A Sound Methodology for Enterprise Management

Pertemuan 25-26

Matakuliah : M0594 / Enterprise SystemTahun : 2007

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A Sound Methodology for Enterprise Management

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• Infrastructure for High Quality• Systematic Methodology• Organizational Prerequisite• Using Six Sigma• Applying Six Sigma• Internet application

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Infrastructure for High Quality

• Quality assuranced has always been a very important issue in any industry, at any time, while swamping costs is instrumental in keeping a healthy bottom line

• Today, both issues are more important than ever before because globalization and rapidly advaing technology.

• Quality and costs should be subject to internal control• Tier-1 companies know from experience that they are

correct instituting an authority that sees to it that management and the rank-and-file have clear incentives and responsibilities on both issues

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What is Six-sigma

• What is special about Six-sigma?• The standard deviation of a distribution, or sigma,

is a statistical term measuring how far a given process deviates from expected value.

• The idea behind Six-sigma is that if one can measure the number of defects in a product or process, one can systematically figure out how to eliminate them and get close to zero defects – provided one benefits from a thorough, well-structured methodology

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What is Six-sigma• Within ± 3 standard

deviations (or 3 δ) from the mean lies 99.73 percent of area under a normal distribution curve shown in Exhibit 12.2.

• The outliers are 0.27 percent, and this percentage become extremely small indeed outside Six-Sigm

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GE implementations of Six-Sigma• GE has developed and implemented an entire methodology around this

statistical quality controlled concept, and it also claims that Six-Sigma has changed the company’s DNA – in everything it does and in every product or service it designs and markets.

• The basic tools underpinning GE’s methodology include:– Statistical process control– Other control charts– Process mapping– A tree diagram– A defect measurement method– Chi-square testing– Experimental design– Root cause analysis– The dashboard– A Pareto diagram

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GE implementations of Six-Sigma

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Systematic Methodology• The Six-Sigma procedure, along with the tools which it uses, permits one

to focus on the quality, cost, and other root issues of sound management.• The goal is to provide efficient help in reducing cycle time, swamping

defects, and emphasizing the value of each individual contribution.• The entire approach is guided by Design for Six-Sigma (DFSS), a

systematic methodology utilizing training tools and measurements to meet customer expectations, produce at high-quality level, and keep costs in check.

• Associated with this is a process for continued improvement known as Define, Measure, Analyze, Improve, and Control (DMAIC).

• This is a closed-loop process, characterized by GE as systematic, scientific, and fact based.

• It helps to eliminate unproductive steps, focus on in-process measurements, and apply the best-available technology for improvement.

• Through DMAIC, Six-Sigma provides a vision of quality and allows people to strive for perfection

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Organizational Prerequisite

• A process that is in control provides a sense of stability and predictabilility.

• This calls for a metaprocess capable of regulating and guiding operations using quantitative data

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Using Six Sigma

• Significant benefits can be derived from implementing a rigorous statistical method, in locating defects, and in breaking a customer’s requirements into manageable tasks; for example, setting optimum specifications for each part of the process and accounting for how the parts interact.

• This lays the ground for accurate responses to customer wishes through technical specifications that are studied analytically.

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Using Six Sigma

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Applying Six Sigma to a Sales Environment at GE Capital

• The methodology described in the previous chapter sections impacts a whole range of business operations, whether in manufacturing, merchandising or banking.

• Examples of Six Sigma applications in the financial industry are provided by GE Capital

• See details in page 240-242

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An Internet Application can benefit from Advanced Statistical Tools

• GE is not the only company that has shown demonstrated tangible result from implementing Six Sigma. The method is indeed valuable to all companies that pay due attention to weeding errors out of their system.

• If GE is a leader in this rigorous error correction process, it is because its CEO put his weight behind it and fathered it until it became the company’s second nature.

• The Synergy of cost control program and a quality assurance program is a major reason why Six-Sigma can become a very effective way to reintroduce the notion that quality matters to the organization, as well as to identify concrete actions needed to sustain a Six Sigma program in the long term:– Providing critical feedback to strategic planning– Helping in setting individual and group goals, with merits and

demerits associated with them

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Review Session