| | Although Six Sigma
programs totaled only 5
percent of all
performance improvement
initiatives undertaken
in the past three years
by companies surveyed in
a major study, the
statistically rigorous
approach to operations
excellence may be in for
major growth this year.
These trends emerged
in a study conducted by
the Economist
Intelligence Unit (EIU)
in collaboration with
Celerant Consulting, the
global firm known for
implementing major
operational performance
improvements. Entitled
"Achieving Operational
Efficiency: The CEO
Agenda Implemented," the
study queried executives
from companies in the
oil and gas, retail,
manufacturing, life
sciences, healthcare,
chemicals, telecom, and
consumer packaged goods
(CPG) industries.
Among the 11 types of
improvement programs
covered in the study -
including such efforts
as business process
reengineering, business
process outsourcing,
major technology
implementation, supply
chain rationalization, | |
|
| | Lean Manufacturing, and
corporate organization
realignment - Six Sigma
was the least often
undertaken. Of the more
than 1500 individual
improvement programs
under these charters,
only 71 - or 5% - were
Six Sigma initiatives.
But 2005 may be a
different story. For
large companies - those
with over $1 billion in
annual revenue - Six
Sigma ranks with
corporate organization
realignment as the top
initiative they intend
to pursue. For telecom,
life sciences, and
healthcare companies Six
Sigma is the second most
likely initiative to be
pursued. For consumer
goods companies, it
ranks third.
"The increasing
interest we are seeing
in Six Sigma stems from
two sources," said Dave
Antis, Executive Vice
President, Celerant
Consulting. "First, as
Six Sigma and its track
record become more
widely understood, more
companies are
considering it. Second,
as the study shows, a
high percentage of other
types of initiative,
although apparently | |
|
| | successful, failed to
fulfil their companies'
strategic objectives."
According to the
study, some 43% of
performance improvement
initiatives undertaken
over the past three
years by the companies
surveyed failed to
achieve the strategic
business and financial
objectives the
initiatives were
designed to support.
Despite these
disappointing business
results, the executives
surprisingly judged 84%
of their improvement
initiatives a success.
"The apparent
contradiction between
disappointing business
results and the high
perceived success rate
for individual
initiatives suggests
that operational
improvement initiatives
may often be
inappropriately measured
or poorly understood,"
added Antis.
"Ultimately, that means
that they have also been
poorly executed in terms
of the strategy they are
intended to serve."
The study found that
the two chief obstacles
to achieving the
strategic objectives of | |
|
| | improvement initiatives
are lack of adequate
data on which to base
decisions and poor
communication between
top executives and
frontline employees.
More than half (56%) the
respondents indicated
that they lack the right
amount of operating data
to make effective
decisions regarding
operations performance.
Despite widespread
agreement across
industries that
communication with
frontline employees is
the key to making
initiatives work, such
communication was most
frequently cited by
executives as the most
difficult area to
master.
"Because Six Sigma
simultaneously addresses
lack of good data and
poor communication,
these findings suggest
an even more precise
reason that companies
might be turning to it,"
said Antis. "Six Sigma
requires rigorous
statistical methods and
accurate, relevant data
to support them, and its
execution depends on
communicating the right
data and its connection
to overall strategic | |
|
| | objectives to the right
people."
Although Six Sigma
ranked lowest among the
number of total
initiatives, 25% of all
companies surveyed
undertook a Six Sigma
project in the past
three years.
Significantly more
large companies (41%)
than small-to-medium
enterprises (SMEs) -
companies undertook Six
Sigma projects in the
past three years.
The overall perceived
success rate for Six
Sigma projects was 81%.
The perceived success
rate for Six Sigma at
large companies was 89%,
while the perceived
success rate at small
companies was
significantly lower at
69%.
A total of 276
executives from the US
(94% of respondents) and
Canada (6%) took part in
the study from September
- October 2004. Fifty
percent of participants
are C-level executives,
and all have operational
responsibilities.
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