Page 168 - DMGT524_TOTAL_QUALITY_MANAGEMENT

Unit 11: Quality Function Deployment

“One thing we looked at was changes in our thought and manufacturing processes to Notes
eliminate rework,” reveals Erwin. “In the short-term, we saw some increased costs, but in
the long run, we’ve improved our processes and applied more effective controls.
We continue to see improvements in product reliability, manufacturing yields and internal
quality metrics, despite increasing product complexity and higher customer expectations.”
Product complexity continues to grow exponentially. Future products such as
semiconductors and software undoubtedly will contain tens of millions, even billions, of
elements. Creating more robust designs and reducing opportunities to introduce defects
into the final product represents a onetime expense. If it’s not done, however, repair,
rework, excessive scrap costs and unhappy customers will continue through the product’s
life. Thus, it’s imperative that companies reduce defect rates to a few parts per billion.

“Although Motorola has made huge reductions in defect rates, we still haven’t achieved
Six Sigma overall,” reports Berg. “Motorola considers itself a 5.7 Sigma company now.
Six Sigma remains a very noble goal, but it is the rate of improvement that is important.
Six Sigma has saved the company billions of dollars in terms of scrap and rework, enabling
greater customer satisfaction – our ultimate goal.”
Six Sigma Successes
After examining how various financial companies pursue quality, Citibank, the
international financial division of Citicorp, undertook the Six Sigma method in the spring
of 1997. Its goal: to reduce defects within its various divisions by a factor of 10 during the
first three years. The corporation already has seen reductions ranging from five to 10
times.
“Six Sigma appealed because it’s pretty straightforward,” comments James Bailey, Citicorp’s
executive vice president and corporate quality officer. “It also seemed like a programme
that would involve everyone.”
Previously, various businesses and divisions within Citibank had tried different quality
programmes, but the company had never instituted a universal quality language or method.
“Continuous improvement is our goal,” maintains Bailey. “We started training senior
management in April 1997, and so far we’ve trained about 2,000 people around the world.”
Besides the defect reductions, the company has recorded a decreased response time for
credit card applications and fewer errors in customer statements.
“We’re on track,” he declares. “We’re more customer-focused. We know it’s a long road,
but we’ve made a reasonable start, and we’re pleased.”

GE, which launched a Six Sigma initiative in late 1995, says the $300 million invested in
quality improvement in 1997 will deliver some $400 million to $500 million in savings.
“Quality improvement, under the disciplined rubric of Six Sigma methodology, will
define the way we work,” the company announced in its 1996 annual report.
A three- to four-sigma level, average for most U.S. companies, can cost a company as much
as 10 per cent to 15 per cent of its revenues. For GE, that would mean $8 billion to $12
billion.
“The methodologies of Six Sigma we learnt from other companies, but the cultural
obsessiveness and all-struggle to achieve a boundaryless culture now seems ‘laid-back’
compared to the near monomania with which we are approaching Six Sigma quality.”

Wipro also reports successes in its first year. “First of all, we now have a common language
across our divisions,” explains Bagchi. “People talk about the customer, defects, Sigma
level and a plan for continuous improvement.”
Contd...

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