Presently
companies are challenged due to technology advancement, customer expectation
evolution, and short product life cycles. Innovation plays a pivotal role for
gaining competitive advantages. Innovation in management system is believed as
one of the crucial competitive advantages for enhancing and sustaining business
performance. Innovation in management system is defined as improving the way
people are managed and works are organized as a response to the changing
environment. However, due to its complexity, it is not easy to innovate. There
is a lot of difficulty in understanding the main factors, such as management
strategies, degree of company integration, and resources. Hence, innovation
needs a systematic approach to be understood and effectively applied.
On
the other hand, Six Sigma, as a management tool, provides a systematic approach
for enhancing performance. The emergence of Six Sigma has become one of the
major developments in management practices. Six Sigma has been widely accepted
as a management model that will guarantee in attaining competitive advantage if
implemented successful.
Impact of Six Sigma on management
system
The
goal of innovation is the positive changes whereby a company improved. This
impact of Six Sigma is derived from two systematic processes: the define,
measure, analyze, improve and control process (DMAIC) problem-solving
methodology and the design for Six Sigma (DFSS) approach. DMAIC is more focused
on problem solving of existing condition in organization for improving performance
and cost reduction. Meanwhile, DFSS tends to be more proactive by designing new
products, services, and business processes. Therefore, it is believed that
DMAIC methodology allows for incremental innovation because it is based on
existing condition to promote an improvement. The DFSS approach is more of a
radical innovation by redesign or design new products, services, and business
processes, according to customer requirement and expectations.
This
paper uses the two Six Sigma processes to analyze the application of Six Sigma
on innovation in management system. This section discusses the positive impact
of Six Sigma in management system based on Osada’s management system model.
This model classified management system into driver, enabler, and performance,
as follows:
Driver: Company direction, vision, mission,
objectives, strategy, and organizational expectations.
Enabler:
Soft infrastructure, stock resources,
process, and flow resources.
Performance: Output, outcome, and financial result.
Sharpening leader
development method
Six Sigma training was an ironclad
prerequisite for promotion to any professional or managerial positions in the
company and a requirement for any award of stock options. In addition, all
professional, supervisory, and managerial employees must be at least green belt
(GB) trained and have done a project. The same as GE, Du Pont has required BB
and GB certification as a requirement for promotion to the ranks of management,
while Caterpillar utilized a structured process to select high-potential
employees to become Six Sigma BB. After two-year assignments, mostly BBs are
promoted to higher level positions within Caterpillar operations and included
in the succession management process. Honeywell was also proactively assigning
high-talent employees to important Six Sigma project, as part of developing the
next generation of leaders.
Improving
the effectiveness of training. This is done by linking training process and
outcome of the project with financial outputs.
Improving
employee spirit. This is done by connecting the reward system (financial
benefit and career promotion) with the project accomplishment to energize
people on Six Sigma initiatives. The promotions are mostly awarded for team
leader, while financial benefit is mostly awarded for team members.
.
Enhancing
the quality of communication
Six
Sigma has a standardize methodology and a clear step of project accomplishment.
Thus, it is easy to be understood, followed, and shared within the business
units. The successful and ongoing projects are being recorded by software for
tracking Six Sigma-related progress and information dissemination. This system
is able to store and share the collected data among related units in company
wide.
Upgrading production process.
Six Sigma projects allow companies to
significantly upgrade the production process with less investment.
.Improving
inventory utilization.
Increasing
inventory utilization and production speed by reducing variations and removing
wasted steps from manufacturing
.Enhancing
elimination of non-value-added process.
One of Du Pont projects, namely the
solutions for document processing in Major Litigations, has eliminated ten of
the 14 steps previously required. As a result, the unit cost of processing one
page was reduced by 53 percent.
Providing significant financial
benefit.
The
Six Sigma has driven undoubtedly contributions to profitability improvements
Uniqueness of Six Sigma as innovation
tool in comparison with TQM
There
are differences between Six Sigma and TQM in areas such as financial
performance, time frame, objective, origin, infrastructure, and methodology. A
Six Sigma project is highly related to strategic planning based on priorities
to changes the daily activities of an organisation. Hence, it decreases the
complexity and provides focus on specific and strategic problems to solve. Six
Sigma has defined two types of projects which are DMAIC projects for providing
corrective action to existing product, services, and business processes and
DFSS project for generating which provides more radical approach to create new
value. Moreover, each type of project is conducted through a difference
methodology according to the nature of the problem to enhance possibility for
success. On the other hand, TQM does not provide an infrastructure like Six
Sigma to decrease its complexity. However, TQM countermeasures the complexity
through kaizen, a continuous improvement process, that is smaller scale, and
people based by rotating PDCA methodology. TQM uses total employee
participation to accumulate these improvements in company wide. Thus, in total
will provide significant improvements.
Therefore, the following discussion is
intended to clarify the strength of Six Sigma as an innovation tool in
management systems compared to TQM. The following findings have been identified
from the Six Sigma characteristics which can provide additional critical
distinction between Six Sigma and TQM.
(1)
Disseminating commitment
At
the early time of implementation, Six Sigma leverages firstly to early
adopters. This method has low resistance and provides an experience to learn
from mistakes. This step is part of change acceleration process (CAP) step.
According to the CAP model, the effectiveness (E) of change initiatives is
equal to the product of the quality initiatives (Q) of the technical strategy
and the acceptance (A) of the strategy. The prerequisite of CAP is the
involvement and skills of the leader. By utilizing CAP tools, the leader can
deliver message of change to help decreasing the resistances of people through
the following steps:
(1) creating a shared need;
(2) shaping a vision;
(3) mobilizing commitment;
(4) making change last;
(5) monitor process; and
(6) change systems and structures.
(2) Sustaining spirit
Six
Sigma starts by focusing on solving strategic problems, which has a direct
linkage with strategic plans within a limited time by assigning their very best
people on a full-time basis. The success stories of Six Sigma projects,
especially on the beginning of deployment, have an impact on strengthening
opinion that Six Sigma really works. Since Six Sigma has also direct linkage
with financial criteria, it is easy to communicate its benefit and tie some
percentage of financial reward to the achievements. In comparison with TQM,
especially at the very beginning implementation, TQM did not treat improvements
of the project base, thus it has no specific time accomplishment. TQM does not
assign specific elite team members, since their main focus was to gain a total
employee involvement Six Sigma has a unique way of introducing projects and
innovation in management systems.
Conclusion
The Six Sigma initiative has a
comprehensive impact on its driver, enabler, and performance cluster, such as
directing the organization way, enhancing the effectiveness of strategic
project management, establishing a culture of data-driven approach, sharpening
the way to develop leader, and so on. Six Sigma has defined two types of
projects which are DMAIC projects for providing corrective action to existing
product, services, and business processes and DFSS project for creating new
value which provides more radical approach.
In
comparison with TQM, Six Sigma has at least two additional critical
differences:
(1) disseminating commitment; and
(2) sustaining spirit.
These
aspects are critical for innovation in management system as to deal with
people’s resistance through enthusiastic early adopter to pioneer the
deployment of Six Sigma. As a result, successful initial projects help to
clarify for others the real business value of Six Sigma. In sustaining spirit
Six Sigma creates a milestone to maintain interest and commitment for long-term
activities through accomplished projects and provides direct financial reward
for successful projects.
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