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1、Six Sigma and the Operations Transformation Initiative,1,DISCUSSION TOPICS,Background behind the effort Perspectives on Six Sigma New thinking on operations transformation Opportunities and next steps,2,CONTEXT,Build Six Sigma / Operations transformation engine service line: Resurrect Six Sigma Take
2、 Six Sigma to the next level Greenfield transformation programs,Current efforts,Initial project approach,2-month effort Interview-intensive Companies with Six Sigma programs Boutique consulting firm Internal Firm experts on Six Sigma and lean Outside-in financial analysis,What is Six Sigma? How has
3、it been applied at companies? How is the Six Sigma consulting landscape structured? What are the implications for the Firm?,In-going questions,3,DISCUSSION TOPICS,Background behind the effort Perspectives on Six Sigma Definition Application at companies Consulting landscape New thinking on operation
4、s transformation Opportunities and next steps,4,THE STATISTICAL ORIGINS OF “SIX SIGMA”,A higher Sigma means less variation and a smaller probability of defects,Before,After,Target,Customer specs,2, i.e., 30.85% will fall outside customer specs,6, i.e., only 0.003% will fall outside customer specs,5,
5、Control charting/statistical process control (SPC) Hypothesis testing Pareto charts Brainstorming Process mapping Root-cause problem solving Design of experiment Voice of the customer Etc.,Master Black Belts(full time),Responsible for lasting results Support project selection, training/coaching of b
6、lack belts, and reporting progress,2. Problem solving toolbox,3. Dedicated and certified resources,A TYPICAL SIX SIGMA PROGRAM CONSISTS OF 3 CORE ELEMENTS,1. Structured improvement methodology,6,SIX SIGMA HAS EVOLVED SIGNIFICANTLY IN ITS 15-YEAR HISTORY,Description Quality-focused program using rigo
7、rous statistical analyses to reduce variability,Description Improvement program focused on driving operational and financial excellence,Description Corporate transformation program focused on development of business leaders as well as near-term financial impact,Description Continuous improvement pro
8、gram developed to address the major business issues from cost reductions to growth,Era 1: Focused on quality Motorola (1987),Era 2: Linked to financial performance Allied Signal (1994),Era 3: Integrated into performance improvement agenda General Electric (1996),Era 4: Applied to broader business is
9、sues Bombardier (2002),Source:Pande, Neuman and Cavanaugh, “The Six Sigma Way: How GE, Motorola, and Other Top Companies are Honing Their Performance;” interviews,7,McKinsey clients with Six Sigma programs,Other McKinsey clients,1 IN 3 McKINSEY CLIENTS IN THE FORTUNE 100 ARE SIX SIGMA COMPANIES,* Co
10、mpanies which are testing Six Sigma (e.g., Target, Verizon), have rolled out Six Sigma in limited business units or functions (e.g., International Paper), or have not yet made official announcements about their Six Sigma programs (e.g., Allstate, GM) Source: Team analysis,American Express Bank of Am
11、erica Citigroup Conoco Delphi Automotive Dow Chemical DuPont Ford Motor General Electric Home Depot Honeywell IBM JP Morgan Chase,List of clients with Six Sigma programs,McKinsey clients within Fortune 100,(30%)*,(70%)*,Johnson press articles,11,. . . HOWEVER, SIX SIGMA DOES NOT INDEPENDENTLY GUARAN
12、TEE SUPERIOR PERFORMANCE,Outperforming peers since launch Operating margin, percent,*GEs peer group comprises Tyco, 3M, Siemens, ABB and Textron Source:Compustat; McKinsey analysis,Underperforming or downward trend since launch Operating margin, percent,Allied Signal/ Honeywell Six Sigma launched 19
13、95,Company,Peer group,GE* Six Sigma launched 1996,Bombardier Six Sigma launched 1997,Launch,DuPont Six Sigma launched 1999,Motorola Six Sigma launched 1987,JP Morgan/JPM Chase Six Sigma launched 1998,Launch,Launch,Launch,Launch,Launch,12,THE SIX SIGMA CONSULTING UNIVERSE CAN BE DIVIDED INTO 4 SEGMEN
14、TS,Large corporations with Six Sigma consulting arms GE Medical Systems GE Plastics Motorola Institute Offer Six Sigma services to customers and suppliers in return for additional sales or price breaks Leverage internal Six Sigma experience,Large consulting firms with Six Sigma service lines PWC CAP
15、 Gemini Introduce Six Sigma to existing audit or systems clients Integrate Six Sigma into process redesigns,Boutique consulting firms offering Six Sigma services Rath interviews,Category Examples Typical approach / value to client,Most significant players,13,DISCUSSION TOPICS,Background behind the e
16、ffort Perspectives on Six Sigma New thinking on operations transformation Opportunities and next steps,14,Solution drivers deliver near-term, bottom-line impact through series of projects,Deep subject matter expertise, e.g,Lean manufacturing Platforming Supply management Pricing Service operations O
17、thers,Problem solving approaches and tools,Structured approach used consistently across the organization Data driven Comprehensive from issue identification to implementation Portfolio of general problem solving tools Statistical process control Process reengineering Others,CURRENT VIEW ON ELEMENTS
18、OF SUCCESSFUL OPERATIONS TRANSFORMATION,Organizational enablers,Clear articulation of goals Visible, sustained involvement Senior team alignment Metrics tied closely to financials and key operations Cascaded to front line Rigorous consequences Training and talent management at all levels True unders
19、tanding and buy-in to change particularly at front line,Leadership Performance management Talent/skill development,Transformation engine support and sustain solutions over time,Improvement infrastructure,Programdesign Dedicated resources Program support,Road map for the initiative Project prioritiza
20、tion Small central coordinating staff Selection of best to staff initiative Clear career path to line roles Specialized training Project management capabilities Tracking and reporting of metrics Knowledge sharing,15,Solution drivers,Deep subject matter expertise,Problem solving approaches and tools,
21、Structured approach Portfolio of tools,A WELL-EXECUTED SIX SIGMA PROGRAM ADDRESSES MOST ELEMENTS . . .,Organizational enablers,Leadership Performance management Talent/skill development,Transformation engine,Improvement infrastructure,Programdesign Dedicated resources Program support,Lean manufactur
22、ing Platforming Supply management Pricing Service operations Others,Clear project selection guidelines Excellent training and development program for high-caliber Black Belts Emphasis on capturing and sustaining savings,Clear roles and expectations for senior executives Project metrics tied closely
23、to financials/CTQs New language instills rigor in day-to-day problem solving,Well-structured problem solving processes Versatile toolkit with emphasis on data-driven analysis,16,. . . THOUGH A FEW GAPS CONSISTENTLY ARISE IN EVEN THE BEST PROGRAMS,Solution drivers,Deep subject matter expertise,Proble
24、m solving approaches and tools,Structured approach Portfolio of tools,Organizational enablers,Leadership Performance management Talent/skill development,Transformation engine,Improvement infrastructure,Programdesign Dedicated resources Program support,Lean manufacturing Platforming Supply management
25、 Pricing Service operations Others,Focus on dis-crete projects can distract leaders from evaluating and improving broader business processes and performance systems,General problem solving toolkit lacks prescriptive recommen-dations on specific topics,“Six Sigma always results in an answer, but not
26、always the best answer” Black Belt,“We were so focused on the quick wins, we never stepped back to ensure that we were fundamentally improving our business” LOB president,17,Solution drivers,Deep subject matter expertise,Problem solving approaches and tools,Structured approach Portfolio of tools,IN
27、COMPARISON, LEAN HAS A DIFFERENT SET OF STRENGTHS,Organizational enablers,Leadership Performance management Talent/skill development,Transformation engine,Improvement infrastructure,Programdesign Dedicated resources Program support,Lean manufacturing Platforming Supply management Pricing Service ope
28、rations Others,Emphasis on systems/core operations,High aspirations ideal state Prescriptive policy deployment approach Emphasis on front-line capability building,Structured tools to support problem-solving,Deep expertise Prescriptive recommenda-tions in operations areas (e.g., inventory management,
29、18,. . . AND WEAKNESSES,Solution drivers,Deep subject matter expertise,Problem solving approaches and tools,Structured approach Portfolio of tools,Organizational enablers,Leadership Performance management Talent/skill development,Transformation engine,Improvement infrastructure,Programdesign Dedicat
30、ed resources Program support,Lean manufacturing Platforming Supply management Pricing Service operations Others,Can be intimidating to executives,Knowledge gaps outside operations,Long apprenticeship Not prescriptive on program, structure/infrastructure,19,IMPLICATIONS,Lean and Six Sigma can be comp
31、lementary Both programs can help a company transform its operations Both have gaps,We have a unique opportunity to help companies tailor an approach that fits their needs likely through a combination of several programs,20,DISCUSSION TOPICS,Background behind the effort Perspectives on Six Sigma New
32、thinking on operations transformation Opportunities and next steps,21,SEVERAL OPPORTUNITIES TO SERVE CLIENTS,Resurrect Six Sigma,Diagnose and reset basic requirements for Six Sigma program,Take Six Sigma to the next level,Incorporate subject-matter expertise (e.g., lean, pricing, sourcing) into a su
33、ccessful Six Sigma program,Launch a green- field operations transformation program,Describe potential approaches Help senior leadership craft and roll out best program for the company,Recent client discussions,22,NEXT STEPS TO BUILD THE INITIATIVE,Knowledge building,Codify basic beliefs and approach
34、 for the transformation engine Develop approach to integrate our subject-matter expertise with Six Sigma methodology (e.g., lean, sourcing, pricing) Lay-out “best practice” greenfield operations transformation approach,People,Recruit core team Develop broader affiliated group Launch internal Six Sig
35、ma training program,Client service,Aspirations for the next 6 months Help 1-2 clients recharge existing Six Sigma programs Work with 1-2 Six Sigma companies to inject functional expertise Support one large greenfield transformation,Syndicate perspectives and build fluency on topic with sector / FCG leaders Publish perspectives in Quarterly, other,Communications,23,CURRENT LEADERSHIP TEAM,Felix Brueck (CL) Maia Hansen (CL) Celia Huber (PT) Stefan Knupfer (DT) Robert Lewis (CL) Jeff Long (LA) Fredric Ramioulle (DT) Tony Simone (MIA),