Six Sigma Program and Motorola - Term Paper Example

?Running head: SIX SIGMA PROGRAM AND MOTOROLA Business Innovation - Six Sigma program and Motorola Module: of submission: http://www.scribd.com/doc/19767551/Six-Sigma-at-Motorola Abstract Six Sigma has been an innovative strategy that many businesses especially in the manufacturing sector have adopted primarily to enhance efficiency in production. This business strategy helps in eliminating waste by controlling the level of defective production. Motorola is one such company that has hugely applied the Six Sigma in its production for quality assurance. Six Sigma has enabled companies to cut on their operational costs as a result of having 99.9% of products free of defects. This process saves a great deal of time that is used to improve on design and general quality aspects of products. Introduction Motorola’s history is quite helpful for many businesses especially in the manufacturing sector. Its major contribution to this sector is the Six Sigma initiative in production where focus was shifted from measuring quality in percentages to parts per million. This idea stemmed from the realisation that the advancement in technology cannot stick with the conservative forms of measurement. Six Sigma was introduced to achieve the set quality goals so as to minimise chances of wastage in terms of resources and time. The company since the adoption of this strategy has saved its shareholders billions of dollars in terms of resources and time. The initiative has also enabled it to deliver high quality products to its consumers all over the world. Cell phone sales have shot up tremendously in the last decade and Motorola was well positioned in the 1990s to cater for the rising demand. For the initiative to work the company has to ensure that it changes its leadership and invest in rewarding innovation coupled with creating the right metrics. This paper will aim at discussing the circumstances that led to the innovation of Six Sigma in Motorola, how Six Sigma project was implemented at Motorola and the results achieved by the company after implementation. Company overview Motorola is one of the leading companies in the electronic communications business. It deals in designing and manufacturing cellular and cordless phones, broadband products and modems among other products. It ranks as the second largest producer of mobile phones behind Nokia. It has for a long time controlled about 17% of the entire world market in regards to mobile phones but leading in two-way radios (Pande, Neuman & Cavanagh, 2000). It has concentrated a great deal in wireless communication and internet related technology. The company further produces a wide range of products for use in the automotive industry together with computer and navigation. It is also important to appreciate that the company enjoys a bigger market outside the USA at almost 60%. Motorola’s glory can be attributed heavily on its quality products which in 1988 saw it receive Malcolm Baldrige National Quality Award. This award recognises businesses that act as role models for others in various areas of management and general operations. It is the Six Sigma initiative at Motorola that attracted this admiration. Motorola acted as the first company to incorporate this Six Sigma in its operations back in January 1987 and due to its almost-immediate success, many other companies followed suit. Before this initiative Motorola was experiencing one of the most turbulent times since it was Galvin Manufacturing Corporation in 1928 (Coronado & Jiju 2002). However, since February 2011 Motorola became two separate companies; Motorola Mobile and Motorola Mobility. Motorola and Six Sigma Before Motorola came up with the Six Sigma initiative, it was on its downward trend and it required an intensively innovative approach to the market. The competitive market arena had become too competitive for the company to rely on its traditional management practices and operational methods. The changes towards a fully-fledged Six Sigma project were first witnessed in the 1970s when the company was taken over by Japanese. The Japanese management found that the company’s defect levels were too high and profitability would not be forthcoming if the trend continued. Drastic changes then started taking place and within a short time the new management was able to reduce the number of defects in production by 1/20th as compared to the time of former Motorola management (Przekop, 2005). The intriguing part in these changes was that the Japanese management achieve this with the same employees, product designs and technology clearly depicting that Motorola’s management was the problem. This innovative project was embraced for more than a decade until mid 1980s when the company management realised that much more needed to be done in order to move higher in the competitive ladder. The company Chief Executive at the time was Bob Galvin who seriously followed up on Six Sigma project. After the company received the earlier mentioned award in 1988 its Six Sigma secret was revealed. Six Sigma at Motorola was a phenomenon that changed the traditional definition of quality in production. Due to the fact that Six Sigma was developed to ensure that firms make money out of innovativeness, the link between this and quality had to be redefined. As a result quality was coined to mean value addition through a productive undertaking. In offering quality products value has to be added by ensuring minimal wastage coupled with faster and cheaper production. In production there are numerous costs involved and Six Sigma’s work is to identify all those that do not add value to the customer and ultimately do away with them. It is notable that those firms that do not incorporate Six Sigma use an average of 32% of their revenues to fix problems in the production processes while those that incorporate it spend less than 5% (Coronado & Jiju, 2002). Implementation of Six Sigma The implementation process of the Six Sigma project was not easy in Motorola and it took more than a decade to be fully fledged. Motorola took more time to implement its project than latter companies that had adopted it basically because it was the initiator and it researched and perfected on Six Sigma as operations went on. During the Galvin launch of the quality program back in 1987 the main objective was to identify and eliminate defects to clock less than 3.4 parts in a million or a yield of 99.99966% as indicated in the table and diagram below; Sigma level DPMO Percentage defective Percentage yield Short-term Cpk Long-term Cpk 1 691,462 69% 31% 0.33 –0.17 2 308,538 31% 69% 0.67 0.17 3 66,807 6.7% 93.3% 1.00 0.5 4 6,210 0.62% 99.38% 1.33 0.83 5 233 0.023% 99.977% 1.67 1.17 6 3.4 0.00034% 99.99966% 2.00 1.5 7 0.019 0.0000019% 99.9999981% 2.33 1.83 Table 1: (Jiju, 2006) Table 2: (Coronado & Jiju, 2002) The quality goal was updated in the late 1980s and by 1991 the quality of products recorded a quality improvement of 10 times (Breyfogle, 2003). The challenge however was to maintain the high quality. Motorola’s innovative strategy in regards to Six Sigma was purely Play-to-Win where it needed to develop a market-leading strategy that revolutionised mostly the manufacturing sector. In adopting this strategy Motorola had to have both organisational and technical capabilities to handle the improvement of quality measurement. Competition was also heightening and rate of technology change was considerably high. In implementing six Sigma four projects were targeted which were termed as Small Wins for Six Sigma (Breyfogle, 2003). They aimed at establishing accountability so as to drive improvement. Graphics was the first department to use this initiative. Quality reviews were then carried out on quite regular basis actually on weekly, monthly and quarterly intervals. The basic idea in developing Six Sigma is that determination of the number of defects in a process will lead to figuring out how to do away with all of them if possible (Linderman & Schroeder, 2003). In order to achieve Sig Sigma Motorola used 6 specific steps namely; The management started by identifying the products they wished to start with i.e. in the product development and graphics departments They considered the company customer base and what is of importance to them which was high quality products that served their purpose. Therefore, defects were hindering customer satisfaction They considered what the company needs were i.e. to improve on quality by eliminating defects which will ultimately save on cost of operations thereby improving on profitability They defined the process to use which was to start with Small Wins for Six Sigma as a selective trial scenario before implementing it to production and design stages of other products Check for mistakes in the above process and eliminate wastage Lastly, to maintain improvement standards by continuously analysing and controlling improvement processes. It is important to appreciate that in 1980s the American economy was doing quite badly as compared to its European counterparts. External competitors were already in the market taking advantage of the situation like Nokia which was selling less defective products and at relatively lower prices. The company had a hard time implementing the project to counter the market forces. It started by devising new ways of training the staff in order to ensure changed manufacturing practices. As research has shown there is need for a company to have adequate infrastructure in place to ensure successful Six Sigma project implementation. It has also been seen that more than 80% of the firms that fail in implementing this initiative have poor infrastructure (Breyfogle, Cupello & Meadows, 2001). Motorola management involved all the human resources as this is another key to success. The staff needed to change their attitude and skills since the project was like nothing anyone had seen before. In order to achieve this training was essential where everybody was trained from the senior management to the junior workers in the various shops. This training aimed at producing three kinds of people; green belts, black belts and champions. The Champions are the ones responsible for all actions of other employees. They comprise the management team of the company including the CEO himself. Another subcategory is the Master Black Belt which comprised of those people who have ample skills and ability to translate Six Sigma plans into real business processes. These people also have a high technical proficiency as far as Six Sigma is concerned. They also have superb mentoring and problem solving skills and thus are able to assist the rest throughout the project. The Black Belts on the other hand are middle-level managers who oversee the project till its completion (Ingle & Roe, 2001). Green Belts on the other hand are managers whose work is to support that of the Black Belts. These are not full timers and as such they are required in huge numbers as compared to Black Belts actually in the ratio of 5:1 (Linderman & Schroeder, 2003). The training was intensive as it took more than 4 months for some staff members especially for the Black Belts. The reason for this is that inefficiency in the Black Belt category translates into inefficiency in the entire organisation as they are the ultimate change agents. These categories are depicted in the diagram below; Fig. 1: (Linderman & Schroeder, 2003) Motorola’s management established a Participative Management Program which involves the nonexecutive staff to relay their ideas on company progress and other issues. The top-level management on the other hand was quite keen in offering quality leadership which trickled down to the production process. PMPs are comprised of employees who are of the same expertise level like those who work in the same work station or location. These are the teams that continually monitor the progress of their work towards achieving set targets. In their assessment they were able to identify initiatives and solve problems in their areas as they arise (Gupta, 2006). This facilitated solving of problems at source and in a timely manner. Motorola is on record to have spent more than $170 million on training its staff for each to know what they were required to do in their respective roles (Antony & Banuelas, 2002). This worker education initiative took 5 years i.e. from 1983-87. Since then 40% of all training is geared towards quality assurance methods and techniques so as to maintain quality standards and innovation in product design. The company also adopted a comparative standards approach where it continually compared its products to those of its competitors based on quality standards. It is however important to note that Motorola made many mistakes in the implementation stages. One grave mistake was the option taken to train employees from bottom up. The real problem was the understanding of the statistical approaches to be used by workers. When they got stranded they were unable to get any help from their untrained bosses. The workplace developed an unreceptive attitude which was not helpful even to those employees who understood the statistical concepts. In the process the company lost a staggering $7 million and as a result the management decided to establish Motorola University (Jiju, 2006). The main aim was to enrol all the company executives for training and within a short time thousands had had finished their executive courses including Bob Galvin. Results of the Six Sigma project Motorola has been working to perfect on its Six Sigma initiative for decades now. The company has gained a great deal from this initiative since its inception. For the period starting 1986 to 2010 the company has saved more than $17.5 billion in its production line and other operational processes. Another feat is that Six Sigma is a Motorola’s trademark which ensures that the company gains revenue from those who train on its workability. The company’s university is one such institution that offers the required Six Sigma training to thousands of people from all over the world. The Six Sigma has become quite popular and more than half of the Fortune 500 companies have already adopted it. This initiative is attributable to the ever increasing innovations by Motorola an example being the Super Slim RAZR. This is a phone that is entirely stamped with Six Sigma and such mobile phone products have of late made Motorola to climb from 15% market share to 22% (Blokdijk, 2008). Another notable instance when Six Sigma benefited the company a great deal was in the late 1990s where it lost market leadership on mobile phones to Nokia. The company went ahead to ensure that Six Sigma works hand in hand with creative processes without one interfering with the other. Six Sigma allows employees to think and it encourages them to be as precise as possible in predicting future outcomes in respect to product quality. One notable feature that helps in its comeback is the way designers and engineers are treated. They are left to do their work with minimum interference. Six Sigma has elicited huge resentment in many companies but not in Motorola. The basic reason for this is the understanding by every employee, whether old or new, that Six Sigma is a company culture at Motorola. Workers are used to project hoppers who offer their input as production progresses. All these initiatives have enabled the company to be able to make mobile phones in lots that range from 1-100,000 units (Raisinghani, Ette, Pierce, Cannon & Daripaly, 2005). This has hugely turned its tables with high influx of customers since they are able to receive their order within the shortest time of making it. Six Sigma has undoubtedly enabled the company to dominate a range of hi-tech productions for example in pagers and cell phones. It is also important to mention that Motorola is a force to reckon with in other communication technologies. Looking back into how the company revolutionised itself and the world at large it is only fair to acknowledge the power that Six Sigma has on business innovation and efficiency. Motorola in the last one decade has gone a notch higher to use Six Sigma as an improvement methodology in all areas of business not just in improving quality of its products. This has resulted in having a workforce that is strategically inclined to adequately and most importantly, efficiently handle the emerging market trends. The current generation six sigma processes are undertaken by aligning customer needs with of those of the company, mobilising of available resources and expertise, accelerating to capitalise on time and lastly by governing the whole process to eliminate wasted efforts. Conclusion 20 years ago Motorola was a company whose fortunes had faded without much hope. Although the company was lately split, its market share and profitability has generally been impressive except for a few times that it has been on a downward trend. The company boasts of being one of the leading mobile phone brands in the world. This progress and high achievements can be hugely attributed to the company’s innovation and adoption of Six Sigma business strategy. Through this Motorola has been able to reduce wastage and improve on efficiency and product quality. The ultimate reward for this has been increased market share and popularity of the company’s products all over the world. 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