Troubleshooting in Business

Lets see how to describe your Business Problems,

Once you understand that work consists of a set of processes, the next step is to identify the most important problems within your organization to improve. This article describes a method for describing the first or next business problem to tackle. Doing so helps teams to focus on the most important problem rather than a trivial one when resources and time are limited. Teams can then begin to understand and describe the problem and improvement opportunity.

It's based on a seven-step process described in The Problem Solving Memory Jogger, published by Goal QPC. Describing your business problem is step one.
The Importance of Understanding the Business Problem

Focus on the right problem. With limited time and resources, it is essential to focus on a problem that is most important to the customer, team and organization.

Break the problem into manageable pieces. This prevents a team from feeling overwhelmed by the larger problem and helps the team identify the pieces that it can control and change.

Gain more knowledge to better define the problem. This ensures the team keeps all its efforts focused on solving the right problem with the right people.

Describe the problem as the gap between what "is" and what should or could be.
The Importance of Gathering Data and Information

Data can help teams:

* Reveal a problem. Teams can't fix a problem they don't know about.
* Describe a problem. When teams understand what the problem is, they can fix the problem rather than just addressing the symptom.
* Monitor and control a problem. Teams can make sure that what they fix or improve stays that way.
* Prevent a problem. When there is a consistent trend or cycle in the data, a team can take action to reduce or eliminate the undesired trend or cycle in the process before it becomes critical and/or apparent to the customer. It's always easier to prevent a problem than to have to correct it.

Types of Data

There are two types of data to measure process performance: variable data and attribute data. It's important to know which type of data you have, since it helps determine which tool to use.

* Variable data. Data is measured and plotted on a continuous scale over time, e.g., temperature, cost figures, times, strength, pH levels. Use Run Charts, Histograms, Scatter Diagrams, and Variable Control Charts to illustrate this data.
* Attribute data. Data is counted and plotted as discrete events for a specified period of time, based on some characteristic, e.g., types of shipping errors, types of customer complaints, reasons for downtime. Use Check Sheets, Pareto Charts, and Attribute Control Charts for this type of data.

What Actions Must Be Taken in This Step?

* Identify important business and process measures that focus on the customer.
* Identify what type of data is needed to define the problem.
* Arrange data into a form that can be analyzed for meaning. Two good choices are the Run Chart and Pareto Chart.
* Write a problem statement that describes the problem as a gap between the present condition (what is) and the required or desired condition (what should be).

How Do You Do It?
1. Look for changes in important business and process performance measures.

3 Tips about Data

Whenever possible, start with data. The discovery and definition of a problem through data collection and analysis reduces the power of opinions and ill-informed decisions.

Typically a team uses data to determine:
1. Where the problem is and is not occurring;
2. When the problem began; and
3. What the extent of the problem is.

Sometimes the gap between the present and desired condition is so large that emergency actions are needed. These actions may not support the identification of root causes and solutions but can limit the impact of the problem. These actions may include: recalling a product if it threatens someone's safety and health; quarantining finished product; stopping further production.

a) Monitor important processes and their key business performance measures. Measures must:

– Be objectively measured with data that reflect the process.
– Support major business objectives.
– Be directly related to a customer need or financial need of the organization.

See Table 1 for examples of measures.

Depending on the organizational improvement structure, this step may be done by a steering team, management team or problem-solving work team. If the business performance measures already exist, monitor them using graphics and charts.

b) Chart the current business and process performance measures.

Use a Run Chart or a Control Chart to plot variable data. These charts show you how the measure performs over time. Data graphed over time helps teams to see if the process they are studying is steady, improving or getting worse. If the process is performing differently than expected, then a team has cause to question this. The team should determine why it has changed and the extent it has changed. Use a Control Chart to distinguish between common cause variation (naturally occurring within the process) and special cause variation (a unique cause not naturally occurring within the process).

In addition to the Run Chart or a Control Chart, a Pareto Chart can be used to chart the performance of the business and/or process measure and to prioritize business issues that need to be addressed. Use a Pareto Chart to visually display attribute data. A Pareto Chart helps a team identify the biggest problem or need for improvement by taking a complex issue and breaking it down into categories of different problems that are occurring. It's used to further prioritize problem areas, categorize customer complaints, defect types, etc. The Pareto Chart is based on the Pareto principle: 20% of the sources cause 80% of the problems. Identify the category that has the highest frequency of occurrence, e.g., the highest cost or highest negative impact, and consider focusing there.

c) Examine the measures and use significant changes in them as signs of potential problems for a team to resolve.

d) Create a draft statement of the problem.

Table 1: Examples of Key Business Performance Measures

Problem
Measured objectively with data
Supports major business objectives
Directly related to customer need or company finances

Measure
Chart

HOSPITAL: Patients wait too long to see emergency room physician
Wait time from patient logs
Run, Control or Histogram
Relates to quality of patient care
Impacts finances if patients go to another hospital

Reasons for long wait time
Pareto
Relates to quality of patient care
Impacts finances if patients go to another hospital

PLANT: Manufacturing not meeting production targets
Yields (% of quality)
Run or Control
Efficiency and quality of products

Customers' orders not filled

Company loses customers to competitors

Lower sales

Machine downtime (# of times machine breaks and duration)
Run or Histogram
Efficiency and quality of products

Customers' orders not filled

Company loses customers to competitors

Lower sales

Reasons for downtime
Pareto
Efficiency and quality of products

Customers' orders not filled

Company loses customers to competitors

Lower sales

Scenario: "The Case of the Missing Deadline"

The Atlantic Book Company (ABC) is a 145-person publishing firm. ABC's success in the last 20 years has been in writing and publishing "how-to" books. More recently, ABC's merger with another publisher has enabled the company to expand into new markets.

Growth has come at a cost, however. As the company has grown, it is increasingly difficult to finish new products on schedule. Jeremy, ABC's New Product Development Manager, was well aware that deadlines were missed more often than met.

Not only was it difficult for Jeremy's new product development staff to meet the deadlines, but morale was suffering too. The latest employee survey showed a 15% drop in job satisfaction. The decline was directly related to work pressure and having to work longer hours.

Jeremy also knew that on-time delivery of new products was an important measure of the health of the business. He decided it was time to solve this problem. Using the data from the Run Chart, Jeremy composed the following problem statement:

"For the past two years, and the last eight projects, book production has been late on average by 7.9 weeks."

Scenario: Book production schedule problem
2. Assemble and support the right team.

If a steering team identified the problem area to address, another team should be chartered to further study and solve the problem. If a team has already been formed and identified the problem, verify that the team has the right members. Consider including suppliers and customers of the process as team members. Also include people who will satisfy the team's needs. Ask team members if anyone is missing or needed, but remember to keep the team small and manageable, no more than five to eight people.
Putting Together an Effective Team

Skills: Does someone do something unique that is a required part of the process? Examples: precision welder, secretary, lab technician, or facilitator.

Knowledge: Is there someone who has essential pieces of information about the problem or process? Examples: research chemist, nurse, customer and/or supplier, service manager.

Approval: Is there someone whose "OK" is required before a likely solution can be implemented? Examples: purchasing manager, finance manager, general manager, CEO.

Acceptance: Are there individuals who can effectively block implementation of a likely solution if it isn't acceptable to them? Examples: process owner, supervisor, worker, or sales representative.

For example, the ABC problem-solving team in our scenario includes:

* – Jeremy, Manager of New Product Development (needed for Approval, Knowledge)
* – Felicia, Lead Editor (needed for Skills, Knowledge)
* – Rich, Customer Representative (needed for Acceptance)
* – Lani, Primary Writer (needed for Skills, Knowledge)
* – Stephano, Copy Layout (needed for Skills)
*
* At each team meeting, Rich took notes and documented the key ideas that were presented so the team could develop an ongoing storyboard to be posted outside the lunchroom. (Storyboards are self-explanatory, graphic summaries of the key analyses, decisions and actions of the problem-solving process. It keeps the organization informed of the team's progress.)

3. Narrow down the project focus.

a) Look for any other data opportunities to further understand and clarify the problem.

– Is there a different process measure that should be studied?
– Is there additional data that would help you understand the largest bar on the Pareto Chart?
– Do you need to create a new Run Chart on a critical measure?
– Would it be helpful to talk to customers?

Tip: Customers' input is invaluable! Their insights to the problem may change what you choose to measure and how you measure it in the process. Understanding your customers' needs can influence the type of solution you later put into place.

Tip: Sometimes you can narrow the scope of the original problem, depending on the knowledge of your team members and the data that you've collected. Keep the scope of the problem within your team's:

– Area of control or influence
– Budget
– Schedule for implementing a solution
– Suppliers

b) As a team, look at the data gathered so far. Begin to ask, "What's wrong?" "What's not working?" List all potential issues, problems, and opportunities.

c) Identify the issue to focus on. Consider these questions when selecting the issue:

* What issue appears to be the most important one in need of changing or improving? Look at the Run Chart or Pareto Chart.
* Is that issue the most important one to the customer? The team? The organization?
* Does the team have control over the part of the process that needs to be changed?
* Will the necessary resources be available to address this problem?

Scenario Continued: ABC Team Narrows Down the Project Focus

The team members decided they had to narrow the focus of the problem before they could find a possible solution. They collected data on the past eight projects by talking with other employees, looking at past records, and studying time logs.

After reviewing this data, the team listed possible reasons for the delays. Then the team collected data from project history files on how often each type of delay had occurred. With this data, the team constructed a Pareto Chart to show the frequency of delays.
Reasons for product delays.

The Pareto Chart showed that more than two thirds of the delays were caused by rework.

The team dug a little deeper by reviewing work assignment sheets and time logs for the last eight projects completed. Using data from that search, the team named the reasons why projects were delayed and created a second Pareto Chart that showed where the greatest number of delays was occurring.
Reasons for project delays.

Based on the data, the team concluded that the leading contributor to project delays was related to graphics production (the tallest bar).
4. Write a final problem statement.

Write a clear and concise statement of the problem to be addressed by the team. A good problem statement will include four components:

Direction: What do you want to do to the performance level of the process, e.g., increase, decrease, cut back, improve, expand, develop, remove, reduce, lower, eliminate, shorten, extend.

Business Measure: The key measure for the process under study, e.g., errors, mistakes, breakdowns, yields, availability, turnaround time, timeliness, wait time, accuracy, cycle time.

Performance Measure: The current numeric performance value of the business measure.

Process Name: The process under study.

For example, the ABC Team's final problem statement was: "Reduce the large number of graphics needing rework in the new product development process so that book production schedules can be met on time."
How Can You Turbo-charge This Step?

The key to a successful problem-solving effort is to get a team off to a good start with the right people working on the right problem. Consider these other approaches to identifying and defining the right problem.
Affinity Diagram and Interrelationship Digraph

1. Start by talking to the customers, suppliers, or staff and workers. Identify their issues and organize them using the Affinity Diagram. This method truly focuses on a customer-identified concern!

2. Identify the driver of these themed groupings using the Interrelationship Digraph.

3. Identify a key business performance measure related to the driver.

4. Construct a Run Chart or Control Chart on the measure. Construct a Pareto Chart on the identified types of concerns/issues.
Problem Reformulation Tool

If a team has trouble identifying the problem, this tool can help a team visualize the problem in a new way.

1. Using pictures, questions, and criteria, identify the components of the system (process) in order to identify new approaches to focusing on the right problem and then solving it.

2. Look at how the components affect the system and at the interrelationships between the components.

3. After writing new statements of how the components or relationships relate back to the original problem, prioritize and select one.

4. Identify a measure on this new problem statement and evaluate it for further study.
Purpose Hierarchy Tool

This tool identifies the full range of possible purposes of an improvement effort and then focuses in on the one that fits the needs of the customer and available resources.

1. Brainstorm a list of purpose statements that begin with the word "to" and have an action (verb) and an object of that action.

2. Code each statement as to its level of difficulty:

S = simple
SM = simple to medium
M = medium
MC = medium to complex
C = complex

3. Order the statements from simple to complex and then select the focus purpose by mapping the statements against applicable criteria.



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Tapping Voice of the Lead User for DFSS

At its core, Design for Six Sigma (DFSS) is concerned with the accurate translation of what the customer wants into measurable characteristics, and then putting these characteristics into functions and design elements. The idea behind DFSS is intuitive and simple. If done well, a company will end up with a product that has what the customer wants and needs exactly at the point of product launch.

The least technical, but perhaps the most challenging part, of DFSS is the accurate understanding of the voice of the customer (VOC). How well the company can gather and understand the customer's wants and needs is critical. Good VOC and the company has a market winning product; bad VOC and that product is likely to be a dud that nobody wants.

But the issue can actually be more complex than that. Does the average customer always know what they really want? After all, prior to their widespread appearance, what consumer even dreamed of asking for the Internet, ATMs, the cell phone, instant photography, contact lenses? How can a company get the voice of the customer for these kinds of never-before-seen products?

There is a similar problem with familiar products. It can be argued that the more familiar a customer is with an existing product type, the less likely the average customer can foresee the future of that product. For example, before Apple introduced the now-standard "windows-style" operating system (which was actually developed by Parc Xerox), it would be hard to imagine a focus group comprised of DOS users asking for the computer operating system features taken for granted today. More likely, the average DOS users would just ask for enhancements and refinements to their existing DOS system.
Considering the Lead User Theory

But not all consumers are average consumers, some are "lead users." According to Eric von Hippel, professor and head of the Innovation and Entrepreneurship Group at the Sloan School of Management at the Massachusetts Institute of Technology, lead users are consumers who have some especially strong needs right now. They have two defining characteristics:

* Lead users face needs that eventually will be in the marketplace – but face them months or years before the bulk of consumers.
* Lead users are positioned to benefit significantly by obtaining a solution to those needs.

If lead users can be systematically identified and accurately tapped for their "voice" and their "concepts," it would be invaluable in implementing the DFSS methodology. It would allow companies to design products today that will meet the needs of the marketplace at the point of product launch, i.e., one to two years later.

Lead user theory as an input into the DFSS methodology is particularly important at this point in the history of product development because most of the exciting developments are in high-tech product design. In high technology, where speed of innovation is so fast, the average customer's current experience and derived needs are often obsolete by the time the product is developed. This was the case with the high-end typewriters that appeared around the same time as personal computers in the early 1980s. The high-end typewriters, which had functions very similar to the word processing software available then, were no doubt the product of diligent market research and voice-of-the-customer analysis. Nevertheless, they became almost obsolete upon arrival because neither their customers nor the companies that produced them foresaw the widespread adoption of the PC and the eventual demise of the typewriter.
Incorporating Lead User Data into DFSS

How can lead users be identified, and how can their insights, needs and expectations be used in DFSS projects? Based on Von Hippel's research, here are four suggested steps for finding and using lead users:

1. Identify the important trends within the product area. Since lead users are ahead of the general market with respect to one or more variables that will change over time, it is important to know the variables. In other words, what is the underlying trend on which these users are ahead of the curve relative to the general population? As an example, a relevant trend in a DFSS project for the next generation of mobile phones is globalization (the mother of all trends). Tapping into the global economy is no longer just the activity of large multinational corporations. It has become almost everyone's business and leads to more people bringing their mobile phones outside of their subscribed networks. International business travel is no longer the exclusive domain of high-level executives who have no concern about racking up huge mobile phone bills on company expense. Today, global business travelers and their companies are concerned about the high cost of global roaming service.

2. Identify lead users. Once the trends have been identified, the next step is to identify the users or customers who are ahead of this trend. In the mobile phone example, lead users may be among the frequent business travelers who do not have large company expense accounts. These lead users often limit their business activities to no more than three markets. For instance, many North American, European and Asian business executives spend time in China.

3. Obtain the lead users' needs, wants, expectations and current solutions to the problem. In the example, lead users want to tap into the cheaper local networks for local business calls rather than to use their global roaming service for a local call. It is important to ask these lead users how they solve their problem. It is common for these lead users to subscribe with a local network provider in their destination country and swap SIM cards for less expensive local calls upon their arrival.

4. If possible, obtain the function and design element expectations of these lead users. In the example, an obvious design element is to have a mobile phone that has more than one SIM card slot. That could, with the right operating system on board, allow the user to switch from one SIM card to another. This kind of function also is useful for another kind of lead user – the high volume text message user. It is common for some mobile phone service providers to offer a certain volume of free text messaging with a basic plan. Many young people try to save on communication cost by using their mobile phone for text messaging most of the time. Some have found it cheaper to have more than one plan (hence two SIM cards) than to exceed their allocated free text messaging on just one plan. A mobile phone with more than one SIM card slotalso could meet the needs of these lead users.
Conclusion: Getting to Market on Time

It is evident that successful DFSS, especially in the area of high-tech products, can be helped significantly by incorporating the lead user theory to develop products that arrive in the marketplace just in time to meet new needs.



Source: Chew Jian Chieh is a senior consultant with Valeocon Management Consulting in Asia and supports clients mainly in Singapore and China.

Introduction and Implementation of Total Quality Management (TQM)

Total Quality Management is a management approach that originated in the 1950's and has steadily become more popular since the early 1980's. Total Quality is a description of the culture, attitude and organization of a company that strives to provide customers with products and services that satisfy their needs. The culture requires quality in all aspects of the company's operations, with processes being done right the first time and defects and waste eradicated from operations.

Total Quality Management, TQM, is a method by which management and employees can become involved in the continuous improvement of the production of goods and services. It is a combination of quality and management tools aimed at increasing business and reducing losses due to wasteful practices.

Some of the companies who have implemented TQM include Ford Motor Company, Phillips Semiconductor, SGL Carbon, Motorola and Toyota Motor Company.

TQM Defined
TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and organizational objectives.

TQM views an organization as a collection of processes. It maintains that organizations must strive to continuously improve these processes by incorporating the knowledge and experiences of workers. The simple objective of TQM is "Do the right things, right the first time, every time". TQM is infinitely variable and adaptable. Although originally applied to manufacturing operations, and for a number of years only used in that area, TQM is now becoming recognized as a generic management tool, just as applicable in service and public sector organizations. There are a number of evolutionary strands, with different sectors creating their own versions from the common ancestor. TQM is the foundation for activities, which include:

* Commitment by senior management and all employees
* Meeting customer requirements
* Reducing development cycle times
* Just In Time/Demand Flow Manufacturing
* Improvement teams
* Reducing product and service costs
* Systems to facilitate improvement
* Line Management ownership
* Employee involvement and empowerment
* Recognition and celebration
* Challenging quantified goals and benchmarking
* Focus on processes / improvement plans
* Specific incorporation in strategic planning

This shows that TQM must be practiced in all activities, by all personnel, in Manufacturing, Marketing, Engineering, R&D, Sales, Purchasing, HR, etc.

Principles of TQM
The key principles of TQM are as following:

Management Commitment

*
1. Plan (drive, direct)
2. Do (deploy, support, participate)
3. Check (review)
4. Act (recognize, communicate, revise)
* Employee Empowerment
1. Training
2. Suggestion scheme
3. Measurement and recognition
4. Excellence teams
* Fact Based Decision Making
1. SPC (statistical process control)
2. DOE, FMEA
3. The 7 statistical tools
4. TOPS (FORD 8D - Team Oriented Problem Solving)
* Continuous Improvement
1. Systematic measurement and focus on CONQ
2. Excellence teams
3. Cross-functional process management
4. Attain, maintain, improve standards
* Customer Focus
1. Supplier partnership
2. Service relationship with internal customers
3. Never compromise quality
4. Customer driven standards

The Concept of Continuous Improvement by TQM
TQM is mainly concerned with continuous improvement in all work, from high level strategic planning and decision-making, to detailed execution of work elements on the shop floor. It stems from the belief that mistakes can be avoided and defects can be prevented. It leads to continuously improving results, in all aspects of work, as a result of continuously improving capabilities, people, processes, technology and machine capabilities.

Continuous improvement must deal not only with improving results, but more importantly with improving capabilities to produce better results in the future. The five major areas of focus for capability improvement are demand generation, supply generation, technology, operations and people capability.

A central principle of TQM is that mistakes may be made by people, but most of them are caused, or at least permitted, by faulty systems and processes. This means that the root cause of such mistakes can be identified and eliminated, and repetition can be prevented by changing the process.

There are three major mechanisms of prevention:

1. Preventing mistakes (defects) from occurring (Mistake - proofing or Poka-Yoke).
2. Where mistakes can't be absolutely prevented, detecting them early to prevent them being passed down the value added chain (Inspection at source or by the next operation).
3. Where mistakes recur, stopping production until the process can be corrected, to prevent the production of more defects. (Stop in time).

Implementation Principles and Processes
A preliminary step in TQM implementation is to assess the organization's current reality. Relevant preconditions have to do with the organization's history, its current needs, precipitating events leading to TQM, and the existing employee quality of working life. If the current reality does not include important preconditions, TQM implementation should be delayed until the organization is in a state in which TQM is likely to succeed.

If an organization has a track record of effective responsiveness to the environment, and if it has been able to successfully change the way it operates when needed, TQM will be easier to implement. If an organization has been historically reactive and has no skill at improving its operating systems, there will be both employee skepticism and a lack of skilled change agents. If this condition prevails, a comprehensive program of management and leadership development may be instituted. A management audit is a good assessment tool to identify current levels of organizational functioning and areas in need of change. An organization should be basically healthy before beginning TQM. If it has significant problems such as a very unstable funding base, weak administrative systems, lack of managerial skill, or poor employee morale, TQM would not be appropriate.

However, a certain level of stress is probably desirable to initiate TQM. People need to feel a need for a change. Kanter (1983) addresses this phenomenon be describing building blocks which are present in effective organizational change. These forces include departures from tradition, a crisis or galvanizing event, strategic decisions, individual "prime movers," and action vehicles. Departures from tradition are activities, usually at lower levels of the organization, which occur when entrepreneurs move outside the normal ways of operating to solve a problem. A crisis, if it is not too disabling, can also help create a sense of urgency which can mobilize people to act. In the case of TQM, this may be a funding cut or threat, or demands from consumers or other stakeholders for improved quality of service. After a crisis, a leader may intervene strategically by articulating a new vision of the future to help the organization deal with it. A plan to implement TQM may be such a strategic decision. Such a leader may then become a prime mover, who takes charge in championing the new idea and showing others how it will help them get where they want to go. Finally, action vehicles are needed and mechanisms or structures to enable the change to occur and become institutionalized.

Steps in Managing the Transition
Beckhard and Pritchard (1992) have outlined the basic steps in managing a transition to a new system such as TQM: identifying tasks to be done, creating necessary management structures, developing strategies for building commitment, designing mechanisms to communicate the change, and assigning resources.

Task identification would include a study of present conditions (assessing current reality, as described above); assessing readiness, such as through a force field analysis; creating a model of the desired state, in this case, implementation of TQM; announcing the change goals to the organization; and assigning responsibilities and resources. This final step would include securing outside consultation and training and assigning someone within the organization to oversee the effort. This should be a responsibility of top management. In fact, the next step, designing transition management structures, is also a responsibility of top management. In fact, Cohen and Brand (1993) and Hyde (1992) assert that management must be heavily involved as leaders rather than relying on a separate staff person or function to shepherd the effort. An organization wide steering committee to oversee the effort may be appropriate. Developing commitment strategies was discussed above in the sections on resistance and on visionary leadership.

To communicate the change, mechanisms beyond existing processes will need to be developed. Special all-staff meetings attended by executives, sometimes designed as input or dialog sessions, may be used to kick off the process, and TQM newsletters may be an effective ongoing communication tool to keep employees aware of activities and accomplishments.

Management of resources for the change effort is important with TQM because outside consultants will almost always be required. Choose consultants based on their prior relevant experience and their commitment to adapting the process to fit unique organizational needs. While consultants will be invaluable with initial training of staff and TQM system design, employees (management and others) should be actively involved in TQM implementation, perhaps after receiving training in change management which they can then pass on to other employees. A collaborative relationship with consultants and clear role definitions and specification of activities must be established.

In summary, first assess preconditions and the current state of the organization to make sure the need for change is clear and that TQM is an appropriate strategy. Leadership styles and organizational culture must be congruent with TQM. If they are not, this should be worked on or TQM implementation should be avoided or delayed until favorable conditions exist.

Remember that this will be a difficult, comprehensive, and long-term process. Leaders will need to maintain their commitment, keep the process visible, provide necessary support, and hold people accountable for results. Use input from stakeholder (clients, referring agencies, funding sources, etc.) as possible; and, of course, maximize employee involvement in design of the system.

Always keep in mind that TQM should be purpose driven. Be clear on the organization's vision for the future and stay focused on it. TQM can be a powerful technique for unleashing employee creativity and potential, reducing bureaucracy and costs, and improving service to clients and the community.

Conclusion
TQM encoureges participation amongst shop floor workers and managers. There is no single theoretical formalization of total quality, but Deming, Juran and Ishikawa provide the core assumptions, as a "...discipline and philosophy of management which institutionalizes planned and continuous... improvement ... and assumes that quality is the outcome of all activities that take place within an organization; that all functions and all employees have to participate in the improvement process; that organizations need both quality systems and a quality culture.".

What Should a Company Listen to?

Conventional Six Sigma practice uses customer satisfaction as the key voice-of-the-customer metric. This metric is problematic on two counts:

* Satisfaction has little linkage to market performance. More and more organizations are forsaking customer satisfaction as the voice of the customer as they begin to understand that happy customers are not necessarily profitable or loyal customers. In fact, companies such as AT&T and Cadillac learned that while their customer satisfaction scores were increasing, market share was actually decreasing.

* Satisfaction does not account for the interaction between quality and price. This is an important point because too often organizations think that to increase market share they simply have to reduce price. In reality, they may not have a pricing problem but rather a value problem. Customers are not willing to pay the price that the organization is asking for the quality that they are going to receive. The interplay between quality and price is value, and value has proven to be one of the best predictors of market share.


For strategic applications of Six Sigma, getting the right voice of the customer is critically important. Understanding how Six Sigma initiatives are consistent with strategy is the first step. Knowing which customers will provide the correct voice and what to listen to also is important. Customer value is increasingly the metric of choice. It is being adopted because of its linkages to market performance and its ability to better understand the dynamics of customer behavior. It is a powerful metric for identifying and directing Six Sigma projects and initiatives.

About Customers?

The question of which product/market to choose is answered by identifying specific strategic criteria and then applying an evaluation of these criteria uniformly across all products/markets within the matrix. Typical criteria include:
* Market size * Market growth rate * Competitive intensity * Margins within the product/market * Market share * Downstream product/service revenues
First, eliminate all non-viable cells where selling a product or service to a specific segment makes little sense. For example, selling home mortgages to retired customers is probably not a viable opportunity. Next, evaluate the remaining cells in terms of the strategic criteria. The best opportunities are those cells that have the best scores on the various criteria. This may mean that, out of a 4x5 matrix (20 potential opportunities), the best opportunities are found within four or five cells.
Does that mean that the organization will no longer serve the other products/markets? No. But the matrix does indicate areas where the organization will not actively invest and therefore will not expend Six Sigma resources. This is where the alignment of Six Sigma and organizational strategy takes place.
Once the products/markets are chosen, the organization must select which voice of the customer to listen to and which will drive Six Sigma projects.

SIX SIGMA

Putting Six Sigma to Work in Business-to-Business


1. 'Outside-In' Thinking: Sales Start with the Customer

2. Focus on What Customers Value in the Buying Process

Define: What Does Sales Expect to Gain?
Measure: A Loyalty Baseline
Analyze: What Do Customers Value?
Improve: How Should the Company Sell Differently?
Control: Measuring to Sustain Improvements


Understanding the Purpose and Use of Benchmarking.


The crux of benchmarking is learning by sharing information between businesses. By comparing work processes, inputs and outputs, you can gain valuable information that can help you improve your own process. At a very high level, the process of benchmarking can be broken down into three steps:

1. Evaluate and measure your own operation or specific process to identify weaknesses and strengths.
2. Initiate a benchmarking study and document processes that are more productive or efficient than yours.
3. Determine how to adapt successful processes and procedures from those who may be doing it better than your process.

Core Set of Effectiveness Metrics for Software and IT.

1. Appraisal cost per defect by phase and appraisal type
2. Rework cost per defect by phase and appraisal type
3. Value-added, appraisal and rework as a percentage of effort
4. Defect containment effectiveness
5. Total containment effectiveness
6. Effort variance normalized for size
7. Schedule variance normalized for size
8. Defect density, or defect per size - total "insertion" rate
9. Effort per size, or productivity
10. Duration per size, or cycle time

Start Software Testing with All Five Essentials in Place.

1. Five essential elements are required for successful software testing. If any one of the five is missing or inadequate, the test effort will most likely fall far short of what could otherwise be achieved. Exploring these five essentials can help improve the effectiveness and efficiency of any software testing program

2. A test strategy that indicates what types of testing and the amount of testing that will work best at finding the defects lurking in the software.

3. A testing plan of the actual testing tasks that will need to be execute to carry out the test strategy.

4. Test cases that have been prepared in advance in the form of detailed examples you will
use to check that the software will actually meet its requirementsTest data consisting of both input test data and database test data to use while you are executing your test cases.

5. A test environment which you will use to carry out your testing.