| | 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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