In the early 1980s, Matsushita’s Japanese management team bought the Quasar division from Motorola, and through the use of sound industrial-management techniques, significantly cut defect rates and cycle times.
At that time, Motorola was having major problems. Shortly thereafter, the company launched its Six Sigma program, which offered a huge opportunity for extremely high returns on investment. In addition to Six Sigma, Motorola also initiated active process redesigning activities focused primarily on cycle-time reduction. For the next five years, Motorola’s problem-solving approach was Walter A. Shewhart’s plan-do-check-act model. Motorola had no formal training to measure, analyze, improve, and control (MAIC); however, in 1991, Motorola developed the concepts of Black Belt and Master Black Belt training using the MAIC methodology, which was a slight modification of Shewhart’s model.
Motorola’s Six Sigma program consisted of the following:
• Record hard savings
• Focus on measurements
• Statistical analysis
• Process mapping
• Process capability analysis
• Statistical process control
• Graphical methods
When Mikel Harry left Motorola and formed the Six Sigma Academy, the Six Sigma concept was sold to Allied Signal and General Electric as an approach to improve financial performance, not to improve quality. GE management, with its excellent quality background, brought some changes to the Motorola model:
• It added “define” to MAIC, making it DMAIC.
• It placed a strong focus on the voice of the customer.
• It added process redesign to Six Sigma.
• It pushed Six Sigma into the product-development area, creating design for Six Sigma.
• It extended Six Sigma to service.
• It achieved cost savings as a result of changes to the process, not only from reductions to the staff.
Allied Signal also made a contribution to expanding the Six Sigma concepts by adding the following:
• Project management
• Change management
• Stakeholder analysis
The training for Black Belts was extensive. Typically it was a four-month program--one week a month in class and the rest of the month working on class projects. The course was heavily oriented to statistical applications, but it wasn’t comprehensive enough to prepare the students to pass the Quality Engineering Certification exam.
It wasn’t long before lean concepts were beginning to compete with Six Sigma and as a result, lean Six Sigma came into existence. Lean originated in the Ford Motor Co. in the early 1910s. It consisted of:
• Zero stock
• 50 inventory turns per year
• Time-and-motion studies
• Standardized work methods
In the auto industry, Ford was the undisputed leader until the early 1920s, when the DuPont company came in and bailed General Motors (GM) out of financial trouble. Pierre du Pont became the chairman, Alfred Sloan was selected as the second in command, and Donaldson Brown was brought in to help run finance. Ford’s approach to production was to constantly tighten, streamline, and accelerate the manufacturing flow. At GM, du Pont, Sloan, and Brown were breaking GM’s manufacturing company into modular components and selling off those that were not profitable. Ford’s approach was pursuing cash flow and market share. GM focused upon return on investment (ROI), seeking to maximize stockholders’ ROI. Sloan’s approach was the basis of GM’s accounting system today. Ford’s system was a total assembly line with 40 or more inventory turns per year, compared to GM’s six times per year under Sloan.
Ford’s lean approach came to an end in 1946 when Eleanor Ford (at that time the undisputed leader of the Ford family) called William Knudsen of GM looking for executive talent. Knudsen and Ernie Breech joined Ford and set about implementing the Sloan accounting system, which killed the original focus on quality, flow, and synchronization. The question is, with lean all but dead in the auto industry, how and why did Toyota bring it back to life in the 1960s? I will answer this question in next month’s column.