every facet of the
corporation and achieve a culture of continual improvement to ASSURE
TOTAL CUSTOMER SATISFACTION. There is only one ultimate goal:
zero defects - in everything we do.
Signed: MOTOROLA EXECUTIVE COMMITTEE
Management Leadership
Quality improvement goals and plans
integrated into business plans.
No formal organization changes to implement.
Part of everyone's job.
Employee empowerment and involvement.
Extensive education and training support.
Recognition and awards.
Why We Have Been Successful...
The Management Process!
Management of the Improvement Process
Corporate review of Sectors quarterly
Sector review of Group monthly
Group review of products monthly
Plant review of manufacturing lines weekly
Manufacturing line review of processes daily
Same measurement - same improvement goal
Employee Involvement Requires
Awareness
How are we doing?
How are the best in class doing?
Training
Tools, Methodology, Metrics
High expectations
Team goal setting
Communication
Progress and recognition
Empowered Teams
Its a business-driven process, not a human relations
program
It starts with senior management - cant be delegated
Employees want to take ownership and become world
class producers
You dont need a crisis to get started
Empowerment affects all functions, not just factories
Done right, its an irreversible process
Worldwide TCS Team Count
0 2000 4000 6000
1990
1991
1992
1993
1994
1995
1996
1997
A Black Belt Is . . .
An Individual from Any Discipline with
Advanced Statistical, Quality, and
Interpersonal Skills
An Experienced and Proven Leader in the use
Six Sigma Strategies and Tools

A Black Belt Will . . .
Drive the Effective Use of Statistical Methods
through Leadership, Training , and
Consultation
Identify, Develop, and Communicate New
Six Sigma Strategies and Tools
Actively Identify and Mentor Future Black
Belts
Use of Six Sigma Black Belts
Highly trained in statistical tools
Act as consultants / change agents
Recognized as skilled in an engineering discipline
Strong interpersonal and communication skills
Significant experience with demonstrated results
Continuous learning aptitude
Black Belt Training
Green Belt
Utilize Statistical & Quality Techniques
2%-5% of Time (1-2 hrs/week) Consulting/Training
Min. 2 Projects* per Year
Black Belt
Lead use of Statistical & Quality Techniques
Mentor Green Belts; Communicate New Techniques
5%-10% of Time (2-4 hrs/week) Consulting/Training
Min. 4 Projects* per Year
Master Black Belt
Mentors Green & Black Belts
80%-100% of Time Consulting/Mentoring/Training
*Projects =training classes or project consultations
Corporate Commitment
Motorola is committed to developing these leaders. We owe it to our
customers and to our stockholders. Through IDE, we seek to identify
those who have the potential to grow into agents of change. We provide
these people with extensive training in statistical and interpersonal tools,
and we provide skilled guidance and management support to assure that
they are able to build and integrate their capabilities.
Once their development has achieved a level worthy of recognition,
we even have a term for those exceptional individuals, whose talent,
dedication, and courage enable them to accelerate our progress into and
beyond the next century.
We call these people Six Sigma Black Belts.

Chris Galvin
History of Six Sigma Black Belt Program
1990 - Motorola DOE Symposium Committee organized
1991 - Motorola Six Sigma Research Institute established
1991 - Corporate Six Sigma Black Belt Steering Committee
formed
1992 - Initiated an effort between Motorola, TI, IBM, Kodak and
others to jointly develop the Six Sigma Black Belt Program
1992 - Six Sigma Technical Institute (SSTI) developed as a
required training vehicle for Black Belt candidates
1992 - First Six Sigma Black Belts recognized in Asia and US
1993 - First Six Sigma Black Belt symposium held
1996 - SPS Six Sigma Black Belt Steering committee formed
1996 - Intro. to Black Belt Program replaces SSTI as required
course
1998 - Motorola Elma leads AIEG/ACCES group wide push for
Black Belts - Reintroduces program
Expectations of Six Sigma Black
Belts
Problem solving leadership
Improvement change agents
Drive use of statistical methods
Integrate statistics into discipline area
Network for solution reuse
Mentor future Belts
Continue personal development
1.00
10.00
100.00
J94
D
P
M
O
p

6 Sigma
SIGMA
J95 J96 J97
6
5.65
5.6
5.5
5.4
5.3
MY95 MY96 MY97 MY98
Barrier Breakthrough Plan
Pareto, Brainstorming, C&E, BvC
8D, 7D, TCS Teams, SPC
DOE, DFM, PC
RenewBlack Belt Program (Internal Motorola)
Black Belt Program (External Suppliers)
Proliferation of Master Black Belts
How does one become Belted
Phase 1: Candidate Identification and Mentor Structure
Identify candidate
Management sponsorship
Master Black Belt Mentor
Define Black Belt responsibilities
Phase 2: Skill Development
Black Belt Orientation Class
Personal Skill Development
High Impact Improvement Project
Phase 3: Recognition
Application for recognition
Black Belt Recognition
Continuous Improvement
Core Statistical Skills Core Six Sigma Quality Skills Core Interpersonal Skills
GBM Statistical Software (JMP, Minitab)
MIN101
GBM AIEG QMS GBM Communication (oral, written)
AEC722, DDI121
GBM Numerical and Graphical Techniques
MIN101, IBM548
GBM QS 9000
AEC279
GBM Team Facilitation
DDI170
GBM Statistical Process Control
AEC506, AEC661, AEC662, AEC663
GBM Customer Satisfaction
SSG100, TCS100
GBM Coaching and Mentoring
LDR380, PER119
GBM Process Capability
AEC661, AEC662, SCP201
GBM Six Steps to Six Sigma
SSG100, SSG102CD
GBM Managing Change
MGT564, MGT124, PDE532
GBM Comparative Tests
MIN101, SPC201
GBM Concurrent Engineering BM Leadership
MGT561, MGT562, DDI180
GBM Analysis of Variance (ANOVA)
ENG998, AEC603
GBM TCS
TCS100
BM Team Building
MGT560, MGT562, EC727, MGT155
GBM Measurement System Analysis
AEC663
GBM Systemic Approach to Problem
Solving
QUA392
M Instructional/Teaching
MOT132
GBM Design of Experiments (e.g. Full,
Fractional, Taguchi Designs)
ENG998, QUA389
GBM Team Oriented Problem Solving
(8D, 7D, 5P)
M Managing Projects
AEC471, MGT839
GBM Regression (e.g. linear, nonlinear) BM Quality System Review
QUA590
GBM Statistical Process Characterization
Strategies and Techniques
ENG227
BM Team Problem Solving Non-
Manufacturing
CES103
BM Statistical Inference
MIN101, SPC201
BM Design for Manufacturability
ENG123, ENG123CD
BM Confidence Intervals
MIN101, SPC201
BM Financial/Economic Quality Issues
BM Probability Concepts and
Distributions
SPC201
M Quality Function Deployment
QUA200A, QUA200B, QUA200C
BM Response Surface Methods
QUA393
M Total Quality Management
BM Screening DOE
QUA391
M Benchmarking
BMK220
M Advanced Problem Solving
Strategies and Technologies
ENG998
M Product Development Assessment
M Acceptance Sampling
SPC201
M Sample Size Estimation
M Robust Design of Processes and
Products
M Survival Analysis / Reliability
Six Sigma Black Belt Mentor
Structure
Belt Sponsorship Related Projects
Master Black Belt 5 Black Belts 10 / Year
Black Belt 2 Green Belts 4 / Year
Green Belt Find 1 new Green Belt 2 / Year
Black Belt Roadmap
Express interest in the program with your
management's approval
Complete application for candidacy
Interview for program
5-7 Black Belts in Training
First 4 months 50-60% during training process
starting May 4th
See detailed Black Belt Roadmap Development Process
Complete Project assigned (4/year)
Sponsor 2 Green Belts
Do other companies have Six Sigma
Black Belt Programs?
GE has very successfully instituted this program
4,000 trained Black Belts by YE 1997
10,000 trained Black Belts by YE 2000
You havent much future at GE unless they are selected to
become Black Belts - Jack Welch
Kodak has instituted this program
CEO and COO driven process
Training includes both written and oral exams
Minimum requirements: a college education, basic statistics,
presentation skills, computer skills
Other companies include:
Allied Signal -Texas Instruments
IBM - ABB
Navistar - Citibank
Discussion
The Cost/Quality Relationship
Six Sigma has shown that the

Highest Quality Producer

is also the

Lowest Cost Producer
Results
And the Results?
1986
4.2
1997
5.6
~ 16 Billion
Products Manufactured
FI NANCI AL

QUALI TY

Sales Up 5.05x $29.8 Billion in 1997
An Average Compounded Growth
Rate of 16.9% per Year
Profits Up 6.03x $1.18 Billion in 1997
Stock Up Over 7.0x
Through Defect Elimination
We have Eliminated > 99.7% of
In-Process Defects
The COPQ (Cost of Poor Quality)
Reduced > than 84% on a Per Unit
Basis
Manufacturing Cost Savings
Cumulative Savings over $14 Billion
Employee Productivity
Increased 3-Fold: A 12% Per Year
Average
Product Reliability
MTBF Increased 5 - 10 Fold
11 Year Journey 1987 to 1997

A decade of product quality and productivity
Cost of Poor Quality Elements
Inspection and Test

Rework/Repair

Scrap

Warranty
The Cost of Poor Quality
0
2
4
6
8
10
12
14
16
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
P
e
r
c
e
n
t

o
f

S
a
l
e
s

Companies Adopting the 6 Culture
General Electric
Eastman Kodak
Allied Signal
Texas Instruments
Citibank
Sony
ABB
plus 30 others who have licensed 6 training
The Future
Six Sigma Renewal
Six Sigma the Improvement Process

Drive Quality from the Customer In

Customer Factory and Field Returns

5-Nines Reliability
Identify Customers
by Organization by Key Contacts
Hierarchy Of Customer Satisfaction
Gain
Customer
Loyalty
Innovation &
Implementation
Exceed
Customer Expectations
Meet
Customer Requirements
Anticipate
Customer Needs
Determine Customer
Requirements & Expectations
Defensive
Strategy
Meet
Commitments
Offensive
Strategy
Trust
Top Box Products and Service

Satisfaction
Completely
Dissatisfied
Completely
Satisfied
Telephone Company
AECS
Noncompetitive
Zone
ACCES
Highly Competitive
Zone
Regulated monopoly or few
substitutes
Dominant brand equity
High cost of switching
Powerful Loyalty program
Proprietary technology

Commoditization or
low differentiation
Consumer indifference
Many substitutes
Low cost of switching
L
o
y
a
l
t
y

High
Low
HARVARD BUSINESS REVIEW Nov./Dec. 1995
Satisfied
Totally
Satisfied
Customer Loyalty
Definitely Would Might Definitely Would Not

0%
10%
20%
30%
40%
50%
60%
70%
80%
79.0%
15.7%
5.3%
74.0%
19.5%
6.5%
75.9%
18.1%
6.0%
Would Continue to Use
Motorola in the Future
Would Recommend
Motorola to Colleagues
Willingness to
Repurchase Products
in the Future
Customer Satisfaction
44
40
30
38
55
60
0
10
20
30
40
50
60
70
80
90
100
1995 1996 1997
P
e
r
c
e
n
t

S
a
t
i
s
f
i
e
d
% Satisfied % Top Box
Performance Compared to Competitors
How we rate in Comparison
with the Best Supplier
How Satisfied is the Customer with
us in Comparison to the Competition
0%
10%
20%
30%
40%
50%
60%
57.4%
35.9%
6.7%
58.3%
40.3%
1.4%
Much Better/
Very Satisfied
Similar/Somewhat Much Worse/
Not Satisfied Satisfied
Ease of Doing Business
Customer Satisfaction with the Ease of Doing Business
0%
10%
20%
30%
40%
50%
60%
70%
63.5%
31.5%
5.0%
Very Satisfied Somewhat Satisfied Not Satisfied
The Customer Speaks
LESSONS
LEARNED
Benchmarking Tells Us
There are no secrets to quality.
There are no Silver Bullets or short cuts to
good quality.
Quality doesnt take time, it saves time.
It is not only free, it pays dividends.
Average company spends close to 25% of its
revenue on waste -- non-value added.
Quality process applies to the administrative
side of business as well.
Service companies are not different from
manufacturing.
A Quality Plans Key Requirements
A methodology
A metric
Measure a complete
product/service
Accountability
(Application -- The Customer View)
and ... Reach Out Goals!!!
Actions Required to
Institutionalize a Quality Process
TOP DOWN COMMITMENT AND INVOLVEMENT
Set the example, be active in the audit process
MEASUREMENT SYSTEM TO TRACK PROGRESS
At both macro and micro levels
TOUGH GOAL SETTING (REACH OUT!!)
Benchmark Best-In-Class -- audit often
PROVIDE THE REQUIRED EDUCATION
The Why and How To
SPREAD THE SUCCESS STORIES
Other Lessons Learned
Be careful that you dont get too focused on
winning the metric game.

Be careful that you dont loose sight of the
customers priorities.

Be careful that you dont become arrogant.

Look at the cost of defects, not just the number.
Quality
is not an Assignable Task
it must be Rooted and Institutionalized
Within every Step of the
Business Process
IT IS EVERYONE'S RESPONSIBILITY
Questions ?

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