Faster, Better and therefore Cheaper

Faster, Better and therefore Cheaper
To compete globally you have to deliver perfect quality, and when you deliver perfection you straightaway cut down on after -sales service cost, inspection cost, with the reliability of what you are delivering, says internationally renowned quality guru Suresh Lulla, Managing Director, Qimpro Consultants.

How do you define quality?
Quality continues to be defined in the Market place and by the customer. There are two parts to this interpretation: one relates to the defect rates in what you are delivering and the second relates to the feature of what you are offering at the same price. The first is operational quality and the second is design quality. Six Sigma addressees primarily the operational quality part. When you are talking of design quality you have to invest money to give more features whereas in operational quality you reduce the defects and save money. The trust of Six sigma is to save money at an exponential rate.

What makes six sigma so powerful?
It sets straight goals and the power comes from its integration with the strategy of the company. Unlike most quality initiatives that are outside the normal business strategy of the company, six sigma enables virtually unearthing all the wasteful costs and with that it delivers a very effective and powerful bottomline. Six sigma is the difference between incremental improvement and radical improvements and it is a top-down initiative in contrast continual quality improvement which is company-wide.

The underlined premise in all this is that at least one third of your costs are dedicated to doing wasteful activities which are in the type of scarp, rework, or giving discounts because of sub-standard quality and so on. Six sigma helps eliminate all this.

What difference does six sigma make to the business?
At the bottomline it makes a lot of difference. It is known that one third of the total cost are dedicated to wasteful activities. If you were to halve the cost of poor quality it would go straight to the bottomline. Now let us say that it reflects in 15% on sales. In effect, halving the cost of poor quality translates into 15% of sales. Your profit to sales ratio is likely to be 10% of sales and adding another 15% by halving the wasteful activities, you will more than double the profits without capital investments.

How long will it take to see the benefits of six sigma?
Typically you take on a pilot study. You choose one process, define the boundaries of the process and you take on a challenge as the company to reduce the cost price, defect rate, cycle time etc by a certain amount. It is a self-review process. We are not telling you to be perfect straight away. That at each time you set a goal to halve it every 6/8 months, you know when you have completed or you are recognised for what you have achieved. So, it is a continual process. The company gets a demonstration of gains within the first 6/8 months through a pilot study. Then it comes to scaling up and the reviewers see 6/8 months cycle each time. That’s how it will cascade.

People have to change from the way they were doing things before. In dealing with resistance, training should also be imparted on team work, team building, resistance management etc.

How does six sigma fit into the Chemical Process Industries?
It may not manifest itself in the chemical process itself as much as it would in a batch mode manufacturing process but certainly yes in all other business processes within that organisation. Chemical process is more or less like a black box, consisting of: input process, output. Here the mistakes may come in terms of how the process was designed in the first place. So you could be looking at six sigma in the design and planning process not so much in the operational processes.

In Chemical Industry, we have worked on six sigma in typical energy saving techniques. There are umpteen opportunities with boilers, and heat exchangers, where leakages happen. Also, we have done lot of work at lTC’s packaging division in Chennai though it was called TQM. Logistics also offers great opportunities to work with quality initiatives, ensuring, the right product at the place at the right time.