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The Power of Ultimate Six Sigma™ Keki R. Bhote AMACOM The Power of Ultimate Six Sigma ™ Keki Bhote’s Proven System for Moving Beyond Quality Excellence to Total Business Excellence KEKI R. BHOTE American Management Association New York • Atlanta • Brussels • Buenos Aires • Chicago • London • Mexico City San Francisco • Shanghai • Tokyo • Toronto • Washington, D. C. 9729 Ultimate Six Sigma 11/25/02 9:51 AM Page i This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the pub- lisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent profes- sional person should be sought. Library of Congress Cataloging-in-Publication Data Bhote, Keki R. The power of ultimate Six Sigma : Keki Bhote’s proven system for moving beyond quality excellence to total business excellence / Keki R. Bhote. p. cm. Includes bibliographical references and index. ISBN 0-8144-0759-5 1. Process control. I. Title. TS156.8 B485 2003 658.5'62—dc21 2002011379 © 2003 Keki R. Bhote. All rights reserved. Printed in the United States of America. This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Printing number 10 9 8 7 6 5 4 3 2 1 Special discounts on bulk quantities of AMACOM books are available to corpora- tions, professional associations, and other organizations. For details, contact Spe- cial Sales Department, AMACOM, a division of American Management Association, 1601 Broadway, New York, NY 10019. Tel.: 212-903-8316 Fax: 212-903-8083 Web site: www.amacombooks.org To my beloved wife Mehroo, whose support for me has been exceeded only by her caring, devotion, and love 9729 Ultimate Six Sigma 11/25/02 9:51 AM Page ii iii Foreword vii Preface ix Acknowledgments xv PART ONE The Power of Ultimate Six Sigma— Evolution and Infrastructure 1 Chapter 1 The Power of Ultimate Six Sigma: A Reach-Out Purpose— Business to Solve the World’s Ills at a Profit 3 Chapter 2 From Infirmity of the Hyped Six Sigma to the Power of Ultimate Six Sigma 17 Chapter 3 The Scope, Structure, and Methodology of the Power of Ultimate Six Sigma 31 PART TWO The Power of Ultimate Six Sigma— From Shareholder Value to Stakeholder Value 43 Chapter 4 From Mere Customer Satisfaction to Customer Loyalty 45 Chapter 5 From Blinkered Micromanagement to Leadership with Panoramic Vision 65 Chapter 6 Organization: From the Straitjacket of Taylorism to the Freedom of a Culture of Entrepreneurship 83 Contents 9729 Ultimate Six Sigma 11/25/02 9:51 AM Page iii Chapter 7 Employees: From Industrial Autocracy Toward Industrial Democracy 101 Chapter 8 From a Customer-Supplier Win-Lose Contest to a Win-Win Partnership for the Entire Supply Chain 129 PART THREE The Power of Ultimate Six Sigma— The High Octane Engines of Thrust 155 Chapter 9 Quality: From Wheel-Spinning to World Class 157 Chapter 10 From Cost Reduction “with Mirrors” to a Robust Bottom Line 189 Chapter 11 Cycle Time: From a Black Hole to the Best Metric for Effectiveness 209 PART FOUR The Power of Ultimate Six Sigma— Applications in Major Line Functions 231 Chapter 12 Design: From Historic Levels to Designs in Half the Time, with Half the Defects, Half the Costs, and Half the Manpower 233 Chapter 13 Manufacturing: From Sunset Obsolescence to Sunrise Enlightenment 263 Chapter 14 Services: From a Black Hole of Little Accountability to a Productivity Contributor 285 PART FIVE The Power of Ultimate Six Sigma—Results 313 Chapter 15 Results: From Mediocrity to World Class 315 iv Contents 9729 Ultimate Six Sigma 11/25/02 9:51 AM Page iv Conclusion: New Hope, New Horizons for Corporations 335 Reference Notes 339 Index 345 About the Author 349 Contents v 9729 Ultimate Six Sigma 11/25/02 9:51 AM Page v 9729 Ultimate Six Sigma 11/25/02 9:51 AM Page vi This Page Intentionally Left Blank It is a pleasure to write this foreword to Keki Bhote’s book The Power of Ultimate Six Sigma. I have had a most productive association with Keki for more than fifteen years. He helped me in enlarging the horizons for APQC’s pioneering work on the Malcolm Baldrige National Quality Award for the United States. Keki also introduced his simple but highly effective and statistically powerful Design of Experiments to the American Productivity and Quality Center staff and to many companies around the world. Keki was among those who helped develop Motorola’s renowned Six Sigma process. As the Chief Corporate Consultant for Quality and Productivity Improvement at Motorola, he was responsible for many of the leading innovations in the company. In 1995, Keki was selected as one of the new quality gurus of America by Quality Digest magazine. His first book on Six Sigma, The Ultimate Six Sigma, expanded the concept of Six Sigma from mere quality excellence to total business excellence. Its great popularity has created a demand for this latest book—The Power of Ultimate Six Sigma. It focuses on several themes vital for America: ■ It challenges the business community to initiate a business Marshall Plan to solve the world’s social and economic problems, with profit at the end of the rainbow. ■ It develops 200 disciplines by which a company, mired in anemic profits, can capture the El Dorado of maximum customer loyalty, together with maximum profits. Three chapters are devoted to the powerful tools of quality, cost, and cycle time improvement. Further, each chapter is illustrated with a case study of a benchmark com- pany that excels in one of the twelve areas of a company’s business. Finally, there is a self- assessment/audit guide by which a company can measure its overall corporate health. The Power of Ultimate Six Sigma adds another of Keki Bhote’s impressive contri- butions to stimulating and helping improve companies around the world. vii Foreword C. Jackson Grayson, Ph. D., Chairman, American Productivity and Quality Center 9729 Ultimate Six Sigma 11/25/02 9:51 AM Page vii This Page Intentionally Left Blank [...]... CHAPTER 1 The Power of Ultimate Six Sigma: A Reach-Out Purpose—Business to Solve the World’s Ills at a Profit CHAPTER 2 From the Infirmity of the Hyped Six Sigma to the Power of Ultimate Six Sigma CHAPTER 3 The Scope, Structure, and Methodology of the Power of Ultimate Six Sigma This Page Intentionally Left Blank C H A P T E R 1 The Power of Ultimate Six Sigma: A Reach-Out Purpose—Business to Solve the World’s... Disciplines of the Ultimate Six Sigma The original Ultimate Six Sigma book grouped the key characteristics and success factors of a Six Sigma drive together, by area The Power of Ultimate Six Sigma retains the key characteristics in each area, but converts the success factors into essential disciplines that must be put into effect for achieving breakthroughs In addition, the entire scope of the Power of the Ultimate. .. Six Sigma? As the title The Power of the Ultimate Six Sigma indicates, there is an urgent need to give a high-octane boost to the top management of business enterprises Two cataclysmic events—one global, the other within the world of business— have converged to expand the horizon of the Ultimate Six Sigma even further and with greater urgency The first represents a golden opportunity for pursuing the. .. Power of the Ultimate Six Sigma to unprecedented heights for business The second represents a Power of Ultimate Six Sigma message for business to reform itself or else witness the precipitous slide in the stock market, the disillusionment of the stockholder, and the gradual atrophy of the glorious engine of capitalism The Aftermath of September 11: A Rousing Challenge for Business The catastrophe of. .. to the hyped Six Sigma siren song of the consulting companies, it will continue to flounder in mediocrity I If, however, the principles of the Power of Ultimate Six Sigma are imple- mented with a focus on the customer; on leadership; on releasing the inherent, creative talents of employees; and on the use of powerful and little-known tools of the twenty-first century, the dawn of a bright new era of. .. Quality/ Cost of Poor Reliability/ Quality (COPQ) Cycle Time Outgoing Quality (ppm) pk c 30,000 Cycle Time (multiples of theoretical cycle time) 10 to 100 C H A P T E R 2 From the Infirmity of the Hyped Six Sigma to the Power of Ultimate Six Sigma We are witnessing Six Sigma Houdinis, who can conjure up the magic of transforming any old quality level to an ideal of —KEKI R BHOTE Six Sigma! Six Sigma: A... The Need for Power of the Ultimate Six Sigma Having shown the need for a business Marshall Plan to lift the scourge of poverty from one-third of mankind, and having traced an outline of required reforms if business is to rise to this global challenge, we can now use the power beacon of the Ultimate Six Sigma to light the path to total business excellence Let’s start with the urgent need for the Power. .. on to the issues of customers, leadership, organization, employees, and suppliers, the Ultimate Six Sigma represented a quantum leap over the standard treatment of Six Sigma By highlighting the ten powerful tools of the twenty-first century, it left far behind the obsolete problem-solving/improvement tools employed by Six Sigma black belts Why, then, the necessity for another perspective on the Ultimate. .. Horizons for The Power of Ultimate Six Sigma My first book on the Ultimate Six Sigma has been immensely popular for breaking new ground on the subject of Six Sigma, first developed by my associates and myself at Motorola It enlarged the scope of Six Sigma as slavishly practiced by hundreds of companies—from the narrow confines of quality excellence to total business excellence By turning the searchlight... for the Ultimate Six Sigma The reader can still refer to the original Ultimate Six Sigma book for indepth background and rationale, but the emphasis here is on unleashing the Power of Ultimate Six Sigma by pursuing each discipline to completion It is about going from intelligence quotient to action quotient To sum up, business needs all three Qs the IQ of all its people, the EQ (emotional quotient) of . Sigma to the Power of Ultimate Six Sigma 17 Chapter 3 The Scope, Structure, and Methodology of the Power of Ultimate Six Sigma 31 PART TWO The Power of Ultimate. employed by Six Sigma black belts. Why, then, the necessity for another perspective on the Ultimate Six Sigma? As the title The Power of the Ultimate Six Sigma