Page 65 - The Handbook for Quality Management a Complete Guide to Operational Excellence

52 B u s i n e s s - I n t e g r a t e d Q u a l i t y S y s t e m s A p p r o a c h e s t o Q u a l i t y 53

TQM takes time. The GAO reports “Many different kinds of compa-
nies benefited from putting specific total quality management practices in
place. However, none of these companies reaped those benefits immedi-
ately. Allowing sufficient time for results to be achieved was as important
as initiating a quality management program.”
Some TQM advocates suggested the need for a “total quality leader”
(TQL) (Kendrick, 1992), who encourages the CEO to be an instrument for
change and function as an extension of the CEO as a change agent (see
Chap. 12). In this view, the CEO and the TQL must be closely allied, to
build credibility for the TQL within the organization.

Six Sigma

Motorola, under the direction of Bob Galvin, developed the principles
now known as Six Sigma in the 1980s. In 1981, Motorola set out to
improve the quality of their products and services tenfold. This effort
led to their acceptance of the 1988 Malcolm Baldrige National Quality
Award, and the inception of the Six Sigma Quality movement. In the
early years of the program, between 1983 and 1987, Motorola estimated
they spent $70 million on quality-related employee education. (www
.quality.nist.gov/winners/motorola.htm) Although this certainly repre-
sents a steep commitment, their benefits have soundly outweighed these
costs (http:/mu.Motorola.com/Six Sigma/SixSigma.html):
• Productivity increased an average of 12.3 percent per year
• Cost of Quality reduced by more than 84 percent
• 99.7 percent of in-process defects eliminated
• $11 Billion in manufacturing costs saved
• Average annual compounded growth rate of 17 percent in earnings,
revenues, and stock prices realized

Larry Bossidy, CEO of Allied Signal, began their Six Sigma program in
1994. In 1998, they achieved cost savings of $500 million directly attribut-
able to their Six Sigma program; in 1999, the cost savings grew to $600
million. The total benefits greatly exceed these savings, as explained in
their 1999 Annual Report:

… cost savings are only part of the story. Delighting customers and accelerating growth
completes the picture. When we are more efficient and improve work flow throughout
every function in the company, we provide tremendous added value to our customers—
through higher quality solutions that are more competitively priced, delivered on time
and invoiced correctly. That makes us a more desirable business partner.
Allied Signal, which merged with Honeywell in 1999, emphasized cycle
time reduction. In one example, two of their plants operating at full

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