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SIXSIGMA BENCHMARKING ISO
SIX SIGMA • Six Sigma is a statistically driven quality management methodology that aims to reduce defects and variation in a business process. In fact, the goal of any Six Sigma initiative is to reduce to the number of defects to 3.4 per one million opportunities thereby increasing customer satisfaction and business profits.
Six Sigma was first developed and implemented by Motorola in the 1980s. In 1996 GE announced it saved $1 Billion by using the Six Sigma methodology. Now a lot of industry leaders have adopted the Six Sigma methodology as their quality improvement method of choice.
Six-Sigma Metrics • Defects per unit (DPU) = number of defects discovered number of units produced • Defects per million opportunities (dpmo) = DPU 1,000,000 opportunities for error
k-Sigma Quality Levels • Six sigma results in at most 3.4 defects per million opportunities
Six-Sigma Implementation • Emphasize defects per million opportunities” as a standard metric that can be applied to all parts of an organization: manufacturing, engineering, administrative, software... • Provide extensive training followed by project team deployment to improve profitability. • Focus on on corporate sponsor support to ontain resources, focus the teams on overall strategic objectives.
Six-Sigma Implementation 4. Create qualified process improvement experts who can apply improvement tools and lead teams 5. Ensure identification of appropriate metrics are identified early in the process and that they focus on business results. 6. Set stretch objectives for improvement
Six-Sigma Problem Solving Approach • Define • Measure • Analyze • Improve • Control DMAIC
The principles include: • vAsk the customer what problems must be solved. • vDon't manage the problem. Eliminate it. • vMeasure the defects but more importantly measure the opportunities - what is possible. • vAnalyze the numbers to find out how well or poorly the processes are working, compared with what's possible and with what the competition are doing.
BENCHMARKING • Benchmarking is the process of determining who is the very best, who sets the standard, and what that standard is.
There are numerous definitions of benchmarking, but essentially it involves learning, sharing information and adopting best practices to bring about step changes in performance. So, at its simplest, benchmarking means: • "Improving ourselves by learning from others". Most organisations tailor definitions of benchmarking to suit their own strategies and objectives. Two examples are given below.
"Benchmarking is simply about making comparisons with other organizations and then learning the lessons that those comparisons throw up".Source: The European Benchmarking Code of Conduct“ • Benchmarking is the continuous process of measuring products, services and practices against the toughest competitors or those companies recognized as industry leaders (best in class)".Source: The Xerox Corporation
In practice, benchmarking usually encompasses: • regularly comparing aspects of performance (functions or processes) with best practitioners; • identifying gaps in performance; • seeking fresh approaches to bring about improvements in performance; • following through with implementing improvements; and • following up by monitoring progress and reviewing the benefits.
Why use Benchmarking? • In the Private Sector In the private sector, the purpose of benchmarking is to gain a competitive edge. A benchmarking approach has become embedded in successful commercial organizations as a means of seeking innovation outside the industry paradigm - a way of keeping at the forefront of the competition. Recent surveys show that benchmarking is the third most used management tool. Interest in benchmarking is continuing to grow across the world. Benchmarking is also being recognized as a valuable tool for external learning strategies.
In the Public Sector Over recent years, public sector organisations across the world have gradually been turning to benchmarking their public services. In thepublic sector, benchmarking has been acknowledged as a powerful tool for improving and bringing about the sort of step changes needed to deliver modern public services. This is against a background in which the drivers for change are becoming as intense as the competitive pressures felt by industry. It has also been recognised that efficient and effective public services play a vital part in improving private sector competitiveness by reducing the burden on business and compliance costs.
Benefits fromBenchmarking Successful benchmarking, in which gaps in performance are bridged by improvements, results in significant tangible benefits that are needed in the public sector, such as: • step changes in performance and innovation; • improving quality and productivity; and • improving performance measurement.
Benchmarking can also have a beneficial effect on aspects needed to support continuous improvement, such as: • raised awareness about performance and greater openness about relative strengths and weaknesses; • learning from others and greater confidence in developing and applying new approaches; • greater involvement and motivation of staff in change programmes; • increase in willingness to share solutions to common problems and build consensus about what is needed to accommodate changes; • better understanding of the ‘big picture’ and gaining a broader perspective of the interplay of the factors (or enablers) that facilitate the implementation of good practice; and • Increasing collaboration and understanding of the interactions within and between organisations.
better understanding of the ‘big picture’ and gaining a broader perspective of the interplay of the factors (or enablers) that facilitate the implementation of good practice; and • Increasing collaboration and understanding of the interactions within and between organizations.
Types of Benchmarking • Strategic Benchmarking is used where organizations seek to improve their overall performance by examining the long-term strategies and general approaches that have enabled high-performers to succeed. It involves considering high level aspects such as core competencies, developing new products and services; changing the balance of activities; and improving capabilities for dealing with changes in the background environment.
Performance Benchmarking or Competitive Benchmarking is used where organisations consider their positions in relation to performance characteristics of key products and services. Benchmarking partners are drawn from the same sector. • Process Benchmarking is used when the focus is on improving specific critical processes and operations. Benchmarking partners are sought from best practice organisations that perform similar work or deliver similar services.
Functional Benchmarking or Generic Benchmarking is used when organisations look to benchmark with partners drawn from different business sectors or areas of activity to find ways of improving similar functions or work processes. This sort of benchmarking can lead to innovation and dramatic improvements.
Internal Benchmarking involves seeking partners from within the same organization, for example, from business units located in different areas. The main advantages of internal benchmarking are that access to sensitive data and information are easier; standardized data is often readily available; and, usually less time and resources are needed. There may be fewer barriers to implementation as practices may be relatively easy to transfer across the same organization.
International Benchmarking is used where partners are sought from other countries because best practitioners are located elsewhere in the world and/or there are too few benchmarking partners within the same country to produce valid results. Globalization and advances in information technology are increasing opportunities for international projects.
ISO • ISO (International Organization for Standardization) is the world's largest developer of standards. Although ISO's principal activity is the development of technical standards, ISO standards also have important economic and social repercussions. ISO standards make a positive difference, not just to engineers and manufacturers for whom they solve basic problems in production and distribution, but to society as a whole.
The International Standards which ISO develops are very useful. They are useful to industrial and business organizations of all types, to governments and other regulatory bodies, to trade officials, to conformity assessment professionals, to suppliers and customers of products and services in both public and private sectors, and, ultimately, to people in general in their roles as consumers and end users.
ISO standards contribute to making the development, manufacturing and supply of products and services more efficient, safer and cleaner. They make trade between countries easier and fairer. They provide governments with a technical base for health, safety and environmental legislation. They aid in transferring technology to developing countries. ISO standards also serve to safeguard consumers, and users in general, of products and services - as well as to make their lives simpler.
Who ISO is • ISO is a network of the national standards institutes of 156 countries, on the basis of one member per country, with a Central Secretariat in Geneva, Switzerland, that coordinates the system.
ISO is a non-governmental organization: its members are not, as is the case in the United Nations system, delegations of national governments. Nevertheless, ISO occupies a special position between the public and private sectors. This is because, on the one hand, many of its member institutes are part of the governmental structure of their countries, or are mandated by their government. On the other hand, other members have their roots uniquely in the private sector, having been set up by national partnerships of industry associations.
What makes ISO 9000 and ISO 14000 so special • The ISO 9000 and ISO 14000 families are among ISO's most widely known standards ever. ISO 9000 has become an international reference for quality requirements in business to business dealings, and ISO 14000 looks set to achieve at least as much, if not more, in helping organizations to meet their environmental challenges.
ISO 9000 is concerned with "quality management". This means what the organization does to enhance customer satisfaction by meeting customer and applicable regulatory requirements and continually to improve its performance in this regard. ISO 14000 is primarily concerned with "environmental management". This means what the organization does to minimize harmful effects on the environment caused by its activities, and continually to improve its environmental performance.
reducing operating costs; • protecting the customer’s safety and health; • enhancing staff productivity; • maximizing the use of resources; • promoting growth andachieving market recognition for the company; • enhancing customer satisfaction; • overcoming language barriers; • facilitating fair competition in the market Some benefits it was considered that international standards can bring
Hospitality • housekeeping – icons, terminology, people and training, security, minimum standard for the room product, wattage/plugs, air-conditioning/heating/water temperature, health and safety; • front office – a common international registration form; • food and beverage – food and personal hygiene, “truth in menu”, safety, core competence for staff, purchasing, service providers, environmental issues, performance and product evaluation
Any standards will need to: • facilitate trade in services among the different market players: hotels, travel agencies, transportation media, etc.; • specify the delivery of specific services to customers; • establish basic requirements for services to fulfil in order to facilitate the establishment of a fair level of competence.
