Six Sigma
Last Word


Last Word
Joseph A. DeFeo.

Sudden Death

E-commerce raises the stakes of quality.

Are you ready for the "e" world? Businesses and consumers alike have easy and instant access to an increasing number of products and services via the Internet, either business-to-business (B2B) or business-to-consumer (B2C). With price transparency the norm, quality is becoming an increasingly important factor in whether a product or service is sold and whether the customer returns.

 Is your organization ready for e-commerce? Organizations that are truly ready can answer these six questions with an unqualified "yes":

  Are your customers loyal to you?

  Is product and process quality consistent, requiring no rework or credits and allowances to customers?

  Do you have price and quality leadership?

  Do you have healthy margins?

  Do you have predictable customer demand forecasts?

  Do your employees work to reduce defects to Six Sigma levels so your processes can perform in an e-world?


 Times are changing faster than you might think. To be truly competitive, an e-commerce marketer must have defect-free products and super-quick processes as well as fully accurate customer services. In the old economy, a dissatisfied supermarket shopper eventually returns to the store because there are only a few markets in any given area. In contrast, a frustrated online shopper will immediately log on to another site, perhaps never again to visit the first one. E-commerce requires perfection at the front end (order entry, transfer of payments, data gathering) and at the back end (supplier raw material ordering, monitoring of shipping, distribution). Failure to achieve it means sudden death.

 Both consumers and businesses are being offered Internet options at a dizzying pace. Consumers can get a free second opinion on medical matters and even doctor ratings online. They can log on to price-comparison sites like Pricescan.com and shopping agents such as Bottomdollar.com to compare the prices and features of thousands of products available on the Web. Those who want to learn about other consumers' purchasing experiences can go to Epinions.com. And Travelocity.com gives consumers entry into the same flight reservations database that travel agents once jealously guarded.

 Sites like Guru.com and FreeAgent.com match independent contractors with businesses on a best-bid basis. Reversing the Priceline.com model, Richard Branson's plan for Virginunlimited.com will let consumers place orders for a range of products and have dealers compete to offer the best price. Even the stately legal profession will soon have competitive bidding online.

 Internet searches will only get easier as the Web HTML language is replaced by extensible markup language (XML) software, which provides more precision in identifying needs. The Internet will become available on a broad range of existing and new appliances. IBM's Global Telecommunications Division predicts that within the next five years more than 80 percent of new corporate e-business applications will be designed for non-PC devices such as wireless phones.

 In GE's 1999 annual report, CEO Jack Welch calls e-business "the final nail in the coffin for bureaucracy at GE."

 "The speed that is the essence of 'e' has accelerated our metabolismů and is changing the company to its core," he writes. "Time today is measured in days and weeks."

 During 1999, 83 percent of U.S. consumers bought something through nonstore, direct-to-home shopping channels, up from 75 percent in 1998, according to research conducted by the Peppers and Rogers Group and the Institute for the Future. While many shoppers bought from catalogs and TV shopping channels, 25 percent shopped online, up from only 9 percent in 1998. Total revenue from consumer direct sales leaped from $115 billion in 1998 to $133 billion in 1999. The largest revenue growth occurred in online shopping, which more than doubled, and direct-to-home grocery delivery.

 By the year 2003, online B2B sales could total $1.4 trillion, as International Data Corp. predicts, or even $3.9 trillion, as Gartner Group estimates. Forrester Research predicts that Web exchanges will account for 53 percent of all online business trade by 2004, and Gartner Group expects that they'll equal 37 percent of the total B2B market. There are now close to 600 B2B exchanges. Alibaba.com, a free site started in China, is said to have registered 38,000 companies worldwide. FreeMarkets Inc. ( www.freemarkets.com ), a full-service B2B e-marketplace, also auctions tax preparation, temporary help, relocation and other services.

 Companies and consumers will continue to increase their participation in e-commerce. Businesses are continuing to improve their efficiencies through instant access to suppliers and customers throughout the world. Consumers are establishing new expectations for speed, range of offerings and buying ease. Companies have made enormous investments in information technology, but the competitive advantages will go to those that use the information best and outperform competition in the quality of everything they do throughout the supply chain--without exception. To achieve the e-commerce quality you need, your processes must perform at Six Sigma levels. E-commerce quality is vital not only to a company's health, but also to its survival.


About the author

Joseph A. DeFeo is president and CEO of Juran Institute, the "breakthrough" consulting and training organization with more than 20 years of experience and headquarters in Wilton, Connecticut. For more information, call (800) 338-7726, visit www.juran.com , or e-mail DeFeo at jdefeo@qualitydigest.com .

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