Strategic six sigma for champions : keys to sustainable competitive advantage

147 Pages·2006·0.87 MB·English

by  Goeke

rei96831_fm.qxd 3/31/06 8:04 AM Page i
Strategic Six Sigma
for Champions
rei96831_fm.qxd 3/31/06 8:04 AM Page ii
Also available from ASQ Quality Press:
Design for Six Sigma as Strategic Experimentation: Planning, Designing,
and Building World-Class Products and Services
H.E. Cook
Business Performance through Lean Six Sigma: Linking the Knowledge
Worker,the Twelve Pillars,and Baldrige
James T. Schutta
The Certified Six Sigma Black Belt Handbook
Donald W. Benbow and T.M. Kubiak
Transactional Six Sigma for Green Belts: Maximizing Service and Manu-
facturing Processes
Samuel E. Windsor
Applied Statistics for the Six Sigma Green Belt
Bhisham C. Gupta and H. Fred Walker
Six Sigma for the Next Millennium:A CSSBB Guidebook
Kim H. Pries
Applied Data Analysis for Process Improvement:A Practical Guide to Six
Sigma Black Belt Statistics
James L. Lamprecht
Six Sigma Project Management:A Pocket Guide
Jeffrey N. Lowenthal
Six Sigma for the Office:A Pocket Guide
Roderick A. Munro
The Six Sigma Path to Leadership:Observations from the Trenches
David H. Treichler
The Certified Manager of Quality/Organizational Excellence Handbook:
Third Edition
Russell T. Westcott,editor
To request a complimentary catalog of ASQ Quality Press publications,
call 800-248-1946,or visit our Web site at http://qualitypress.asq.org.
rei96831_fm.qxd 3/31/06 8:04 AM Page iii
Strategic Six Sigma
for Champions
Keys to Sustainable Competitive Advantage
R. Eric Reidenbach and Reginald W. Goeke
ASQ Quality Press
Milwaukee,Wisconsin
rei96831_fm.qxd 3/31/06 8:04 AM Page iv
American Society for Quality,Quality Press,Milwaukee 53203
©2006 ASQ
All rights reserved. Published 2006
Printed in the United States of America
12 11 10 09 08 07 06 5 4 3 2 1
Library of Congress Cataloging-in-Publication Data
Reidenbach,R. Eric.
Strategic six sigma for champions :keys to sustainable competitive advantage /
R. Eric Reidenbach and Reginald W. Goeke.
p. cm.
Includes bibliographical references and index.
ISBN-13:978-0-87389-683-2
1. Quality of products—Evaluation. 2. Six sigma (Quality control standard) 3. Total
quality management. 4. Performance technology. I. Goeke,Reginald W. II. Title.
HF5415.157.R45 2006
658.4'013—dc22
2006008198
No part of this book may be reproduced in any form or by any means,electronic,
mechanical,photocopying,recording,or otherwise,without the prior written
permission of the publisher.
Publisher:William A. Tony
Acquisitions Editior:Annemieke Hytinen
Project Editor:Paul O’Mara
Production Administrator:Randall Benson
ASQ Mission:The American Society for Quality advances individual,
organization,and community excellence worldwide through learning,
quality improvement,and knowledge exchange.
Attention Bookstores,Wholesalers,Schools and Corporations:ASQ Quality Press
books,videotapes,audiotapes,and software are available at quantity discounts
with bulk purchases for business,education,or instructional use.
For information,please contact ASQ Quality Press at 800-24801946,or write to
ASQ Quality Press,P.O. Box 3005,Milwaukee,WI 53201-3005.
To place orders or to request a free copy of the ASQ Quality Press Publication
Catalog,including ASQ membership information,call 800-248-1946. Visit our
Web site at www.asq.org or http://qualitypress.asq.org.
Printed on acid-free paper
rei96831_fm.qxd 3/31/06 8:04 AM Page v
Table of Contents
List of Tables and Figures . . . . . . . . . . . . . . . . . . . . . . vii
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Chapter 1 Value Matters . . . . . . . . . . . . . . . . . . . . . 1
Emotional versus Cognitive Responses . . . . . . . . . . . . . 2
The Interaction between Quality and Price . . . . . . . . . . . 4
Linkage to Performance . . . . . . . . . . . . . . . . . . . . . 5
Six Sigma Projects Need a Strategic Metric . . . . . . . . . . 7
What Is a Good Strategic Metric? . . . . . . . . . . . . . . . . 8
Linking Value to Processes . . . . . . . . . . . . . . . . . . . 11
Chapter 2 Value Tools . . . . . . . . . . . . . . . . . . . . . . . 13
Understanding Market Value:The Customer Value Model . . . 13
Understanding Your Competitive Value Proposition:
The Competitive Value Matrix . . . . . . . . . . . . . . . . 19
Chapter 3 Identifying Critical Processes for Value
Enhancement . . . . . . . . . . . . . . . . . . . . . 21
Calculate Critical Value Gaps . . . . . . . . . . . . . . . . . . 22
Identify the Value Stream . . . . . . . . . . . . . . . . . . . . 23
Constructing the CTQ/Process Matrix . . . . . . . . . . . . . 27
Target Processes of Six Sigma Projects . . . . . . . . . . . . . 29
Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . 30
v
rei96831_fm.qxd 3/31/06 8:04 AM Page vi
vi Table of Contents
Chapter 4 Good Measurement Begins with Focus . . . . . . . 31
Product/Market . . . . . . . . . . . . . . . . . . . . . . . . . 32
Strategic Criteria . . . . . . . . . . . . . . . . . . . . . . . . 34
Chapter 5 Asking the Right Questions . . . . . . . . . . . . . . 39
Marketing and Salespeople . . . . . . . . . . . . . . . . . . . 40
Chapter 6 Questionnaire Construction . . . . . . . . . . . . . 51
Screening for the Right Respondent . . . . . . . . . . . . . . 51
Questionnaire Layout and Structure . . . . . . . . . . . . . . . 55
Why Is Good Measurement So Important to Six Sigma? . . . . 69
Chapter 7 Sampling and Data Collection . . . . . . . . . . . . 71
Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . 71
Sampling Approaches . . . . . . . . . . . . . . . . . . . . . . 76
Sample Sizes . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Chapter 8 Premodeling Issues . . . . . . . . . . . . . . . . . . 83
Multicollinearity . . . . . . . . . . . . . . . . . . . . . . . . . 84
Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Reliability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Chapter 9 Monitoring Changes in Value Gaps . . . . . . . . . 97
Internal Performance Metrics . . . . . . . . . . . . . . . . . . 98
Transactional Measures of Customer Value . . . . . . . . . . . 99
Diagnostic Snapshots . . . . . . . . . . . . . . . . . . . . . . 105
Alignment of Business Information Systems . . . . . . . . . . 107
Chapter 10 Keys to the Strategic Deployment of Six Sigma . . . 109
CW 1:Listen to the VOC . . . . . . . . . . . . . . . . . . . . 110
CW 2:Customer Satisfaction Is the Goal . . . . . . . . . . . . 111
CW 3:More Than One Customer . . . . . . . . . . . . . . . . 113
Make Your Strategic Six Sigma Initiative Part of Your
Competitive Strategy . . . . . . . . . . . . . . . . . . . . . 114
Evolve to a Market Focus . . . . . . . . . . . . . . . . . . . . 114
Select Reliable Research Vendors . . . . . . . . . . . . . . . . 115
Focus on the Entire Value-Delivery System . . . . . . . . . . . 116
Set up a Fact-Based Process to Eliminate Agendas . . . . . . . 116
Monitor Changes in the Organization’s Value Proposition . . . 116
Commit to Periodic Customer Analyses . . . . . . . . . . . . 117
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
rei96831_fm.qxd 3/31/06 8:04 AM Page vii
List of Figures
and Tables
Figure 1.1 Generalized value model . . . . . . . . . . . . . . . . . . . . 9
Figure 1.2 The value-process linkage . . . . . . . . . . . . . . . . . . . 11
Figure 2.1 The value-process linkage . . . . . . . . . . . . . . . . . . . 14
Figure 2.2 Competitive Value model for backhoe loaders/building
contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 2.1 Competitive scores on CTQ factors . . . . . . . . . . . . . . 16
Table 2.2 Dealer service CTQ attributes . . . . . . . . . . . . . . . . . 17
Table 2.3 Dealer Service CTQ attributes . . . . . . . . . . . . . . . . . 18
Figure 2.4 Competitive value matrix—40 tractors/hobby farmers . . . . . 20
Figure 3.1 The value-process linkage . . . . . . . . . . . . . . . . . . . 22
Table 3.1 Calculation of CTQ value gaps . . . . . . . . . . . . . . . . . 23
Table 3.2 Value gap importance at the value performance
criteria level . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Figure 3.2 Customer-focused value stream . . . . . . . . . . . . . . . . 26
Table 3.3 CTQ/process matrix . . . . . . . . . . . . . . . . . . . . . . 28
Figure 3.3 The service/repair value stream map . . . . . . . . . . . . . . 30
Figure 4.1 Product/market matrix . . . . . . . . . . . . . . . . . . . . . 32
Figure 4.2 WesTrac P/M matrix . . . . . . . . . . . . . . . . . . . . . . 36
Table 4.1 Quality driver rankings . . . . . . . . . . . . . . . . . . . . . 37
Figure 5.1 A generic view of value . . . . . . . . . . . . . . . . . . . . . 42
Figure 5.2 Sample moderator guide . . . . . . . . . . . . . . . . . . . . 45
Table 6.1 Randomizing questions . . . . . . . . . . . . . . . . . . . . . 56
Table 6.2 Customer loyalty questions . . . . . . . . . . . . . . . . . . . 59
Table 6.3 Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Table 7.1 A comparison of four survey methodologies . . . . . . . . . . 76
Figure 7.1 Sampling procedures . . . . . . . . . . . . . . . . . . . . . . 77
Figure 7.2 Sample quotas—household shoppers . . . . . . . . . . . . . . 78
Table 8.1 Intercorrelations among and between attributes . . . . . . . . 85
Table 8.2 Machine Quality Factors . . . . . . . . . . . . . . . . . . . . 88
vii
rei96831_fm.qxd 3/31/06 8:04 AM Page viii
viii List of Figures and Tables
Table 8.3 Intercorrelations among factors and value . . . . . . . . . . . 89
Figure 8.1 The factor analysis process . . . . . . . . . . . . . . . . . . . 90
Table 8.4 ISP value performance criteria (attributes) . . . . . . . . . . . 91
Figure 9.1 Repair promise/delivery time . . . . . . . . . . . . . . . . . . 98
Figure 9.2 Transactional survey . . . . . . . . . . . . . . . . . . . . . . 101
Figure 9.3 Survey linkage to CRM . . . . . . . . . . . . . . . . . . . . . 103
Figure 9.4 Menu-driven reporting system . . . . . . . . . . . . . . . . . 104
Figure 9.5 Performance trend report . . . . . . . . . . . . . . . . . . . . 104
Figure 9.6 Management dashboard . . . . . . . . . . . . . . . . . . . . . 105
Figure 9.7 Value model—electricity/residential users . . . . . . . . . . . 106
Figure 9.8 “Routine transactions”attributes . . . . . . . . . . . . . . . . 106
Figure 10.1 Generalized value model . . . . . . . . . . . . . . . . . . . . 112
Figure 10.2 Generalized product/market matrix . . . . . . . . . . . . . . . 113
rei96831_fm.qxd 3/31/06 8:04 AM Page ix
Preface
T
he essence of Six Sigma when applied to achieving the objectives of
increasing top-line revenue or market share is a methodology to ei-
ther widen a value advantage your organization enjoys over its com-
petition or lessen the value gap between your organization and a leading
competitor. Value leadership brings with it enhanced top-line revenues,
greater market share leadership,and increased profitability.
Strategic Six Sigma for Champions is about how the metrics and
management of customer value can be used to identify and direct Six
Sigma projects and,in so doing,how to make Six Sigma more responsive
to what targeted customers value. Expert after expert,author after author,
Six Sigma Black Belt after Black Belt discusses, writes, and preaches
about the central role of the voice of the customer in identifying and ex-
ecuting Six Sigma projects. Bendell and Mara (2005) weigh in on this
discussion and point out a dichotomy between what is said and what is
done—”The six sigma ‘gospel’says that it is fundamentally about cus-
tomers.... If you talk to black belts,however,you get a different view—
the major driver in project selection is ‘cost down.’”The authors go on
to note that “the traditional six sigma approach focuses on cost and time
minimization,which is applicable in both manufacturing and service in-
dustries. The traditional DMAIC (Define,Measure,Analyze,Implement,
Control) project approach works for cost down projects but does not fully
suit customer valueand market share driven projects where the stages are
less linear and more integrative.”
Within a philosophy where metrics and measurement play such a dom-
inant role, this issue is of significant importance. However, there is much
doubt and confusion regarding whether,in fact,any customer input is actu-
ally used and what customer input should be used.
ix
rei96831_fm.qxd 3/31/06 8:04 AM Page x
x Preface
First, why the emphasis on cost? In organizations without a real cus-
tomer or market orientation,it is not surprising to find inward-looking man-
agers focusing on cost. These organizations tend to embrace a production
orientation in which costs are all-important. Internal metrics dominate and
little,if any,real attention is focused on the end user,where things appear a
lot fuzzier and less concrete.
Second,many organizations do know how to use the voice of the cus-
tomer to direct either their strategic or operational initiatives. Much cus-
tomer or market research is exiled to a three-ring binder,never to be used.
The information is treated as interesting,providing little more than a report
card analysis of how the organization is doingrather than a directive as to
what the organization needs to do and how to do it.
For those organizations actually using customer information,there is a
second issue regarding what information should be used. For example,
Harry and Schroeder (2000,p.vii) ask and answer the question “What is six
sigma?”According to them,“it is a business process that allows companies
to drastically improve their bottom line by designing and monitoring every-
day business activities that minimize waste and resources while increasing
customer satisfaction [emphasis added].”They later go on to clarify what
they mean by customer satisfaction, stating that “customers are satisfied
when they receive the valuethey expect”(Harry and Schroeder 2000,p.14).
Moreover,they state that “six sigma is about pursuing quality only if it adds
valuefor the customers and the company”(p.23). In spite of this satisfac-
tion/value confusion,they seem to get to the heart of the issue with the fol-
lowing comment:“We say that quality is a state in which value entitlement
is realized for the customer and provided in every aspect of the business
relationship ... for customers,“entitlement”means that they have a rightful
level of expectation to buy high quality products at the lowest possible cost”
(p.6). High-quality products bought at the lowest possible cost is the very
essence of value.
Another Six Sigma expert,Michael George (2002),acknowledges the
importance of customer value, indicating that “the knowledge of what
the customer valuesmost is the start of value stream analysis”[a key step in
the lean six sigma process] (p.17).
Antis and Nally (2005) join the argument,noting that “the next evolu-
tion beyond DMAIC focuses on capturing the ‘voice of the customer’
(VOC). Design and marketing for six sigma emphasizes the design and com-
munication of superior value in products and services leading to top line
growth. Firms listening to the VOC have discovered that the financial results
are tremendous with returns occurring roughly one to two years after
deployment.”
Clearly there is some ambiguity regarding both the use of the VOC and
whether this voice ought to articulate satisfaction or value. Six Sigma ex-
perts and authors use the terms satisfactionand valueloosely and,in some