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Integrating Six Sigma and Related Initiatives
By Thomas
Pyzdek
At any given time most companies have numerous activities underway
to improve their operations. For example, the company might be pursuing
one or more of the following:
- TQM
- Lean manufacturing
- Lean service
- Continuous improvement
- Kaizen
- Business process reengineering
- Theory of constraints
- Variation reduction
The list can be extended indefinitely. Six Sigma can't simply
be thrown into the mix without causing tremendous confusion. People
will find themselves in conflict with one another over jurisdiction,
resources, and authority. Leadership must give careful thought as
to how the various overlapping activities can best be organized
to optimize their impact on performance. An "umbrella concept"
often provides the needed guidance to successfully integrate the
different but related efforts. One concept that I've found to be
particularly useful is that of "Process Excellence," or
PE.
What is Process Excellence?
Organizations are typically designed along functional lines. Functions,
such as engineering, marketing, accounting, manufacturing, and so
on are assigned responsibility for certain tasks. The functions
tend to correspond closely to university degree programs. Persons
with higher education in a functional area specialize in the work
assigned to the function. General management allocates resources
to each function based on the needs of the enterprise.
If the enterprise is to be successful the "needs of the enterprise"
must be based on the needs of its customers. However, customers
typically obtain value not from organizational functions but from
products or services that are created by the cooperative efforts
and resources of many different functional areas. Most customers
could care less about how the enterprise creates the values they
are purchasing. A similar discussion applies to owners and shareholders.
In fact, there is a substantial body of opinion among management
experts that focusing internally on functional concerns can be detrimental
to the enterprise as a whole. An alternative is to focus on the
process or value stream that creates and delivers value.
A process focus means that stakeholder values are defined and activities
are classified as either relating to the creation of the final value
(value-added activity) or not (non-value added activity.) Processes
are evaluated on how effectively and efficiently they create value.
Effectiveness is defined as delivering what the customer requires,
or exceeding the requirements; it encompasses quality, price, delivery,
timeliness and everything else that goes into perceived value. Efficiency
is defined as being effective using a minimum of resources; more
of an owner's perspective. Excellent processes are those that are
both effective and efficient.
PE is the set of activities specifically designed to create excellent
processes. PE is change-oriented and cross-functional. It includes
Six Sigma, all of the initiatives listed earlier, and many more
as well. By creating a top-level position for PE, leadership assigns
clear responsibility for this important work. The PE Leader, usually
a Vice-President, leads a Process Excellence Leadership Team (PELT)
which includes functional leaders as well as full-time PE personnel
such as the Director of Six Sigma. The VP of PE isn't responsible
for a particular processes, but she has the authority to identify
key processes and nominate owners for approval by the CEO or the
PELT. Examples of processes include:
- Order fulfillment
- Coordinating improvement activities of Six Sigma, Lean, etc.
- Customer contact with the company
- Handling public relations emergencies
- Getting ideas for improvement projects
- Matching improvement projects with customer needs
- Innovating
- Communicating with the outside world
- Communicating internally
- Identifying talent
- Handling customer problems
- Avoiding legal disputes
In other words, the VP of Process Excellence has a "meta-process"
responsibility. He is responsible for the process of identifying
and improving processes. PE activities such as Six Sigma, Lean,
etc. provide PE with resources to direct toward the organization's
goal of developing internal processes that give them a competitive
advantage in securing the best employees, delivering superior customer
value, and earning a premium return for its investors.
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