Page 49 - How To Implement Lean Manufacturing

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zero defects are achievable. Second, the key metric used to drive the effort is “quality
costs.” With quality costs, there are at least two major problems. The first issue is that
many of the major quality costs are not quantifiable. For example, what is the true cost
of a customer return? What is the cost of a field warrantee failure? What is the cost of
the loss of future business? However, even worse than that, the American system of cost
accounting does not capture quality costs very well. Our financial accounting systems
are designed to take care of two business needs: the profit and loss statement and the
issue of taxes. It is not designed to capture things like the cost of poor quality.
Consequently, a zero defects program finds itself unable to account for the costs,
and then the engineers whose job it is to reduce these quality costs (as well as justify
their own existence) find themselves buried in the cost system trying to extract the
savings from their efforts. They then become experts in the cost system, and so quality
issues suffer.

Six Sigma
The concept of Six Sigma has achieved a great deal of publicity and, quite frankly, a
great deal of success lately. Most of the publicity is directly or indirectly related to
the large effort put forth by GE, which was made very public by their now-retired
CEO, Jack Welch. Six Sigma owes its roots to Motorola and the efforts of Mikel Harry.
I first read about it as a design concept and tolerancing mechanism popularized in
the publication Six Sigma Producibility Analysis and Process Characterization, put out
by Motorola University. The purpose of this technique was to start at the design
phase and try to produce a “Six Sigma” quality product. This was defined as one
with less than 3.4 defects per million opportunities. Later, the concept of Six Sigma
was broadened to become a problem-solving technique, and the Six Sigma curricu-
lum has become standardized with Six Sigma Blackbelt and Greenbelt certifications
now available.
Since the early days at Motorola, the Six Sigma concept has grown and has various
degrees of success. Welch in his writings claimed that GE sent $10 to the bottom line for
each dollar they spent on Six Sigma efforts. Most large GE facilities had a complement
of Blackbelts and Greenbelts and actually set up these internal consultants as cost
centers. Still others have tried to link Six Sigma with Lean Manufacturing under the
name of Lean-Sigma or some such double-barreled effort to sell yet another product.
Today, to most people: “Six Sigma is a project-based, problem solving initiative which uses
basic as well as powerful statistical methods to solve business problems and drive money to the
bottom line of the business” (from www.qc-ep.com).
This being the case, Six Sigma is neither a manufacturing system nor a manufacturing
philosophy at all; rather, it is a fine set of tools that can enhance problem solving in
any sort of business, manufacturing or otherwise. For example, when teaching and
training Blackbelts, we always require they undertake a project during the four-month
training program. We also keep track of the financial earnings that are driven to the
bottom line; they must be identifiable on the balance sheet. A recent group of 14 Black-
belts, four months after their training, had booked $1,030,000. By the end of a year,
their projects had driven $3,500,000 to the bottom line. Other groups perform simi-
larly, so the Six Sigma problem solving concept is a sound one and helps make the
company a more powerful money-making machine. But Six Sigma is not a manufac-
turing philosophy. It is a completely different animal than the TPS, yet it is totally
compatible with the TPS.