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Six Sigma for Safe Landings
Suzan Fischer, Michele Economou-Ureste and Norma Simons
(Publisher's Note: This article, is reprinted with permission from THE INFORMED OUTLOOK, in which it first appeared in Nov. 2003.)
Following the ISO 9001:2000 transition, the future of quality management continues to align with that of business management. The challenge in both cases is for organizations to move beyond baseline practices provided by traditional management approaches. Companies that fail to rise to the challenge could lose their competitive edge or their existence in an increasingly global marketplace.
Continual improvement, which was made explicit in the generic quality management system requirements of ISO 9001:2000, is the element that can provide security to organizations that effectively pursue it throughout their operations. In the aerospace sector, this security is provided by AS9100A, Quality Systems-Aerospace-Model for Quality Assurance in Design, Development, Production, Installation and Servicing, which was published in August 2001 and is aligned with ISO 9001:2000.
Security refers to an organization's ability to remain competitive, healthy and profitable enough to respond to marketplace changes and thrive as a business. Simply maintaining a QMS that meets the baseline requirements of ISO 9001:2000 or any aligned sector standard, no matter how many additional requirements are added, isn't enough in a tough economic climate.
Indeed, today's economic climate demands that businesses seek more effective-and efficient-means to improve company performance. The same holds true in government, where taxpayers expect improving levels of service without increases in tax rates and fees. The challenge is to reduce cost while simultaneously improving quality and maximizing the bottom line. Although a QMS that conforms with ISO 9001:2000 establishes the critical foundation necessary for pursuing performance improvement, it doesn't provide the tools organizations need to actually obtain those improvements.
Under these circumstances, Six Sigma has emerged as a preeminent tool--the structured methodology for improving performance, increasing value to the customer and establishing a measurement system that drives bottom-line results. During the past few years, leading companies have recognized that to compete today and in the future, they must begin the journey toward Six Sigma. Numerous books and articles on the subject have clarified a number of facts about Six Sigma, including:
It's a highly effective quality management tool in both large and small organizations but requires a significant commitment of resources to produce a worthwhile return on investment.
A Six Sigma program will be distinct from an ISO 9001:2000-based QMS, but having an effective QMS in place is critical to gaining real value from a Six Sigma program; likewise, that program can provide the type of continual improvement required by ISO 9001:2000.
Although Six Sigma has been promoted as a specific packaged product, it's actually a bundle of quality management and statistical tools that can be used with some flexibility, making it adaptable to the size, nature and needs of many organizations.
If implemented correctly, a Six Sigma program can ensure a "safe landing" for an organization soaring through the rough economic conditions in 2004 and beyond-conditions which aren't expected to improve in the aerospace industry or many other sectors in the foreseeable future.
Thus, it's not surprising that Goodrich Corp. has responded to the crisis affecting the airlines-and that has lead to shrinking margins, aggressive cost-reduction goals and stringent, predictable product performance targets-by establishing a plan to implement Six Sigma.
Goodrich's management team took notice of the bottom-line savings that companies such as GE and Motorola have achieved by implementing full-scale Six Sigma programs and decided that it was Goodrich's turn to move onto the runway in preparation for a Six Sigma takeoff.
Goodrich Aircraft Wheels and Brakes relied on its facilities' QMSs, which are registered to ISO 9001:2000 and AS9100A, to serve as the foundations for continual improvement. It's useful to see how this organization has used several continual improvement tools, including a Six Sigma program, to fulfill the continual improvement requirements of the standards and, more important, to enhance organizational competitiveness and reduce costs.
Goodrich background and history
Goodrich Corp. is a leading worldwide supplier of aerospace components, systems and services. With a record of profitable growth and annual revenues of $4.2 billion, the company ranks as one of Fortune magazine's "Most Admired" aerospace companies and as one of Forbes magazine's "400 Best Big American Companies." Driving this performance is the company's vision to create value through excellence in people, quality and innovation. The company is headquartered in Charlotte, North Carolina, and employs more than 18,000 people worldwide in 133 facilities across 20 countries.
Goodrich offers products, systems and services for aircraft and engine manufacturers, airlines and other operators. The company's tenfold increase in aerospace sales in as many years and strong financial performance have been driven by strategic acquisitions and internal growth, which, in turn, have been fueled by innovation and quality. From aerostructures and avionics to landing gear, engine components, sensors and safety systems, Goodrich products are on almost every aircraft in the world, and increasingly so on satellites.
Goodrich today is dramatically different from the company created in 1870 by Benjamin Franklin Goodrich. Once one of the world's largest and most respected manufacturers of rubber products, it's now a top-tier performer in the aerospace sector. Despite all this change, the company's underlying values of risk-taking, entrepreneurship and innovation have remained constant.
Nowhere is innovation and the capacity to change more evident than in Goodrich's radical transformation during the past 15 years. In the mid-1980s, the company was at a critical juncture. Its primary products-automobile tires and polyvinyl chloride-had become commodities. The tire business, which comprised nearly half of the company's sales, had gone flat in terms of profitability and growth, and PVC sales had become increasingly cyclical. On the other hand, the smaller but value-added aerospace and specialty chemical businesses had great promise.
The course was set with a new strategy that would lead to divesting the legacy tire and PVC businesses-approximately 70 percent of sales-and expand Goodrich's aerospace business-at the time only 7 percent of total sales in 1985. Aerospace soon became the company's growth engine. The core of Goodrich's aerospace business had been created years earlier with products such as aircraft wheels and brakes, evacuation systems and the first commercial pneumatic de-icers.
New product lines were added to this base, including sensors, landing gear and avionics, and some of the most respected names in the industry became part of Goodrich through acquisitions.
Goodrich Aircraft Wheels and Brakes Division, headquartered in Troy, Ohio, employs approximately 750 employees. There are four plants within this division. Three of them manufacture carbon heat sink materials and are located in Spokane, Washington; Pueblo, Colorado; and Santa Fe Springs, California. The Troy facility manufactures structural components that make up the wheel and brake assemblies, and assembles the products. Its commercial original equipment manufacturer customers include both Boeing and Airbus, and its regional and business jet customers include Bombardier, Cessna, Embraer and Raytheon. AWB's military customers include Lockheed Martin and Boeing, and it also supplies wheels and brakes for NASA.
AWB obtained registration to ISO 9001:1994 in 1998 and has also been approved to various customer quality system requirements such as Boeing's D1-9000. Its QMS was upgraded in 2002 to meet the new requirements of ISO 9001:2000 and AS9100A. AWB also started on its Malcolm Baldrige National Quality Award journey in 2000 with its tier-one application to the state process called the Ohio Award for Excellence. The company was awarded tier-three in 2002, and current plans are to submit an application to the OAE for tier-four consideration in 2004.
Goodrich's three-legged improvement model
Goodrich Corp. has recently developed a three-legged continual improvement model, which is comprised of:
Lean manufacturing, adopted in Troy five years ago, which has been successful in reducing cycle times and floor space, and eliminating nonvalue-added activity both on the manufacturing floor and in the office.
Six Sigma, which was launched in January 2003 and has resulted in two successfully completed projects and five in progress.
Design for Six Sigma, which is tentatively planned to launch in Troy late, this year.
The company believes that capitalizing on the strengths of each these processes is necessary to provide a well-rounded continual improvement program to ensure the company's competitiveness in the marketplace. All three processes are used today in one or more of the Goodrich businesses and have proven themselves to be complementary with each other and offer increased customer satisfaction and bottom-line savings to the business.
At the AWB plant in Troy, lean implementation began in 1999 and has become such a pivotal part of the Goodrich corporate culture that lean activities often influence Six Sigma efforts. Lean has removed the nonvalue-added activity in the organization, and Six Sigma is aimed at improving the value-added processes that remain.
If your organization decides to pursue Six Sigma, it's important to consider that improvement doesn't occur in a vacuum. You must select an approach that fits and can successfully improve your organization's culture as well as involve other management efforts. Together they will produce quantifiable results. Top management will judge the success of any activity by the output of the activity.
Six Sigma implementation infrastructure
The Troy facility began to implement Six Sigma in October 2002, and it geared up in the first quarter of 2003 for its first two Six Sigma DMAIC projects. DMAIC is the acronym that describes the Six Sigma methodology of defining, measuring, analyzing, improving and controlling process variation. Six Sigma projects are chosen with the expectation that they'll be of short-term duration (i.e., three to six months) so that they'll focus the Six Sigma program's efforts and produce quantifiable results in a defined time period. At the AWB plant in Troy, Six Sigma deployment is led by Suzan Fischer, the continuous improvement manager, under the direction of a continuous improvement steering committee comprised of top-level executives.
Training relative to Six Sigma implementation began with 14 managers as potential internal champions, who were available to assist Black Belts and support, or "champion," Six Sigma projects. The immediate challenge for these Champions was to develop project selection criteria followed by project selection. The criteria developed by Goodrich's champions were based on the affect a project would have on the customer and on the organization's business strategy, financials and internal resources, as well as on the project's likelihood of success.
AWB took an innovative approach to its Six Sigma implementation effort in the Troy plant. As a pilot effort, AWB selected two internal employees to train as Black Belts and 12 hourly and salaried employees to train as Green Belts, with the goal of conducting training concurrently with the project execution. Thus, as part of the pilot, these 14 employees were expected to learn about, gain hands-on experience with and apply Six Sigma by dividing into two teams of seven people to complete two DMAIC projects.
Overall, the Green Belts received 10 days of training and the Black Belts 18 days. In some cases the Black and Green Belts were trained together, and they were also given opportunities during the training to discuss the application of specific tools to their projects. This ensured that, by the end of the training process, the projects had provided results. Training was accomplished during a four-month period. The first month involved four days of training for both the Green and Black Belts on the define and measure phases; the next three months involved two days each on the analysis, improvement and control phases for Green Belts.
The Black Belts received the same training as the Green Belts, as well as two to four days per phase, depending on what it was. (The DOE training in the analysis phase, for example, took additional time.)
Another difference from typical implementation approaches to Six Sigma is that Black Belts at the AWB plant are devoted to Six Sigma projects 50 percent of the time, as opposed to full-time, and Green Belts devote 20 percent of their time to projects. Each Six Sigma project team is led by a Black Belt, while a Champion is available to provide assistance. Each current Black Belt and Green Belt is expected to serve in this role for two years, with each member completing two projects per year.
In the beginning, the two Six Sigma teams were required to report to top management at the end of each DMAIC phase during these two pilot projects. This requirement reinforced each project team's understanding of the Six Sigma methodology and the sequential activities associated with each phase of reducing defect-per-unit and defect-per-million-opportunities levels, which is the ultimate goal of Six Sigma.
This part-time Black Belt approach was taken because top management saw a need to demonstrate success and the affect that Black and Green Belts can have on the business's bottom line before committing to full-time Black Belts. It has also kept Black Belts in touch with day-to-day activities within the plant. Although Black Belts are usually employed full-time to avoid having day-to-day tasks interfere with the Six Sigma projects, employing them at half-time hasn't proven a drawback so far at the Troy plant.
Indeed, Fischer noted that the monthly progress review for each Six Sigma project, which is conducted in front of management and Black and Green Belts' peers, puts pressures on the Six Sigma teams to stay on track.
Pilot produces value-added project results
Using Six Sigma project selection criteria, the Champions selected two projects that rated the highest, based on the criteria. The two projects were a cost-of-poor-quality reduction effort in the Troy plant's Wheel Assembly Paint Touch-Up Operation and a reduction in shipping errors. Before proceeding with any Six Sigma project, the Champions had to present a business case justifying a project to top management for approval. At the Troy plant, the champions were required to present each business case to the continuous improvement steering committee.
The business case for the Wheel Assembly Paint Touch-Up was summed up as follows:
"During the assembly process, paint touch-up is often required on wheel halves and wheel assemblies due to damaged or inadequately painted surfaces, resulting in longer lead times and shipping delays. Current paint touch-up requirements, planned and unplanned, lead to customer dissatisfaction and poor on-time delivery ratings. To improve customer satisfaction, we will reduce the total cost of paint touch-up by 90 percent, which will also reduce cycle time and work-in-progress and help to improve on-time delivery."
As part of the business case, the Six Sigma project team identified where savings and benefits could be obtained and also calculated the projected savings. The reason for this is that a Six Sigma project must be able to produce a return on investment greater than the cost of the project, and the savings must justify it over other potential projects. The team for the Wheel Assembly Paint Touch-Up project identified direct employee labor, benefits and overtime costs, work-in-progress inventory, and total paint and material costs as areas where potential savings and benefits would be obtained. The annual savings are projected to be more than $160,000.
The benefits of full implementation are projected to include an 87 percent reduction in nonconformance occurrence, an 81 percent reduction in both DPUs and DPMOs, a sigma level increase from 3.42 to 4.06, reduced lead times and reduced production costs.
The business case for the project to reduce shipping errors was summed up as follows:
"During the past six months, Goodrich has received customer-reported shipping errors, which have resulted in increased customer dissatisfaction and delayed cash flow. To improve customer satisfaction and cash flow and to reduce administrative costs, we will reduce defects identified in Pareto analysis by 90 percent from 2002 results."
A cost-benefits analysis for the shipping project showed that an annual savings of $120,740 would result from a 90 percent reduction in shipping errors. This financial improvement was extrapolated from reductions in uncollected freight charges, return freight charges and indirect labor redeployment (i.e., there would be a reduced need for overtime), improvements in cash flow, resolution of errors and support personnel efficiencies in order entry, billing, shipping, and accounts receivable. In fact, the reduction goal was achieved by June 30, 2003.
Examples of improvements made included visual controls to indicate when an order was separated (to be rejoined after special packaging), development of a custom value chart for overseas shipments, and mistake-proofing the shipping addresses (some customers have multiple locations).
The greatest nonfinancial or intangible benefit observed from both of these projects is the enhanced level of job satisfaction and increased morale of hourly and salaried employees participating in activities relating to these processes. The projects have empowered these employees, who are no longer merely flying at a "5,000-foot level."
Six Sigma emphasizes fact-based decision making
One aspect of the AWB continuous improvement program unique to Goodrich are work stream teams. These are cross-functional in nature and deemed to be most important to the business as a whole. Typically, the teams implement strategic initiatives or solve major problems in the organization. Each team is assigned a champion from the CI steering committee and is required to provide a monthly status report to the committee.
Top management and the Troy plant's work stream team support the its Six Sigma program, which is a key reason behind the successful results gained from both projects in the first wave of program implementation. In addition, the first two projects during the Six Sigma pilot phase provided the organization with a demonstration on the effective use of data in making decisions. This lesson, more than any other, will have important repercussions within Goodrich--or any other organization--because fact-based decision making is one of the quality management principles upon which ISO 9001:2000 is based as well as a fundamental objective of business management.
Among the lessons learned from the pilot projects, the Troy plant realized that having more process owners and/or interested parties participating on the Six Sigma teams is important to facilitate effective change in an organization and in its culture. Changes to the Six Sigma program will be instituted before subsequent waves of Six Sigma projects begin that will increase process owner participation on the teams.
The extreme financial situation facing the airline industry requires a significant emphasis on cost reduction and customer satisfaction; cost of poor quality will be a key metric in orienting Six Sigma projects. This metric will be established as a key corporate-level performance metric that drives continual improvement initiatives. The corporation has decided to establish a standard method to capture and calculate COPQ.
Ideally, the CI steering committee expects some Green Belts will rise to Black Belt status once they've received training and/or participated in enough projects. Lessons learned from the Six Sigma program will be applied when design for Six Sigma takes flight. Pushing this methodology upstream in the product development process should substantially increase the financial gains from the Six Sigma program already underway.
Top management at Goodrich recognizes that committing to the program requires allocating resources to implement the Six Sigma program properly and reward positive results. An existing gain-sharing program will reward Six Sigma breakthroughs as they trickle down in the form of tangible bottom-line savings. The program is self-funding, relying on the allocation of 10 percent of the financial savings from improvement initiatives to fund continual improvement needs. In addition, project team members are rewarded and recognized based on team guidelines. Examples include a certificate presented by a member of the division staff, a luncheon, Goodrich apparel, etc.
Start from your baseline and customize your approach
The implementation approach for a Six Sigma program or any other performance improvement initiative must be customized for every organization. Goodrich's Aircraft Wheels and Brakes Division selected a slower and more deliberate approach to Six Sigma implementation as opposed to a strategy of mass training. This ensures a gradual demonstration of the results one step at a time. It also provides the organization with its own unique model. Each wave of projects brings with it new challenges as the projects are selected, applied, monitored and implemented under the watchful eye of the continuous improvement steering committee and the organization as a whole. By including some hourly workers as Green Belts, the division has also gained support for the Six Sigma program from the United Auto Workers Union.
However, in order to customize the continual improvement program for your organization to be effective in improving performance, you must know the baseline upon which the program is going to be built. Otherwise, it will be impossible to customize Six Sigma, lean or other programs.
Further, you must know that the baseline upon which the program will be built is a solid foundation because a QMS that is ineffective and not used properly won't support and sustain the program you're implementing. ISO 9001:2000 provides a set of effective QMS requirements that, if properly satisfied, will provide that foundation. In other words, to have a safe landing in a turbulent business environment, you need a solid QMS to serve as your runway so that your top-line wheels touch down properly and you can finish your organization's mission smoothly.
Suzan Fischer is continuous improvement manager at Goodrich Aircraft Wheels & Brakes. She's been actively involved in continuous improvement initiatives at the AWB Division since 1988, including Six Sigma, lean manufacturing, Baldrige and integrated product development. Fischer is an ASQ-certified Quality Manager and has a degree in metallurgical engineering from Michigan Technological University.
Michele Economou-Ureste is vice president of Simons-White & Associates Inc., a consulting and training organization that specializes in providing customized business and quality management solutions. She's been involved in the quality field for the past eight years. Prior to Simons-White, Economou-Ureste served as the quality program manager of the Automotive Industry Action Group, during which time QS-9000:1998 was published. She has a degree from Central Michigan University, a degree from Oakland University and is a member of THE OUTLOOK's editorial advisory board.
Norma Simons is president of Simons-White & Associates Inc. She has 20 years of job application and consulting experience. Simons is an ASQ-certified Quality Engineer, Reliability Engineer and Six Sigma Black Belt. She has a degree in industrial engineering/operations research from Wayne State University in Detroit.
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