Quality generates positive word of mouth

His detractors say he is admired more by people outside the company he runs than by those inside it. But what no one can deny is the fact that KR Kim, as managing director of LG Electronics India, has presided over the revival of the company’s fortunes in the country. His achievements are well recognised in Seoul. Kim is also the president of LG’s South West Asia operations and is counted among LG’s top five people across the globe. For him quality has been the key to the company’s success in India. In a freewheeling interview to Alokananda Chakraborty, Kim said that that LG sees its long-term future in IT-enabled consumer devices.

LG did away with its affordability strategy for a premium strategy in the durables market recently. Why did LG change tack? Has the strategy started paying dividends?

It would be wrong to say that LG has focused only on affordability or that the Indian consumer is solely driven by price. We have tried to provide the best in terms of products, features, technology and quality to the customer. Our flagship models have always been premium products right from the three-door DIOS refrigerators to the 71-inch PDPs.

The other important development is the formulation of the Blue Ocean strategy department in India. What is the brief to the team? What role does this group play?

This phenomenon is not India specific. LG Electronics announced the Blue Ocean programme across all its subsidiaries in the world with the goal to become a top three consumer electronics player by 2010. This programme is based on the understanding that only flexible companies that adapt to lifecycle and industry changes will enjoy continued growth.

The underlying belief is that this shift will help LG to increase revenues and generate higher profits. It will also strengthen its overall capabilities to deliver quality, premium products, thus enhancing its offering to consumers.

Philosophies of customer-oriented management, competitive advantage in technology and increased management efficiency are central to this initiative. Additional initiatives of this campaign are strengthening business capabilities, enhan-cing brand value and developing next-generation high-tech businesses.

What are the notable trends you have observed in the Indian consumer electronics market in the last five years?

The past few years have seen a definitive change in buying patterns. Customers today are willing to spend more and buy the latest products rather than watch their products become obsolete in a few years. In CTVs, for example, we are seeing more and more first time buyers purchasing flat TVs rather than conventional TVs. LCDs and plasmas are also showing great growth. Similar shifts are visible across all categories.

Of course, many hi-end products have been laun- ched; but do you think the retail offtake justifies the kind of marketing spends companies make on such products?

No doubt about it. India is one of the fastest growing economies in the world. The spending power and availability of finances have also increased over the past few years. The trends clearly show that the Indian customer wants the best in the world and they are willing to spend money on products that promise them the latest technology, coupled with the best quality.

In other words, would you describe the Indian consumer as price conscious or value conscious?

I would say Indian consumers are quality conscious. Which essentially means that to be the leader in the Indian market, and to stay at the top, a company has to offer great products backed by equally great service.

You have said LG’s growth agenda includes capturing leadership positions in communication and IT products. How do you plan to go about the job?

I feel this is the right time to consolidate our position in IT and mobile phones. In a lot of ways we are banking on our channel strength and responsiveness to help propel this growth.

LG has seen a lot of churn in the top management in recent years. Doesn’t that send out a negative signal?

Let me put it this way. Our flexibility is our strength. As the organisation grows, the organisation structure will inevitably change to accommodate the growth. Consider how we have grown over the past few years. From a Rs 125 crore (1997) company we have grown to a Rs 7,500 crore (2005) company today. In any case, people movement is a very natural and ongoing process across industries .

Given your emphasis on growth in the country, where does India figure in LG’s global scheme of things?

For us India is a key market and we are very optimistic about consolidating our position in the country. In the past nine years LG Electronics India has not only marked its presence as the leader in consumer durables in the country, but has also turned it into an export hub catering to the markets in Africa, South East Asia and the Pacific.

What was the biggest advantage that India offered LG?

India, with its vast geographical spread and booming economy, is a great challenge as well as a great market for us. The past few years have seen an increase in disposable incomes, easy accessibility of finance and a boom in con- sumerism in the country. Also, the India customer is more aware and willing to adopt newer technologies. She is quality conscious and will settle for nothing but the best.

Where does your competitive advantage lie? Is it design like Samsung, simplicity like Philips, pride of ownership as in Onida?

We realise that to retain customers and bring in positive word of mouth our quality has to be absolutely top notch. That’s why LG stands for quality. This zeal for quality is reflected in our products, partners and employees. We invest heavily in quality assurance through Six Sigma training programmes for our employees as well as vendors. Each and every component that goes into an LG product goes through the most stringent quality checks.

What are LG’s targets for this year?

This year we aim to achieve Rs 9,000 crore in turnover. The growth drivers for us would be the IT products and GSM phones. Flat panel displays will also be a key focus area.

Turn SOX Compliance into Cash: Link Sarbanes-Oxley Requirements to Business Improvement

by Oversight Systems

Overview:
Sarbanes-Oxley demands quality in financial reporting. While the initial costs of SOX compliance have been extraordinarily high, companies can achieve a return on investment by approaching their SOX compliance with a mindset to drive quality throughout their financial operations. AMR Research estimates that companies will spend more than $6 billion in 2005 to comply with Sarbanes-Oxley. Forward-thinking executives view this as a $6 billion opportunity to improve their businesses.

Companies can achieve a return on compliance spending by using SOX as a lever to improve business processes- processes mapped as part of their SOX documentation. This paper details specific ways that companies have reduced their ongoing compliance costs and increased the quality of their financial operations to truly turn compliance into cash.

The Compliance Framework Companies determined to improve their business through SOX compliance face a substantial challenge: How can I make compliance attainable, sustainable, and cost-effective while improving quality? The answer is to build compliance requirements into the foundation of how you run your business. Companies must get past the "what do I have to do to be compliant" and now to answer the question: How do I make this a strategic part of what I do?

Active compliance goes beyond sample based audits that assess the magnitude of exceptions; it moves into the real-time transaction stream. Active compliance regiments compliance into the process instead of looking for compliance after the fact. Compliance is no longer an occasional activity but an essential part of what you do.

Map SOX to Quality

Sarbanes-Oxley compliance provides public companies with a golden opportunity to enhance the quality of their financial operations. A proven total quality management approach, such as Six Sigma, can both sustain SOX compliance and provide tangible value to shareholders.

The value of Six Sigma's DMAIC (define-measure-analyze-improve-control) closed-loop control system mirrors the document-test-remediate-monitor principles of Sarbanes-Oxley Section 404 compliance. Applying closed-loop control principles to financial processes sustains the requirements of SOX compliance while achieving the benefits of a quality regimen.

Successful quality- and compliance- is a continuous improvement process that demands a closed-loop control structure. Technology-enabled quality in the "financial data factory" provides a significant ROI. Sarbanes-Oxley compliance becomes a dimension of overall quality. Continuous inspection solutions from Oversight Systems provide precise results and a leveraged environment for improving quality in financial operations.

Marlton hospital steps into future

Wednesday, February 22, 2006

By JEANNE RIDGWAY
Courier-Post Staff

EVESHAM
Taking a step into the future of medicine, Virtua-West Jersey Hospital, Marlton unveiled two new leading-edge operating rooms where physicians may treat patients using voice-activated equipment, two-way videos and high-definition digital imaging.

Virtua Health invested $4.3 million to build the two 600-square-foot operating rooms, and equip them with technology by Stryker, a worldwide medical services and products company headquartered in Kalamazoo, Mich.

The improvements are part of a $55 million expansion and renovation plan at the hospital. Virtua-Marlton is making itself over into a specialty hospital for surgeries and cardiac care.

Opened for use this week, the new surgical suites are among the most advanced in the Delaware Valley, according to Richard P. Miller, president and CEO of Virtua Health.

On Tuesday, the units were toured by the media and special guests.

The rooms will be used for minimally invasive endoscopic surgery, a type of surgery requiring only a small incision and the use of a scope to see the interior of the body.

These suites may accommodate surgeries of the stomach and esophagus, thyroid, prostate, kidney, lung, colon, rectum and abdominal aortic aneurysm stent repair.

"This technology is very exciting for Virtua, " said Dr. Dioscoro Villanueva, a thoracic surgeon for Virtua Health and the clinical director of surgery at Virtua's Marlton campus.

The technically advanced rooms are expected to improve overall patient outcomes, he said, by providing more precise diagnosis and quicker surgery, thereby reducing the time a patient is under anesthesia.

Virtua's new ORs provide:

Voice-activated headsets, giving physicians direct control over surgical devices and improved field of view.

A teleconference system whereby surgeons may communicate in real time with other physicians throughout the world.

A system for capturing enhanced digital images. The images may be distributed and archived, allowing multiple physicians to see them at any time, anywhere.

Connection to the hospital's pathology lab so surgeons may view specimens in pathology while patients are still in surgery.

Surgical equipment mounted on ceilings in order to free up floor space and remove trailing wires.

Other improvements under the Marlton expansion plan include an 18-bed intensive care unit, a full-service cardiac catheterization lab, and a new post-intervention care unit.

Virtua Health is a multi-hospital health-care organization employing 7,100 clinical and administrative personnel and with 1,800 physicians on staff.

It is one of the first health-care organizations to adopt the Six Sigma method, a system for improving operational efficiency. Virtua Health has also formed unique partnerships with GE Healthcare, Fox Chase Cancer Center and A.I. duPont Hospital for Children.

In Camden, Cooper University Hospital officially recognized the opening of its new state-of-the-art lab.

The new lab provides a wide range of tests and automates many functions, reducing the possibility of errors and increasing efficiencies within the hospital's laboratory system, officials said.

Cooper is the first hospital in the Delaware Valley to install this automated system, officials said.

Reach Jeanne Ridgway at (856) 486-2479 or jridgway@courierpostonline.com

BPO and compliance

Aditya Sapru, Partner & Managing Director, Frost & Sullivan, talks about the regulations and standards that the Indian BPO industry has to follow these days. He also touches upon the changing global scenario.

There is a widely held notion that India’s success in the BPO space is because India is a low-cost destination with a deep supply of qualified manpower. This is why the Indian Business Process Outsourcing industry has come to epitomise compliance to international quality and standards.

The BPO scenario consists of businesses that depend entirely on repeat business for growth. Clients invariably start small and only ramp up over time as they develop confidence in the delivery capability of the service provider. Given this, the key differentiators that Indians have developed are quality and adoption of standards that permeate all business aspects.


SURROUNDED BY STANDARDS

As a business that depends on offshoring from customers in international markets, the situation that Indian BPOs find themselves in on the issue of compliance to quality standards and government regulation is unique.

First, they have to comply with Indian law. Then, they must comply with the relevant laws of the land that offshores business processes, such as COBIT for IT management, Six Sigma, ISO, COPC for quality management and Sarbanes-Oxley Act 2002 for auditing. Sometimes the customers may have their own unique practices that Indian BPOs must adopt. Finally, BPOs themselves may have designed their own process standards or may like to comply with some well-known international standards such as SOX.

Compliance to regulatory frameworks such as SOX by the BPO industry can act as a signal to global stakeholders that a firm is following best practices for corporate governance. This has become an important enabler as India's BPOs are proposing to list on international bourses


GOVERNMENT'S POINT OF VIEW

It is a general practice to consider compliance to government regulation separately from the compliance to industry standards. However, there is a case for everyone to consider these as on the same continuum rather than on two different spheres. Both of these issues pertain to the general business environment.

While compliance to government regulations and following industry standards may not by itself grow business, not having quality certifications can certainly act as a dampener for business growth. The invitation criteria itself these days for large deals specifies minimum adherence to quality standards and regulation, and not having these can eject service providers from the deal.

Compliance to regulatory frameworks such as the Sarbanes-Oxley Act by the BPO industry can act as a signal to global stakeholders that a firm is following best practices for corporate governance. This has become an important enabler as India’s BPOs are proposing to list in international bourses, and valuation is determined by the liquidity that they can attract from shareholders.


TAKING OFF THE LOAD

Earlier, some regulatory restrictions prevented BPOs from claiming tax benefits when serving both international and Indian customers. Restrictive regulations such as these have now been removed.

One of the enabling aspects of the India’s regulatory environment has been de-constraining the Factory Act by allowing female workers to work the night shift. The emphasis of international regulations has mainly been on the privacy and data security aspects of the BPO business. No-call list in the US and HIPPA standard for the healthcare industry are two prime examples of this regulatory trend.


Acts and standards

IT ACT 2000
The IT act is still somewhat opaque on the data protection front. There is a need for increased recognition for these standards of the BPO environment, and to create laws to prevent loopholes.

COBIT
COBIT is an IT management standard. It identifies certain control parameters, the dependencies on IT resources and puts certain practices in place. Any organisation becoming more complex from the IT point of view needs to have to some kind of COBIT compliance. However, one may not replicate the exact COBIT standard in the organisation.

Many IT vendors are now creating information structure management software compliant to these standards. For example, HP OpenView is based on the ITSM COBIT standards.


PRACTICES IN PLACE

The quality standards that Indian BPOs have adopted represent an eclectic mix of issues that BPOs must address. Some are standards that directly affect the quality of service offered by the service providers, including COPC, ISO and Six Sigma.

In addition, Indian BPOs have adopted standards that create a more enabling agenda, though peripheral to the quality of the final service offered. Under this category are the ones such as COBIT, ITSM and BS7799.

Furthermore, many organisations are adopting procedures such as whitehat hacking, in which ethical hackers hack and test security. Third-party BPOs have been using these audit reports to highlight their security compliance to their customers.


THE EMERGING SCENARIO

Many organisations are adopting procedures such as whitehat hacking, in which ethical hackers hack and test security. Third-party BPOs have been using these audit reports to highlight their security compliance to their customers
As standards mature and BPOs realise the intrinsic value of each, there is a likelihood for some realignment in the standards that will be followed in future. We foresee two mutually exclusive trends in the markets for standards.

The first will be in process compliance and the second will be in outcome compliance. Standards such as COPC prescribe best practices and root cause analysis templates specific to the BPO industry, and are attuned to increasingly complex situations that BPOs face today. Others such as the ISO standard may not be specific to the BPO industry, however they prescribe the process and documentation aspects of ensuring quality.

While there is a commitment to quality standards and regulation, an equally important aspect that BPOs must appreciate is that of cost and the extra management bandwidth that compliance demands from senior managers.

Hence, there is a need to strike a balance between what the external world is demanding from BPOs and the intrinsic gains that BPOs can seek from adopting quality.

The F&S survey results
Frost & Sullivan conducted a survey in March 2004 in which nearly 71 interviews were conducted with operational managers, COOs, IT managers and CTOs.

Some of the trends by the end of March 2004 in the BPO industry:
82 percent followed a quality standard, suggestive of the criticality of quality to contact centres.

ISO is the most widely accepted quality standard adopted by contact centres, with about 25 percent of the sample acknowledging it.

Other than ISO as a quality standard, Six Sigma and COPC also have a large acceptance in the market at 20 percent and 13 percent respectively.

High level of acceptance of a third party/external entity to accredit quality: less than one-fifth of the sample taking no formal quality initiatives.

Quality consciousness amongst adopters and potential adopters of CMS (Call Monitoring System) and WFM (Workforce Management System) is very high.
COPC and Six Sigma are popular with large contact centres

ISO as a practice is popular in medium and small enterprises; Six Sigma retains popularity in the large and medium enterprises, COPC a favourite with the large contact centres.

While quality initiatives are important for both the value from quality as well as communication to external constituency, cost of acquiring quality norms is crucial in the final decision.

Quality initiatives and size are the leading indicators for gauging prospective investment intentions in CMS and WFM. Tracking these two parameters can lead to prospect identification.

The man who would save Scottish industry

TERRY MURDEN

WHEN the call came from hole-in-the-wall company NCR, it looked like the Larkhall plant of Rosti Technical Plastic was about to become the latest victim of the drift of manufacturing work to China.

NCR believed Rosti's components were too expensive and that it could have them made in China at a fraction of the cost. Jobs were on the line and another bit of Scottish manufacturing looked as if it was about to bite the dust.

But Rosti's management had other ideas. They had heard about Stuart Ross, a veteran of the Japanese working practices of kaizen ("continuous improvement") and lean manufacturing. Ross had been working at multinationals including Hewlett Packard, Digital and Polaroid where he had become a convert to the principle of stripping out waste and improving the way companies operated.

Now running his own business and gaining a reputation for results, Ross was brought in to offer Rosti a route to salvation. He got to work and within weeks had come up with a means to improve productivity by a massive 70%. While Rosti's other plants in England and Wales suffered cutbacks, the work that NCR wanted to switch to China stayed in Scotland.

Ross, 60, is emerging as a messianic figure in Scottish manufacturing, an expert in improving company processes and the way people work to the point where he is now advising even the biggest corporations and grabbing the attention of the government as the search for cost-efficient working moves up the agenda.

He reckons, even by his own modest estimates, to have saved Scottish industry more than £10 million - a sum that grows as the annual savings accumulate - and to have kept hundreds, if not thousands, of Scots in work. The results of his endeavours speak for themselves and have encouraged those who have worked with him to describe him as the saviour of Scottish industry. A close examination of what he has achieved suggests there is some truth in it.

Henry Technologies was a struggling manufacturer of components for refrigeration systems on the Hillington Industrial Estate near Glasgow when it announced that job losses appeared inevitable. Ross was brought in and implemented his programme. Within weeks the company saw a 150% improvement in productivity. The firm cut the cost of its main product by 15% and the delivery time from six weeks to three days. Salesmen previously hindered by this long lead time were able to tell customers they could have the parts installed that same week and at a lower price.

Within 10 months the firm saw a 125% increase in sales and went from threatening to fire people to hiring them. No extra finance was raised, it all came about from a reorganisation of how the firm operated.

Peter Hughes, chief executive of Scottish Engineering, the trade association for the country's manufacturers, said he could not praise Ross highly enough for what he was doing. "He has done a hell of a lot of good, quite amazing. He is making a significant impact."

Last week, during a break from his latest seminar at the Beardmore Hotel, Clydebank, Ross modestly recounted his experiences and how he operates as a self-styled "resultant", rather than a consultant, as it describes the end rather than the means.

His grandly titled company, Stuart Ross International, turns out to be its own model of efficiency with just himself and one fellow "resultant", Richard Steer. His wife and son do all the administrative and internet design work. But that's it: four desks in a modest office in Milngavie on the outskirts of Glasgow from where he is implementing a programme now regarded as a vital component in the survival of Scottish manufacturing. He is getting results on a turnover of £250,000. So much for Scottish Enterprise's £500m.

All the more surprising is that Ross is profoundly deaf, a result of the side-effects of drugs he was taking for asthma. He communicates via an electronic device worn around his neck that is connected to two titanium studs drilled into his skull. The disability means that he requires a lot of microphones and cables in order to hear what is being said, but it has had no adverse effect on the message he conveys.

Some of his 70-plus clients have been back for more than one session and include some of the world's biggest firms - some that may have thought themselves to be already among the most efficient. He worked with IBM's continuous improvement manager, who was sceptical that he could achieve a 50% improvement in one particular area of activity. "He was stunned by what we achieved and the dead bodies we recovered," says Ross. "Before you knew it, the place was littered with dead bodies."

Ross says his philosophy is based on "doing more for less", stripping out waste and improving the way people work. "It is not just about productivity, but predictability, speeding things up, making things flow smoothly."

He involves employees in reorganising how they do their jobs, asking them to identify problems and how things might improve. It means asking what the customer wants and how best it can be delivered. "You look at the processes involved and usually they are not very good. Wherever you go, usually people are working with processes that have been imposed on them. When you give them a chance to look critically at how they are doing things and how they might do them differently, the results can be amazing.

"The other thing is that improving the way people work makes them enjoy their work. They often know what is wrong and what is broken, but they don't have any opportunities to make changes. So things stay as they are.

"You also find the same things coming up from different clients. We had a man from IBM listening to the problems at the Benefits Agency and he said the pressures, the inadequate processes and other problems were the same as the ones they faced."

Ross says his passion for improving organisations comes from a personal drive "to make things better". Some 30 years with multinationals included a spell as total quality master at Digital in the early 1990s when he was part of a team sent out to the US to apply the kaizen and lean manufacturing principles to build a jet engine. Instead of the usual 104 hours it took 26. "It was life-changing," says Ross.

Toyota claims to have developed the principles after the war and Nissan adopted them, introducing the concept of minimum waste and maximum efficiency to its new plant in Sunderland in the 1980s at a time when the British car industry was plagued with over-manning and underperformance. Kaizen and lean manufacturing are similar in concept, while Six Sigma, another "efficiency model" is driven more by technical improvements. Companies such as Weir Group in Glasgow and Bosch in Kirkcaldy have adopted one or other as a means of driving out waste and improving productivity.

Ross will be working closely with the Scottish Executive's new Scottish Manufacturing Advisory Service, which aims to send teams of experts to struggling companies to help keep them in business. He made an immediate impact at the launch conference at the Dunblane Hydro in November, with 10 of the delegates signing up as clients.

The Executive was so impressed with a session given by Ross to its managers that it asked for another and made a video to promote it to staff. Tom McCabe, the finance minister, has taken a keen interest, particularly after seeing the results of work that Ross did with Aberdeenshire Council, which has completed 18 sessions.

The council's planning department wanted to speed up its process. As a result of changes now introduced, the time for processing applications has been reduced from up to eight days to three. In half of cases it takes just one day, and uses half the resources. There were similar improvements in the social work department, where no jobs were lost, but instead more staff were employed with clients rather than in paperwork.

Warwick Business School is due to publish the results of a survey in early summer into the effects of employing kaizen and lean principles into the public sector. It will include an analysis of the work at Aberdeenshire Council.

Ross says: "Lean thinking can be applied to almost any process, but the key is the involvement of those who actually do the work. I passionately believe that companies, councils and the NHS can make major improvements across all their key measures once they learn how to involve their staff in the elimination of wasted time."

3M's Hutchinson plant provides tape to the world

3M's Hutchinson plant provides tape to the worldDEE DePASSStar Tribune of MinneapolisHUTCHINSON, Minn. - Every 12 seconds, one of 3M's behemoth molding machines hisses, opens its steel jaws and spits out 12 Scotch tape dispensers at the company's tape plant in Hutchinson, the largest 3M plant on the planet and the birthplace of 5,600 varieties of 500 sticky products.

The plant, which houses 1,500 workers in 1.2 million square feet, has been manufacturing its made-in-Minnesota "jumbos" - sofa-sized rolls of Scotch tape - for 60 years, and it's not about to stop.

In an era in which more and more manufacturing is being outsourced to nations such as China and India, the Hutchinson plant is a notable exception. It makes 1 percent of the 55,000 products 3M makes around the globe.
Plant manager Dan Carlson beams as he strides next to the humming sprawl of automated machines.

"All the Scotch tape for the world is made right here. That's exciting," Carlson said.

The plant once produced only miles of clear "cellophane tape" in red plaid tins for consumers. Now it also makes black electrical tape, purple and green Post-it "flags," adhesive computer-chip trays, medical tape, duct tape and the increasingly popular blue painter's tape. From small, historic Hutchinson, the products go out to more than 200 countries.

3M has a "strong commitment to the Hutchinson plant. It has obviously demonstrated that it's viable," company spokeswoman Jackie Berry said.

The factory contributes mightily to 3M's consumer and office division, where sales grew by $125 million to $3 billion last year. 3M doesn't release product sales figures anymore. But 25 years ago, 3M estimated that its Scotch tape sales alone were $700 million a year - more than $1.6 billion in today's dollars.
The plant also contributes to each of 3M's six other business segments, including industrial and health care. 3M executives say the plant has stayed competitive through regular investments and changes that have reduced its environmental emissions.

Twenty-five workers at the plant were laid off in 2001, the year then-CEO W. James McNerney Jr. cut 5,000 jobs companywide. But the plant has lost only 100 positions altogether since 2000, and Carlson said he wants to hold steady at 1,500 jobs in the Hutchinson facility.

Maplewood-based 3M has invested $50 million to make sure the plant stays competitive and lean.

"Lean is about increasing the speed to customers, taking out unnecessary steps and improving our processes," Carlson said. "We did that with the blue painter's tape that we began making here about eight years ago."

The easy-to-peel tape that leaves a smooth paint edge has became a blockbuster hit, thanks in part to America's home improvement craze. Demand has swelled so much that the company spent $50 million last year converting a parking lot and packaging supply warehouse into the "Scotch Blue Tape Center of Excellence." The addition, which connected the Hutchinson plant's North and South buildings, created 70 jobs, Berry said.

On a recent Friday morning a forklift operator zoomed a "jumbo" of blue tape into the cavernous new center, where machines pulled, sliced and re-rolled the massive blue beast into 2,000 smaller rolls. Soon vacuum suckers stacked the reels, plopped them onto scuttling conveyor belts and sent them on to shrink-wrapping and packaging stations, as Annette Plowman looked on.

Plowman, the production team leader, has been with 3M for 24 years. Last year she, Carlson and other managers got smart and took glue coaters and tape slitters from different ends of the Hutchinson plant and moved them into the new factory addition. They then moved those production machines closer to packing equipment and robotic transporters, which reduced product movement within the plant and cut the production cycle time by three days.

"We used to have lots of big rolls of stuff waiting to be finished, and now we realized we can do all this under one roof," spokeswoman Berry said. "Because of that, we reduced the semifinished inventory by 50 percent."
That wasn't all.

"By pulling it all together they could see all the packaging supplies they had sitting around, and realized they had more than they needed. They did a Six Sigma analysis and then reduced the packaging supplies by 50 percent," Berry said. "That saved money and floor space for production" - and hiring.

The hiring came just in time.

This month some blue-tape workers who were sent to help peers on the Scotch tape line during the crazy Christmas season were returned to Plowman. Now they are ready to attack the painting tape's "big spring rush," Plowman explained.
Blue tape sales "go up in February and stay up all the way through August," she said.
Honking forklifts, zooming worker bikes and beeping robots zip along the concrete floors that link the addition to the rest of the plant, where other signs of innovation are evident.

In the rear of the plant, tape spools sail overhead through clear vacuum tubes toward the transparent tape conversion station, where a 3-foot-wide "jumbo" unrolls at warp speed - routed through a slitter into ribbons and onto small spools that are then lined up quickly by 25-year veteran Sherri Arneson. She snatches the spools and scoots them into boxes in neat rows of 30.

"These will go into contour dispensers," said Arneson, working quickly.
The contour dispensers are the result of what was supposed to be a temporary marketing campaign that took on a life of its own. Curved and colorful, the hot pink, chartreuse, mango and lilac-colored contoured tape dispensers were introduced last year just to celebrate Scotch tape's 75th anniversary. But they've become a permanent offering.
The reason?

"Teens just love them!" Carlson said. The product, now made by a supplier, soon will become the 5,601st product to be made at Hutchinson.

"If customer demand continues to take off, maybe we'll have to build a new Center for Contour Excellence," Carlson said with a chuckle. "It's pretty wild."

MRI equipment utilisation probed

MRI equipment utilisation probed
Posted: Tuesday, February 14, 2006

Dubai

GE Healthcare and Shaikh Khalifa Medical City (SKMC) have announced exciting results from a comprehensive joint initiative leveraging GE’s Performance Solutions business.

This partnership enabled SKMC’s management to achieve more visibility on Magnetic Resonance Imaging (MRI) equipment utilisation allowing for even higher patient throughput.

Healthcare centres globally are facing the need to reduce costs while improving quality.

The US and Europe have already begun their transformation towards more business-driven healthcare delivery.

The introduction of this initiative in the Middle East will enable healthcare providers to improve operational, clinical and management processes by applying proven GE tools and healthcare expertise to the challenges of change in healthcare.

“The global healthcare landscape is changing. Operational excellence is becoming a necessity. This context of change is forcing hospitals to act more like businesses, to look at the quality of their processes while maintaining a high level of clinical care,” said Raoul Pop, Performance Solutions Business, Middle East sales manager at GE Healthcare.

The project at SKMC was launched to further optimize the hospital’s newly purchased MR equipment and become a benchmark for other hospitals in the UAE.

The staff applied Six Sigma, Work-Out and Change Management techniques to understand how they could streamline scheduling, and in the future, better balance workload between the 4 MR departments in the Emirates.

This is to improve communication, reduce delays, and allow the introduction of new procedures.

For this first project with SKMC, results were achieved through the hospital’s focused efforts to identify and address opportunities for improvement, assisted by GE Healthcare’s experienced consultants.

GE consultants bring GE methodology (tools such as Six Sigma, Lean, CAP, Work-Out) into hospitals through projects tailored to specific customer needs.

In some cases the methodology is taught to the hospital staff and remains once the consultants have left.

Little by little, processes are changed and improved from inside the hospital, by the people working there. This is what helps bring about true operational excellence.

“Monitoring the utilisation rate of our new MR equipment was something we did not know how to do in a way tailored to our environment,” said Zaid Al Siksek, director of health policy and regulation, General Authority of Health Services, Abu Dhabi.

“I knew about Six Sigma and its industrial world applications, and recently learned that GE Healthcare, one of our long-term partners, had successfully deployed it to the healthcare world in the US and Europe, notably through an initiative called Performance Solutions.”

Along with putting in place a way to monitor capital investment utilization, GE Healthcare program is typically designed to help hospitals and imaging centers realise measurable improvement in any department, or across the entire hospital.

“GE Healthcare helped us develop a two level dashboard articulated around empowerment of the operational team, and combining instant clear visibility for the management of workflow and quick identification of causes of variations,' added Al Siksek.

“The General Authority of Health Services of Abu Dhabi intends to use this type of dashboard to establish internal benchmarks from now on,” said Al Siksek.

As a result, Shaikh Khalifa Medical City has experienced a wide range of benefits, including clear visibility on team productivity and room utilization, and tools to measure parameters affecting the productivity (cancellations and no-shows).

The project also generated a positive atmosphere emphasising the need for even stronger staff teamwork to serve their patients more efficiently.

“It’s exciting and gratifying to see the results that Shaikh Khalifa Medical City in Abu Dhabi is achieving,” said Pamela Garrido, general manager, Performance Solutions Business in Europe at GE Healthcare.

“Successful efforts like this make life better for GE’s customers and, ultimately, the patients they serve; set higher standards; and go a long way toward transforming the way healthcare is delivered in this region and beyond.”

GE Healthcare provides transformational medical technologies that are shaping a new age of patient care. Their expertise in medical imaging and information technologies, medical diagnostics, patient monitoring systems, drug discovery, and biopharmaceutical manufacturing technologies is helping clinicians around the world re-imagine new ways to predict, diagnose, inform and treat disease, so their patients can live their lives to the fullest.

GE Healthcare's broad range of products and services enable healthcare providers to better diagnose and treat cancer, heart disease, neurological diseases, and other conditions earlier.

The Shaikh Khalifa Medical City provides a network of comprehensive healthcare facilities and services for Abu Dhabi.

The overall strategy of the new Shaikh Khalifa Medical City is to improve the current status of healthcare delivery by expanding its services and technology; upgrading and improving the physical condition of its existing facilities; combining its healthcare resources for a more efficient model of healthcare delivery; increasing its current bed capacity to accommodate the needs of its patients; and create a system for healthcare professionals to work as one team within the Shaikh Khalifa Medical City and under the guidance of the General Authority for Health Services for the emirate of Abu Dhabi. TradeArabia News Service

Quality Takes A Beating

March 1, 2006 -- When Marc Trahan began setting up a new services group responsible for tracking product quality for Audi North America in June 2002, he had no idea what awaited him. Although a controversial safety issue had plagued the model 5000 series in the United States back in the early '80s, Audi North America had since done well, with rising sales and an improved reputation for quality and technological sophistication.

But just a few months after the North American unit took over its own quality monitoring from the parent group, Audi owners began experiencing stalling problems en masse. "In September and October 2002, we had a fairly high rate of failures, particularly on the 4-cylinder engine," says Trahan, director of product quality and technical service at Audi North America. Auburn Hills, Mich.

Trahan says the failure rate "exceeded 50%," affecting a total of 101,000 cars from the 2001, 2002, and 2003 model years. In most cases, he says, the cars had to be towed in. "It was an issue with our ignition coil that manifested itself in cold weather," he adds.

Audi traced the root cause to a process issue at its supplier of circuit boards. "Cold weather would cause a problem so that there would be no spark for the spark plugs," Trahan explains.

To mollify customers, Audi sent a letter to owners suggesting they bring the car in and have the faulty ignition system replaced. Things got worse, though, when Audi discovered that because it had only one supplier for the circuit board, there suddenly was an acute shortage of replacement units. Owners had their cars towed in, only to learn that they faced an inordinate wait to have them repaired.

"We sent teams of people to the supplier and fixed the development issues," Trahan adds. "We weren't providing sufficient quality supervision for this supplier.

"It also taught us not to rely on one supplier. Today we have a second supplier. It's like an insurance policy."

Trahan believes the automaker benefited from the setback. "The fact that this ignition coil problem arose sort of helped us. Today the reliability rate for all our cars, in terms of warranty costs and failure rates, is up."

Defects Costing Billions

Audi's quality failure is not unusual. Despite thousands of manufacturers having adopted the quality mantra -- most often in the form of continuous improvement methodologies such as Six Sigma and derivatives of the Toyota Production System -- many products are defective or fail early.

Anyone who doubts that quality is still a big pain for manufacturers need only follow the blood trail left by the numbers. The auto industry alone coughed up $14.5 billion to cover the cost of warranty and recall work in 2004.

Other industries incurring product quality woes include heavy equipment, biotech, firearms, consumer electronics, and appliances. Few industries, in fact, have escaped the stigma of defective products.

What's causing this killer wave of defects and failures? Not surprisingly, most manufacturers aren't eager to divulge the causes. "Almost all processes have people, and people make mistakes," says Jerry Mairani, president of the American Society for Quality (ASQ).

Quality experts say most defects are caused by:

new products rushed to market;

insufficient testing;

complex electronics with buggy software;

poor supplier quality;

design errors;

sloppy production.

New products are especially likely to cause trouble. "Whenever you introduce a new product, you introduce risk," says Michael Burkett, vice president of the product lifecycle management practice at AMR Research in Boston.

There's also management pressure to launch new products. "Often there is too much concern within a company to make a launch window, so the company will take short cuts," Mairani says. "Shipping something early and knowing it was not tested properly is wrong, but from a financial perspective, being late to market will cost you money."

Cost cutting in design is another reason. In the Audi case, cost cutting clearly was a factor. "There was too much emphasis on cost and not enough on quality at the supplier," Trahan says.

A growing cause of product failures is complex electronics. From washing machines to lawnmowers to automobiles, more goods depend on computer chips and complex software code to function properly.

"The relatively untested functionality in automotive electronics is the cause of 70% of all vehicles returned to the dealer under warranty," reports Martin Piszczalski, a research director specializing in the automotive industry at Gartner Group.

A software logic glitch was the reason that some Toyota Prius 2004 and 2005 models stalled out. Out of 150,000 Priuses sold in 2004 and 2005, Toyota reports only 68 cases of cars stalling.

"As things get more complicated with more sensors on cars and more electronic codes, we can't foresee or prevent every possible problem," says a Toyota North America spokesman. Toyota directed owners to come in for an hour-long software upgrade.

Electronics contributed to a mess at Maytag. For a company that had built its reputation on dependability, the launch of the Neptune front-load washing machine in March 1997 was a quality nightmare. Rubber seals on doors got moldy. Door latches failed. Computer circuit boards that controlled the machines were buggy. Electric motors conked out. Drainage problems led some customers to complain that their clothes stank, so much that some customers took to calling it the "Stinkomatic."

Maytag won't discuss what caused the failure, but one plaintiff alleged design shortcomings, claiming that the Neptune "contained a number of common design defects that may lead to cessation of operations and mold or mildew accumulation."

Maytag has sold more than 1.4 million Neptune washers in the U.S., and more than 100,000 claims were filed by owners of the defective early models. Maytag settled a class-action lawsuit, making claimants eligible for free repairs, cash, product certifications good for new appliances, or -- in some cases where machines resisted the best efforts of the Maytag man to repair them -- replacement washers.

Maytag reported a loss of $9 million in 2004, partly as a result of $33.5 million in litigation costs stemming from the early Neptune's defects.

High-tech is another industry that often experiences quality flubs. "Consumer electronics is an area that is notorious for quality problems," says Gartner's Piszczalski. Adds AMR's Burkett, "It's quite common in the high-tech industry to see a higher failure rate."

Apple Computer, which has had a runaway success since the iPod's launch in 2001, disappointed buyers of the first three iterations of the handheld music player/downloader when the batteries died after four hours, instead of up to the 12 hours that buyers expected.

In a proposal to settle a class-action suit over the weak batteries, Apple offered buyers up to $50 in cash or credit. By one estimate, the settlement, which covers up to 2 million iPods purchased before May 31, 2004, could cost Apple as much as $100 million.

Tracing Problem To Suppliers

Guidant, a manufacturer of heart implant devices, last year notified physicians that certain models of its defibrillators and pacemakers could, on rare occasions, fail unexpectedly. The company reported 28 instances out of 26,000 devices built of its Ventak Prizm 2 defibrillators failing due to deterioration of a wire insulator that in turn, caused a short in the device.

In one instance, a 21-year old college student died of cardiac arrest when the device failed to provide electrical therapy to restart his heart. The company is offering reimbursement for surgery for patients who have the device implanted to have it swapped out. The Prizm 2 now is the focus of litigation claiming that patients suffered mental anguish when they decided to have their potentially problematic devices surgically removed and replaced.

Guidant also notified physicians of two failure modes for its Insignia and Nexus families of implantable pacemakers. A total of 36 failures were reported out of 49,500 devices implanted for the first failure mode, and 16 failures arose among 341,000 devices for the second failure mode. No deaths were reported due to the failure of the devices.

Guidant traced the cause of the first failure condition to a quality issue at a supplier. "Root cause has been identified as foreign material within a crystal timing component," Guidant told physicians in a notice on Sept. 22. "The supplier of the crystal timing component used in this subset has eliminated foreign material within the crystal chamber, and no such failures have been observed in any devices shipped after March 12, 2004."

The defibrillator and pacemaker problems have been costly for Guidant, which revised its expectations for fourth quarter results. It reported in December that its fourth-quarter sales and profit would fall well below expectations, projecting quarterly sales of $790 million to $820 million, versus analysts' expectations of $928 million.

Six Sigma is new mantra in IT, BPOs

CHENNAI: A US-based Six Sigma expert holding a senior master black belt has found good scope for deploying the technique in a range of Indian sectors like manufacturing, IT, BPO besides in management consultancy. Six Sigma is meant to reduce the defects in any data-associated process to meet the needs of the customer thereby impacting the earnings before interest and taxes (EBIT).

Mr Shree Nanguneri, CEO, Millennium Global Business Solutions (MGBS) said, several Indian companies are in the forefront of adopting global practices like ISO, QS, TQM, CMMI and GxP (in the pharma industry) in the last one decade. If Six Sigma technique could be aligned with these initiatives, corporates stood to gain maximum benefits.

“The integration of such initiatives along with Six Sigma is pivotal to the overall sustainable success of the organisation. It was never meant to create ISO, TQM, TPM, CMMI and GxP belts but to have experts in the organisation who can recognise what the customer wants and deliver it in a proactive manner speedily at the best value”, he explained.

He said, MGBS has an approach of integrating such efforts into one initiative termed ‘process excellence’ which includes components such as DMAIC (define-measure-analyse-improve-control methodology), lean enterprise ormanufacturing, TQM\TPM, ISO and GLP\GMP or GxP in general. MGBS will assess the status of these existing components within an organisation to integrate and align the Six Sigma strategy to meet the expected goals and objectives of the business. It has an office in Chennai and is said to have identified leading companies for working with them.

Mr Ganesan Hariharan, head — Asia, MGBS, cautioned that China, the Philippines and East European countries are already trying to snatch away orders from India. “We need to show the world that we are not only cost efficient but also zero defect.

It is this deadly combination which will make us forge ahead in the face of competition from any country. “ A chemical engineer from IIT, Madras and a doctorate in polymer science from the University of Southern Mississippi, Mr Nanguneri, had a six year tenure with General Electric.

Over the last decade, his Six Sigma efforts are said to have directly impacted organisations to the tune of more than $200 million as benefits through projects and deployments.

Mr Nanguneri, who was in Chennai recently for conducting a workshop under the aegis of the Indo American Chamber of Commerce, told ET, “we plan to grow at a pace that meets the demands of the customers regardless of their location. Having experienced with customers in the west, it is very interesting to develop and nurture the right talent from India where the resource pool is unlimited and invaluable”.

The 6 great tips for improvement

Debashis Sarkar February 16, 2006

Process improvements seldom happen by accident. Debashis Sarkar argues that a well thought out plan must incorporate the 'ACCEPT' principles.

Process improvements are an integral part of all quality programmes. Irrespective of the type of industry, all process improvements are touched by a few principles which are vital to their success. Ignoring any of these principles can be detrimental to the expected outcome of the improvement project and their subsequent sustenance.

Whether it is process improvements through Six Sigma, Lean S, TRIZ, TOC (Theory of Constraints) or any other methodology, these principles are universally applicable. I call it the 'ACCEPT principles for process improvements.'

1. Ability of the leader to ask the right questions

Ability of leaders to ask the right questions is critical to the success of a project. The type of questions will determine the quality of process improvements. If leaders do not know what to look for, teams would get the message that they can get away with whatever is possible.

The questions of a leader should be around 'why the problem occurred', 'what is the purpose and business case', 'what will take to accomplish', 'what are the data sources', 'how would it impact the customer, business and overall system' and 'who is accountable'.

It is imperative that leaders make an effort to understand the broad approach to improvement and the type of language being used by the Improvement specialist. This is the reason why Six Sigma methodology requires leaders to go through a Champion's Workshop or a session which gives the brief on Six Sigma, what to look for and what questions to ask.

2. Commit to the right metrics

A fallout of a successful process improvement is installation of metrics. A good process management should include an optimum balance of 'result metrics' and 'process metrics.' The result metrics measure the output quality while the process metrics help in predicting the process output.

The former acts a lead indicator while the latter acts as a lag indicator. The term 'process data' is a bit of a misnomer because all data are the consequence of some antecedent event. However, we refer to these data as they provide sufficiently early indicators such that we can adjust the process before the undesirable condition occurs.

Installation of process measurements should be in two stages. In the first stage of process improvement establish a system to measure the results (outputs) through result metrics. In the second stage add a system that enables proactive management of process outcomes through process metrics.

Remember, measurements should be targetted at improving the effective-ness, efficiency and adaptability of the process.

3. Communicate 'why are we doing what we are doing'

Do not launch an improvement programme without a purpose. Bereft of a purpose there is no framework for establishing priorities, aligning efforts or judging success. Much improvement process fails because the effort is squandered in improving unimportant processes.

Further, it is imperative that all people working in the process are made aware why has the process been taken up for improvement and how does it affect the larger picture. Often the involvement levels of process teams are not adequate because they have not been sensitized on the importance of the initiative and how it would impact the business and them.

It is the duty of leaders, improvement specialist and process owners to relentlessly communicate to all concerned the purpose of the improvement.

4. Ensure system level improvement

Organisations carry out a lot local process improvements without realising how they impact the entire system. It is imperative that we understand the concept of integration and alignment of processes and how it helps in achievement of overall objectives of the system.

The processes should be managed as a system and we need to understand the process networks and their interactions. The outputs from one process may be inputs to other processes and interlinked into the overall network or system. Carry out process improvements with the overall performance of the system in mind.

The worst thing to happen is that a process is optimized but the entire system turns sub-optimal. The effort of the organisation should be to inculcate in its employees to understand systems, lead systems, and think systemically. As Fuji Cho, President Toyota Motor Company, mentions in Jeffrey K. Liker's book The Toyota Way, 'The key to the Toyota Way and what makes Toyota stand out is not any of the individual elements. . . But what is important is having all the elements together as a system. It must be practiced every day in a very consistent manner - not in spurts.'

5. Promote organic growth of capabilities

There are no off-the-shelf approach to improvements. Effective process improvements take time and need to gradually seep deep and wide. Don't set unrealistic timelines as it may lead to bogus improvements without creating the desired capabilities to carry the initiative on an ongoing basis.

Be wary of consultants who are ready to carry out improvements on your behalf. Remember, they are your greatest enemy as they shall carry out improvements without leaving back competencies with the organisation.

Improvements carried out should be self-sustaining and this is possible when there is sufficient number of trained employees within the organisation. In the early days management push may work but in the long run sustenance requires motivated individuals who have the relevant competencies.

The competency development should be in the following areas:

Quality methodology used for improvement;
Process management and sustenance; and
New process.

6. Teams

Just not teams but 'effective teams' are required for process improvements. Teams are the engines that deliver successful process improvements. It is the duty of management to ensure that right teams are put in place and that they are effective.

While there are many traits, the five key characteristics of an effective team for process improvements are:

Teams should have a clear defined purpose;
Teams should be cross functional and have representation of all stakeholders of the process;
Teams should be empowered to take all required decisions;
All team members should be trained on the improvement methodology;
Team members should have good change management skills.

Delivering Two Kinds Of Quality

Success Starts With Making Products That Work. But Appealing To A Customer's Aesthetic Taste Is Also Essential In Today's Marketplace

As I write this, the petroleum executive sitting next to me on the plane has carefully unpacked his Bose QuietComfort 2 headphones and iPod nano, which has me thinking about the meaning of quality. The Japanese actually have two words for quality -- and an understanding of each is necessary to compete today.

More than 20 years after the quality craze kicked off in the U.S. [primarily because America was getting its clock cleaned by the Japanese], quality remains an elusive target for many American companies. Not that we haven't made progress. In 1980 the average car produced by Ford (F) had twice as many product flaws [as measured by J.D. Power's survey of initial quality] as the average Japanese car.

By 1986 the Japanese auto industry lead over Ford had shrunk from 100% to about 20%, as Ford made quality "Job One." But since that impressive initial spurt of progress, many U.S. companies have struggled to keep up on quality, even as the Japanese began building more of their products in the U.S. with American workers.


The truth is, the Japanese have an unfair advantage. Japanese culture intrinsically values quality and appreciates the small details. In fact, the Japanese expression for quality is atarimae hinshitsu, which can be roughly translated as "taken-for-granted quality."

What do the Japanese take for granted when it comes to quality? They take for granted that things should work as they are supposed to, and they even see an elegance to things working properly -- whether it's cars, subway schedules, traditional flower arranging, or the famous tea ceremony.

Japanese manufacturers were so obsessed with taken-for-granted quality that they created a constant stream of innovations that built on renowned quality-management consultant Ed Deming's original concepts: lean manufacturing, just-in-time industry, and design for quality. In today's competitive markets, manufacturers need to be very far along this quality innovation curve -- or moving along it very quickly. If they are not, you can take for granted that they will go out of business.

This is true even for small, entrepreneurial companies. The ability to create products and services that work is no longer a source of long-term competitive advantage. It has become just the price of admission to most markets. If the stuff your competitors make works better, your customers aren't going to be customers for long.


Though much improved, America's quality record still isn't what it might be. Here are two traps I've seen a lot of companies fall into on the road to quality.

1. Faking a commitment. There's no way around it. Whether you're adopting total quality management [TQM], continuous improvement, or Six Sigma, these techniques require everyone in a company to learn how to think and work differently. Too many senior executives grab onto the fad phrases as they come and go -- from TQM to lean manufacturing and now Six Sigma -- without taking the time to learn what these processes are and how they work. They leave the nitty gritty of quality to the folks below them -- a sure way to have a quality program fail.

2. Letting the quality zealots run wild. On the other extreme, some companies become so quality-process obsessed that quality-management techniques cease to be a tool to improve the company's performance and instead become an end in themselves. Statistical analysis should be used for questions for which a company doesn't readily have a "good enough" answer. Instead, organizations sometimes go through long analytical processes for problems that a little common sense could have solved.

Quality-management techniques work very well for certain processes and applications -- but their efficacy is less clear in areas like sales. Nothing sours an organization on quality faster than meaningless quality busywork. Perhaps the biggest risk to companies engaged in statistical process-control methods, such as TQM and Six Sigma, is that they may lose sight of the fact that controlling errors is only part of the game.

MODERN MARVELS.

That brings us to the second of the two Japanese expressions for quality: miryoku teki hinshitsu, which means "bewitching" or "enchanting quality." This kind of quality appeals not to customer expectations and reliability [that things should do what they're supposed to), but rather to a person's aesthetic sense of beauty and elegance.

That's what I think Apple Computer (AAPL) got right with the iPod and its many offspring. The nano belonging to the man sitting next to me is a marvel, not just of miniaturization, but of rounded edges in a world of sharp corners.

And as I put on my own Bose headphones, I realize how much I appreciate being able to retreat to my Zen space amid the rumble of the aircraft engines, rattling serving carts, and chattering cabin mates. If these products didn't work properly when you turned them on, nobody would buy them. They would lack atarimae hinshitsu. But with the hungry competitors in most markets today, taken-for-granted quality by itself may not get the job done.

Uncovering Hidden Customer Needs to Grow your Services Business

By Paul Born on Monday, February 06, 2006

If you provide services, you know that you have an increasing need to design a competitive advantage into your service offerings. One of the greatest struggles is identifying the features or positioning that will provide this advantage, and then communicating the value to your potential customers.

We’ve found that the key to growing services in almost any business is to uncover your customers’ hidden needs and then design services specifically crafted and positioned to meet these needs. Using a modified Six Sigma technique specifically adapted for use by service organizations, you can systematically identify areas that are critical to your customer’s satisfaction. The underlying technique utilizes a tool called the Critical-to-Quality (CTQ) Flowdown to help translate the Voice of the Customer (VOC) into specific service features. These features, when mapped back against the customers’ spoken and hidden needs, can then be positioned to provide a distinct competitive advantage for your services business.



Let’s take a look at this specific methodology we can use to uncover hidden needs. We’ll follow these fundamental steps to organize the process:

• Defining the Voice of the Customer (VOC) requirements
• Obtaining the VOC
• Conducting a Customer Needs Assessment
• Designing Service Features

Define the Requirements
To start the process, it’s important to identify where your fundamental customer needs can be uncovered. Customer needs can be determined through customer interviews, sales team feedback, customer surveys, market research, and more. If you are targeting a new market segment, identify sources with your target market characteristics. Come up with a list of contacts and sources that will contribute to your overall assessment.

From there, determine the types of information you require from these contacts. Customer needs can be technical requirements, financial parameters, turnaround times, and much more. Don’t narrow your scope too much, as the needs you uncover may provide you your competitive advantage. As an example, if you are considering offering technology installation services, you will want to build a list of companies and people that will be representative of your target market.

Obtaining the Voice of the Customer (VOC)
The next step is to actually obtain the VOC. Begin to craft questions and contact methods to accurately obtain feedback from these individuals. Remember, you’re trying to uncover needs, not just validate what you already think. Using the technology installation service example, you might be asking questions about their previous installation experiences, what they need to maintain their installation, who gets involved, etc. You can ask your questions in many ways, but we’ve found it best to conduct one-on-one interviews. Using this method, you’re able to pickup potential hidden needs and inquire about them in more depth.

Once you’ve gathered the feedback, it’s time to analyze, group, and prioritize responses. It can be helpful to survey your customers with these preliminary needs you have uncovered. They can help you prioritize them and perhaps even tell you who they think should be providing the feature.

Conducting a Customer Needs Assessment
Once you’ve sufficiently gathered the VOC, it’s time to create a customer needs assessment. This is where the Critical to Quality (CTQ) Flowdown method is helpful to organize VOC requirements. To use this method, place the customer needs on the left hand side, and then try to dig a bit deeper to describe the needs in more specific terms. For instance, if a need is to have zero downtime during an installation procedure, some possible expansions of this need are …

1. need users trained on the technology prior to the go-live date.
2. need the installation plan precisely communicated to all effected people.
3. need the technology tested.

You can see that the idea here is to break down the needs into specific areas so that you can design features that are sure to meet their needs.

Designing Service Features
The final part of this process is designing service features that meet these customer needs. Some features may meet multiple needs, which is all the better for creating an efficient service. Start by looking at the very specific needs identified in your customer needs assessment. Your service features need to meet these needs in the most efficient and cost-effective way possible. Using the previous example, features might include …

1. an internal customer training presentation for customers.
2. a comprehensive communication plan.
3. a comprehensive test plan.
4. a parallel technology system to build and test the new technology before an after-hours go-live attempted.

The main point here is to create innovative service features that meet your customers’ needs.



Summary
This method really does work in helping methodically organize customer needs and mapping service features to meet these needs. By designing and selling services that specifically meet your customers’ spoken and hidden needs, you will seize a distinct competitive advantage. Remember when creating your sales and marketing documents to reference your customers’ needs, and how your features are built specifically to meet these needs. By defining the customers’ needs and mapping service features to these needs, you can consistently sell a service that customers value and truly need.

Design For Six Sigma

February 08, 2006

by Peter Peterka

Design for Six Sigma (DFSS) is the application of Six Sigma principles to the design of products and their manufacturing and support processes. Whereas Six Sigma by definition focuses on the production phase of a product, DFSS focuses on research, design, and development phases. DFSS combines many of the tools that are used to improve existing products or services and integrates the voice of the customer and simulation methods to predict new process and product performance.

DFSS can be compared to DMAIC (Design, Measure, Analyze, Improve, Control) and often the acronym DMADV (Define, Measure, Analyze, Design, Verify) is used to describe the strategy of DFSS. The precise phases or steps of a DFSS methodology are not universally defined. Most organizations will implement DFSS to suit their business, industry, and culture. DFSS methodology, instead of the DMAIC methodology, should be used when.

Is 99.9% "good" good enough?

by Mike Hoban

BY MIKE HOBAN

This story ran on nwitimes.com on Saturday, January 28, 2006 12:03 AM CST

An employee in one of the auto plants I'm working with recently got a little excitable about being asked to aim for being defect-free in her job on the line. "C'mon, we aren't robots! It's unreasonable to expect us not to make a few mistakes every day. We're only human!"

And while she was right -- people are "human," and few of us get through the work day without making a single error, whether we are a waiter, a manager or, yes, even a consultant -- errors in the workplace can have a huge impact on consumers, patients, employees and business owners.

Consider 99.9 percent defect-free quality. That means 1 error in 1,000, whether you are building a house, running lab tests or writing software. That sounds like a mighty high standard and seems close to flawless performance. Yet, at a 99.9 percent "quality" level:

-- We would have no electricity for 10 minutes each week;

-- 2.8 million phone calls in the U.S. would reach the wrong number every day;

-- 810 commercial airline flights would crash every month;

-- Our heart would miss 32,000 beats each year;

-- 107 incorrect medical procedures would be performed every day;

-- We'd have 43 minutes of unsafe drinking water coming out of our faucets each month;

-- 76 newborn babies each month in the U.S. would be given to the wrong parents.

You get the picture. Most of us depend on people and processes and equipment to get it right the first time. And in many cases, that happens. For the first 10 months of 2005, for instance, there were almost 8.5 million commercial flights in this country and not a single fatal accident.

On the other hand, it's estimated that almost 100,000 Americans die each year from medical errors, and not much progress has been made since that startling statistic was communicated in 2000.

While airplane and medical safety are certainly examples of high stakes for defect-free performance, we all experience day-to-day examples of defects, that while not life threatening can certainly be annoying, like the rattle in your new car, or the letter that gets delivered to the wrong address.

Many businesses have started "Six Sigma" quality programs, with six sigma being a statistical term for 3.4 defects per million. In the early '90s, some folks at Motorola are said to have tried unsuccessfully to apply the principle and set of tools to making a "six sigma" blueberry muffin. In the end, it just wasn't worth the effort.

Defects don't usually occur because someone is lazy or doesn't care about good quality. It's more complicated than that. But excellent quality does start with employees and bosses who are committed to doing it right the first time for their customers, their patients, their clients.

That auto plant employee thought her work was "good enough." But "good enough" is almost never really good enough.

Tilton test: Turn survival into success

By David Greising
Chief business correspondent
Published February 2, 2006

United Airlines' three-year stay in bankruptcy court lasted twice as long as Chief Executive Glenn Tilton expected when he filed in December 2002, and the effort proved at least twice as hard.

It was brutal to the 22,000 workers who lost jobs, and the thousands more who lost billions of dollars worth of pension benefits.

The process was costly to many creditors, who are expected to get just 8 cents on every dollar they had lent to United.

The task of rescuing United was exhausting and daunting for Tilton and his team of 400 executives. They'll be richly rewarded, thanks to a stock grant that will give them an 8 percent stake in the airline. But, still, they sweated through three years of knowing that liquidation loomed if they made key mistakes.

Add up the employee sacrifices, the financial haggling and the executive sweat and know this: United is just getting started.

The obvious heavy lifting may be done. Most of the slash-and-burn headlines are behind us.

The job ahead is more delicate, but equally important: moving from emergency triage to permanent transformation.

Tilton made one promise Wednesday evening that should please employees. "We are not going back to employees" for more wage or benefit cuts, he said.

Employees might not have to pony up for more cuts. But to make the transformation stick, they will have to sign on to a cycle of continuous improvement and relentless focus on cost and competitive standing.

United has closed the gap with its chief competitors on costs. When the airline entered bankruptcy, the airline was running a lot richer than its closest competitors.

United was leagues away from low-cost leader Southwest Airlines. More worrisome to Tilton, though, was that United's costs were out of line with its own high-cost peers. Its operating costs were 5 percent higher than American Airlines' costs and a shocking 23 percent more than Tilton's favored benchmark, Continental Airlines.

Bankruptcy has cut United's costs down to size. Exclude the sky-high cost of jet fuel, which affects all the hub-and-spoke carriers similarly, and United is in line with its peers. It costs United 7.46 cents to fly a seat mile compared with 7.34 cents for Continental and 7.48 cents for American.

2-front battle

On his way out of bankruptcy, Tilton knows he has to compete on two major fronts. He needs to pare costs by introducing efficiencies, and he needs to create pricing power by adding services that customers are willing to pay for.

The first tactic may be doable. The second is unproven, and even risky.

And there are plenty of skeptics out there who don't expect success.

"Glenn Tilton has expressed no vision other than a few buzzwords handed to him by the consultants at McKinsey & Co.," said Michael Boyd, a longtime aviation consultant.

Tilton does speak jargonese. But listen through that, and he can express a vision.

Tilton is seeking to lock in a low-cost mindset by introducing a new way of thinking. For starters, he is pushing United's employees to cut the turnaround rate for airplanes at the gate. Trimming eight minutes on domestic routes allows the company to operate with as many as 10 fewer planes in its domestic system.

The true measure of the cultural change, though, will be in less-easily measured adjustments. United is introducing so-called lean-manufacturing techniques at its maintenance operations. It is introducing highly technical new quality measurements, called Six Sigma, to its cargo and call centers, and new work methods in its ramp and customer service operations.

Doing either of those successfully will require a cultural change, not on the luggage lines but at the management level. And that's a place where cultural change has never come easily for United.

Tilton takes heart from the fact that United's union leadership has embraced at least some of the efficiency measures. Exhibit A: Leaders from the Aircraft Mechanics Fraternal Association participated in an industry expo in Shanghai last year, boasting about United's new economies. In doing so, they touted improvements at United's San Francisco hub, historically one of the union's most strident anti-management strongholds.

"We are aligned" with the unions, Tilton said. But what to make of all the hot talk and lawsuits during the bankruptcy process? "That was all a negotiation," Tilton said.

Who will pay for extras?

The second leg of Tilton's plan is the one that may be fraught with peril. Tilton's hope is that he can create pricing power in the marketplace by introducing perquisites that customers will pay for.

He's offering extra leg room, a luxury that American Airlines abandoned after a costly marketing campaign failed and American discovered it couldn't afford to take seats out of its planes. He also is offering fully reclining seats in first class, a big plus on international flights, maybe, but of virtually no value on domestic routes.

In the period since airlines were deregulated in the late 1970s, major carriers have had almost no luck building their marketing campaigns around the notion that travelers will pay more for extras in the air. That's doubly true in a period when corporate travel budgets are under siege.

Like every other U.S. business executive, Tilton will focus special attention on China. United has a head start in the world's most consequential new market. It's Tilton's job to make certain he keeps the edge.

"That is the type of opportunity you want to lock down" before competitors can make their moves, Tilton said. He has entered a partnership with Shanghai Airlines, and the big plum, Air China, has expressed interest in perhaps joining United's Star Alliance.

People with a lot to gain, or lose, seem to like what they see. Trading on an as-issued basis in days before Thursday's Nasdaq debut, United's shares traded well above the previously projected $15-per-share opening range. Before United locked in $3 billion in new loans, lenders lined up and offered up to $7 billion in loans, United has said.

There's confidence out there, even though Tilton is moving into a new phase of United's history.

Tilton has spent the last three years in survival mode. Success mode will prove to be another challenge altogether.

Do Six Sigma, TQM stifle innovation?

Stephen Manallack

2 February 2006

Too much process management across all levels of an organisation makes for easier implementation, but it can strangle bold, breakthrough innovations.

As more businesses and organisations adopt process management programs such as Six Sigma and Total Quality Management, a warning has come that the overzealous application of these programmes can stifle creativity, reducing innovation and the exploration for new services and markets for the future.

USA's Wharton School (University of Pennsylvania) Management professor, Mary Brenner, advises organisations to reassess the use of process management programmes and to apply them with more discrimination. The warning was carried in a recently published paper under Wharton's innovation and entrepreneurship category, titled TQM, ISO 9000, Six Sigma: Do Process Management Programmes Discourage Innovation?

Urging firms to understand the limitations of process management programmes, professor Brenner said, "Our message is this: companies that have process management in one area must realise that it can bleed into other areas of the company, and you must prevent that from happening. Use these approaches where they make sense — and deliberately do not have them in areas that are focused on innovation."

TQM is a strategy that focuses the entire organisation on continuous improvement. It arose in the 1980's in response to the Japanese competition with the US, and the writings of W Edwards Deming. Six Sigma started in the US at Motorola and became prominent in the mid 1990's due to its adoption by General Electric. The goal of Six Sigma is to improve a company's quality to only three defects per million, through incremental change in processes and statistical measurement of outcomes.

Birlasoft, one of India's leading commercial houses, with equity participation by GE Capital, uses Six Sigma technique in its governance framework to increase efficiency, reduce costs and improve customer satisfaction. Monthly defects have decreased from 11 per cent to 3 per cent.

While both TQM and Six Sigma focus on techniques for solving problems and rely on statistical assessment, TQM encourages firm-wide employee involvement but Six Sigma's approach is to train experts (green belts and black belts) who work on solving problems and teaching others in the company.

The focus of ISO 9000 which started in 1987 by the International Organisation for Standardisation, is to make sure companies have standard processes and it involves a third-party registration programme to certify that you are following documented processes.

But people are taking another look and Professor Benner believes this is because "I suspect that many companies with widespread process management initiatives over the past few years have reached the limits of improvement." She claims the ability to gain competitive advantage via cost and efficiency gains also has limits.

Benner points to companies like IBM, Procter and Gamble and Unilever who have shifted focus to gain advantage via innovation. Bennner says "Even General Electric is looking to grow through exploratory innovation".

GE's chief executive, Jeffrey Immelt, has set GE on a course of growing more revenue from existing operations, with growth fuelled by technological innovation or what Immelt calls "imagination breakthroughs". He has tied senior executive team annual remuneration to meeting idea-generation goals. He has invested $100 million and more on research centres in Bangalore, Munich, New York and Shanghai.

Benner sees the danger of too much process management this way: "You can get stuck with being very, very good at something you were good at yesterday."

She warns against trying to tie innovation down with measurement. "Measuring innovation is not easy because there is no yardstick. Rewarding innovation makes compensation a tricky exercise. Managing those who innovate is also challenging."

But Benner does not suggest that companies abandon process management, but rather apply them where they are most appropriate. The aim would be to have an organisation that can "celebrate both variance reduction in the service of exploitation and variance creation in the service of exploration."

Companies should balance improving current operations to be competitive in the short term with exploring for new knowledge for the future. "Too much process management across all levels of an organisation makes it easier to implement, but can strangle bolder, breakthrough innovations."

Professor Benner urges organisations to become "ambidextrous", managing process management and innovation simultaneously. Innovation can happen in both the research and development department, where companies generate new ideas or create new products, and in marketing, where companies search for new markets and new customers.

She warns against companies trying to apply process management to how they innovate or how they find new markets. Innovation, she says, may not lend itself to strict processes with measures.

Tips in accuracy, cast in steel

R. KRISHNA DAS



Sopan More, a Mumbai dabbawalah who attended Prince Charles’s wedding, busy at work. Reuters file picture
Raipur, Feb. 2: After Prince Charles, it’s the turn of the Bhilai Steel Plant (BSP) management to admire the “working skills’ of the quintessential Mumbai dabbawalah.

“The BSP management has invited the dabbawalahs for a three-day lecture series on accuracy, precision and delivering near-perfect services and products,” the chief of corporate communications at BSP, Ashok Singhai, told The Telegraph.

The lecture series will be held at Kalamandir and BTI assembly hall in Bhilai township, about 40 km from here, starting tomorrow.

Gangaram Talekar of Nutan Mumbai Tiffinbox Suppliers’ Charity Trust and Raghunath Medge, president of the Mumbai Tiffinmen’s Association, will share their experiences with the BSP employees and officials.

“The internationally-acclaimed Mumbai tiffinmen make just one error in every 16 million transactions. Forbes magazine selected them as an example of Six Sigma performers,” Singhai said.

The renowned magazine gave a Six Sigma performance rating to the dabbawalahs, which means the chances of missing a day’s lunch is just one in 6,000.

The lectures are an attempt to learn how the distribution system works and the dabbawalahs’ experiences can be utilised to reorient the company’s organisational hierarchy, the official said, adding that about 500 executives and 1,500 non-executives would attend the session.

The dabbawalahs hit the big time after Prince Charles met some of them during his visit in November 2003. The publicity they got resulted in some top Indian business schools inviting them to deliver guest lectures.

The dabbawalahs, who ferry thousands of lunch boxes containing home-cooked food to offices, schools and colleges in Mumbai, never fail to do their job even if the skies open up or other adversities emerge.

Last year, they decided to send wedding gifts to Prince Charles and his bride, Camilla Parker Bowles. Medge and his associate Sopan More even attended the wedding and got the opportunity to exchange pleasantries with Queen Elizabeth.

The tiffinmen have taken classes in IIM on logistics and time management. This will be the first time they will address the officials and employees of a SAIL enterprise.