GE Appliances Customer Relations: Total Quality Management vs Six Sigma Management - Research Paper Example

?Running Head: TQM vs. Six Sigma Should General Electric Appliances Relations use Total Quality Management Instead of Six Sigma Management? Insert your Name here Insert your Academic Institution Name here Should General Electric Appliances Customer Relations use Total Quality Management Instead of Six Sigma Management? TQM TQM (Total Quality Management) is “a management approach that tries to achieve and sustain long term organizational success by encouraging employee feedback and participation, satisfying customer needs and expectations, respecting social values and beliefs and obeying governmental statutes and regulations” (Charantimath, 2003). This definition implies that TQM focuses on continuous improvement by involving people at all levels and looks at all processes at organizational level. It does not focus on just one part of the organization but the entire organization as a whole. It involves integrating the technical systems of an organization with the social systems (Barnes and Pike, 1996). The idea is to achieve total customer, employee and stake holder satisfaction. It follows various principals for leading an organization to ensure continuous improvement. These include Involving employees at all level - This is because a TQM effort cannot be successful if it is propagated from the leadership team without the employees at executive level understanding its implications and working towards executing it. Focus on customer satisfaction Ownership at the lowest levels – Employees at the lowest levels need to take ownership of the TQM initiatives and work as self managed teams (Charantimath, 2003). Team work – Success of TQM initiative depends on how well the various teams can coordinate and collaborate with each other as well as within themselves. Competitive benchmarking helps in continuous improvement. Thus, it is vital for a company to measure itself against the best performers of the industry in which it is operating. Company culture is an important element of TQM. Hence, the culture should be developed to instill the quality way of working in all employees (Murray, n. d). TQM uses various tools and models to achieve continuous improvement. Some of the quality improvement tools it uses are – check-sheets, histograms, Pareto charts, Control charts, scatter diagrams, process capability studies and so on (Charantimath, 2003). All these tools help the managers to find opportunities for improvement. Some of these tools are also used to monitor the performance of the process on a continuous basis so that any deviations from expected levels are detected and sorted at the earliest. Such monitoring also helps managers to analyze the performance and find ways of improvement. Six Sigma Six Sigma approach came far later than the TQM concept. In fact, Six Sigma is an outcome of TQM but its focus area is slightly different. It focuses mainly of defect reduction by reducing variation within a process (Shiba and Walden, 2001). Any reduction in variation of a production or service related process leads to standardized output which means reduction in errors or defects. It provides project focus for people to work on. For this, it uses the DMAIC (Define-Measure-Analyze-Improve-Control) approach to work on a task in a structured way. These are the various stages of a project and help the project leader and other stake holders focus on all aspects of a process which are relevant at the particular stage of a project. Six Sigma provides explicit tools for every stage of the project. Some of the tools are – histograms, fishbone diagrams, paretos, run charts, process control charts and so on. All these tools help the project team in analysis of the data at various stages of the project. Six Sigma verses TQM Just like TQM Six Sigma uses various tools to analyze process performance. It also requires top leadership support for successful implementation just like TQM. A cultural change is required to be brought about within the organization for both the approaches to work. Many of the tools used by Six Sigma are also very similar to those used by TQM. Continuous improvement is the key word for both the concepts. However, dissimilarity lies in the clear characteristic of the focus in Six Sigma approach. It focuses on those areas of work which will bring about substantial benefits (Shiba and Walden, 2001). Thus, efforts are focused only on areas that justify the cost of Six Sigma implementation. This is in contrast to the TQM approach which has a more generic approach for improvement. Six Sigma also has more sophisticated tools to help analyze data. A major support in implementation of these highly sophisticated statistical tools for process improvement is from the trained quality resources called the “black belts” (Shiba and Walden, 2001). Absence of such facilitators for TQM implementation is the reason for lack of use of more sophisticated tools for better accuracy of decisions. Another important distinction between the two is that Six Sigma involves executives in project selection which is not there in TQM (Shiba and Walden, 2001). TQM focuses on use of all tools by everyone. However, Six Sigma calls for using only those tools that cater to a specific requirement (Pyzdek, 2001). The training of Six Sigma concepts also focuses on using these tools rather than on theoretical concepts. Six Sigma is a specific target and not a generic statement. It means that for every million customer contacts or transactions a Six Sigma firm will meet its customer’s expectation 999,996.6 times, which indirectly means only 3.4 defects or errors per million opportunities (Pyzdek, 2001). This kind of clear definition is not there in TQM. By making generic goals like “total quality”, an organization is unable to focus on those spots which are actually the pain areas or which can generate maximum financial benefits. While Six Sigma targets at reducing errors for quality improvement, TQM is more focused on conformance to internal requirements (Pyzdek, 2001). A very significant feature of TQM is that it is an external agent or department which tries to drive the quality initiative throughout the organization. However, Six Sigma implementation requires people from within the processes or departments to work on projects on a part-time basis (Pyzdek, 2001). Even the black belts work as Six Sigma resource for short duration of a year or two and then move back into operational roles. This leads to more commitment and ownership as any improvement in the process would eventually reap benefits for the individual himself. Thus we can see that Six Sigma provides a clear road map for individuals and organizations to bring about a positive change in a scientific way. Though TQM has also been successfully implemented in many organizations like Motorola etc. Six Sigma provides better tools and concrete direction for organizations to work. By providing a project based approach with clear financial targets, Six Sigma is able to align process improvements to company’s financial goal of profitability and increase in shareholder value. TQM lags in this aspect as it generalizes the quality effort. Though many organizations require overall quality improvement effort, it may not be required in all. By focusing on aspects which do not yield substantial benefits, TQM may result is inefficient use of resources. Six Sigma on the other hand ignores those areas which do not result in sizeable benefits. For every improvement program it is important to direct efforts in the right place as these programs have a cost of implementation. All quality efforts are a strain on resources and Six Sigma is better equipped at providing sure shot results. Thus, for General Electric Appliances customer relations, Six Sigma management is recommended. Six Sigma technique Six Sigma is a state where there is very little variation in a process which results in almost zero defect output (3.4 defects per million opportunities). This requires using the DMAIC approach (as described earlier) to obtain SMART (specific, measurable, attainable, realistic and timely) goals. Within the various phases of DMAIC, various tools and techniques are used to help analyze the data and reach conclusions. Let us discuss a few techniques used at various stages of a Six Sigma project (Boer, Andharia and Harteveld, 2007). Fishbone analysis – This is used mostly in the define phase for understanding the various factors on which an outcome is dependent. It is done through brainstorming session by all stakeholders of the process. Communication plan – Again used in the define phase and enlists responsibilities of various team member so that all activities are accounted for. Control charts - These are used in measure, analyze as well as control phases. They help in detecting any abnormalities in data by checking for any outliers. In the control phase they help in tracking if the process is within control or not. Control plan – This is used in the control phase to ensure that the process does not fall back to its old levels. It charts contingency plan also. FMEA – Failure Mode Effects Analysis is used in measure/analyze phase to see the impact of each failure within a process. It quantifies each impact and helps in deciding the key Xs. Pareto, run charts and histograms – These are common tools used to study data and reach conclusions regarding the next steps. There are many more highly advanced tools and techniques which are used for analyzing various data types. Quality experts help in using them during the project implementation. Implementation process The most important requirement for Six Sigma process implementation is that of leadership support. The leaders of an organization should initiate the process by creating a clear vision for Six Sigma philosophy of the company. This should be followed by clear communication till the lowest level of hierarchy regarding the same. The Six Sigma goals and objectives should be in line with the company objectives. For this the leadership team should be adequately trained on Six Sigma concept and methodology (Pyzdek and Keller, 2009). This should be followed by provision for adequate infrastructure for Six Sigma implementation (Pyzdek and Keller, 2009). This could be software required, training material, training rooms, and trained staff and so on. A Six Sigma culture needs to be created by excessive communication regarding the key concepts of Six Sigma. Stakeholder, employee, supplier and customer feedback mechanisms need to be created. Base-lining needs to be done to find out where the company stands before implementation of Six Sigma rigor. Key process metrics need to be defined so that future performance of the processes can be monitored. The metrics should be the ones that affect customer satisfaction the most. These should also be aligned to organization goals. Finally project selection needs to be done in conjunction with the process as well as Six Sigma experts. Inputs need to be taken from process experts regarding the pain areas of the processes and then the quality experts need to decide whether the project would yield substantial results and requires resource allocation. Application of Six Sigma in various organizations Many organizations have benefitted by implementing Six Sigma as their operational philosophy. Dow chemical company implemented Six Sigma to achieve improved quality and productivity. Their aim as stated in the 1999 annual report was to achieve EBIT target of $1.5 billion by the end of 2003 (texasiof.utexas.edu, 2003). However, this was achieved by 2002 end itself due to the Six Sigma rigor. Dow’s senior management targeted four areas which they thought would provide maximum returns. Hence, four projects were implemented which followed the DMAIC methodology to yield results. Each project had the following resource (texasiof.utexas.edu, 2003) A sponsor who was the business head leading the organization A champion who was responsible for “Six Sigma strategy, deployment and vision” (texasiof.utexas.edu, 2003) A process owner who was the manager or supervisor of the process where the project was being implemented. The owner was a process expert and was responsible for tracking the process for long term gains. Green belt – The person who was leading the project and undergoing Six Sigma training for eventual Green belt certification Black belt – A person who was a quality expert to guide the Six Sigma team in using the various statistical tools All the projects had a direct support from the CEO who was also monitoring their progress. The following table summarizes the results of the various stages of one of the projects. Table source: texasiof.utexas.edu, 2003 The savings from these projects were so huge that the company’s EBIT target was met a year before the deadline. Two of the projects were together expected to yield saving of $1.1 billion every year of operation in the future. Wipro is another organization which aims at achieving zero defect state through Six Sigma. The company started by first building the culture within the organization followed by creating a Six Sigma team. Projects were selected based on the probability of their success and aimed at completing them fast (Sharma, Pandla and Gupta, n. d). Resources were invested into the projects on a need basis. The company used following Six Sigma methodologies (Sharma, Pandla and Gupta, n. d). (Sharma, Pandla and Gupta, n. d) The company uses following tools for Six Sigma implementation – ideation, definition, selection, tracking and reporting. Application of Six Sigma at GE and implementation plan As seen in the previous sections, organizations have reaped major benefits by Six Sigma implementation. The same can be done at GE alliances customer service division. As GE already has a quality team consisting of Black Belts and Master Black Belts, it does not need to waste time in setting up an expert group. The quality team with the senior managers of the customer services division should first look at the pain areas of the division and focus on running Six Sigma projects in those domains as was done in Dow and Wipro. They should pick up projects which can be completed in short time periods. The key process owners should be trained on Six Sigma and team members should also be aware of its methodology and benefits. Unless the team members understand what Six Sigma is, all efforts to implement the methodology company-wide would be wasted. Clear cut performance metrics with focus on customer satisfaction and company goals should be set. This will help in not only monitoring the performance of a process during the project but also in the long run after the control phase. The process owners need to monitor these throughout the life of the process for any variations and scope of improvement. This should then be followed by project implementation in various phases as per the DMAIC approach. During the define phase clear targets should be specified. A road map with clear milestones and team member responsibilities should be defined. During the measure and analyze phases Black belt should provide adequate support with respect to the statistical tools to be used. The owners should be responsible for the long term benefits post the control phase. The Six Sigma rigor requires continuous monitoring of the key metrics not only by the immediate process owners but all the business leaders up to the level of the CEO. Without the focus of the highest level of the leadership team, Six Sigma implementation cannot be achieved. References Barnes, R and Pike, J. (1996). TQM in action: a practical approach to continuous performance improvement. Springer Boer, S. D, Andharia, R and Harteveld, M .(2007). Six Sigma for IT Management: A Pocket Guide. Van Haren Publishing Charantimath, M. P. (2003). Total quality management. Pearson Education India Murray, M. (n. d). Total Quality Management (TQM), About.com. Retrieved from: http://logistics.about.com/od/qualityinthesupplychain/a/TQM.htm Pyzdek, T. (2001). Why Six Sigma is not TQM. Retrieved from: http://www.sixsigmatraining.org/six_sigma_vs_tqm Pyzdek, T and Keller, P.A. (2009). The Six Sigma handbook: a complete guide for green belts, black belts, and managers at all levels. McGraw Hill Professional Sharma, M, Pandla, K and Gupta, P. (n. d). Case study on Six Sigma at Wipro Technologies: Thrust on quality. Retrieved from: http://www.iitk.ac.in/infocell/announce/convention/papers/Changing%20Playfield-04-Manisha%20Sharma,%20Kapil%20Pandla,%20Prasanth%20Gupta.pdf Shiba, S and Walden, D. (2001). Four practical revolutions in management: systems for creating unique organizational capability. Productivity Press. texasiof.ces.utexas.edu. (2003). Applying Six Sigma methodology to energy-saving projects. Retrieved from: http://texasiof.ces.utexas.edu/texasshowcase/pdfs/casestudies/cs_dow_sixsigma.pdf Read More