Six Sigma Business Scorecard : Creating a Comprehensive Corporate Performance Measurement System

Praveen Gupta, A. William Wiggenhorn0071417303, 9780071417303

Six Sigma has become a widely recognized strategic tool to improve business performance and profitability. Many books cover basic Six Sigma concepts, but none detail the most critical element of its improvement methodology: performance measurements.Without a strong grasp of performance metrics, a company can have no clear, quantitative indication of its quality improvement. The is a unique approach to measuring performance. It allows companies to track their improvements in quality and profitability – and make adjustments if such improvements are not up to expectations – while implementing Six Sigma. Without a comprehensive performance measurement strategy, your company can’t hope to reap the many benefits of Six Sigma. This guidebook will show you how to implement a successful, statistically rigorous Six Sigma program.* Provides numerical methods for evaluating a corporation’s Six Sigma success (or lack thereof)* Written by an author with twelve years teaching experience at Motorola University* Builds on the recognized Business Scorecard approach

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Table of contents :
TeamLiB……Page 1
Cover……Page 2
CONTENTS……Page 9
PREFACE……Page 25
ACKNOWLEDGMENTS……Page 27
INTRODUCTION……Page 29
TECHNOLOGY AND GLOBALIZATION……Page 36
MACRO ECONOMIC MEASURES……Page 37
EVOLUTION IN PERFORMANCE MEASUREMENTS……Page 38
JURAN’S FINANCIAL AND QUALITY TRILOGIES……Page 40
BUSINESS TRILOGY……Page 41
ISO 9000 QUALITY MANAGEMENT SYSTEM……Page 42
PROCESS THINKING……Page 44
MALCOLM BALDRIGE NATIONAL QUALITY AWARD GUIDELINES……Page 45
SIX SIGMA BUSINESS SCORECARD……Page 49
COMPLEXITY AND PERFORMANCE……Page 52
COST OF POOR PERFORMANCE……Page 53
BASICS OF SIX SIGMA……Page 56
TRADITIONAL APPROACH TO SIX SIGMA……Page 57
THE BREAKTHROUGH APPROACH TO SIX SIGMA……Page 58
DEFINE……Page 59
MEASURE……Page 61
ANALYZE……Page 66
IMPROVE……Page 71
CONTROL……Page 72
CHALLENGES IN IMPLEMENTING SIX SIGMA……Page 74
CHAPTER THREE NEED FOR THE SIX SIGMA BUSINESS SCORECARD……Page 78
MISSING RATE OF IMPROVEMENT……Page 80
INSUFFICIENT PROCESS PERFORMANCE MEASUREMENTS……Page 81
DEMING’S 14 POINTS……Page 84
LIMITS OF ISO 9000……Page 85
SHORTCOMINGS OF SIX SIGMA MEASUREMENTS……Page 88
LIMITS OF THE BALANCED SCORECARD……Page 89
DEVELOPING A NEW MEASUREMENT SYSTEM……Page 91
BUSINESS AND LEADERS……Page 94
INFORMATION AGE PARADIGM……Page 96
SIPOC ANALYSIS FOR CONSTRAINTS……Page 98
MANAGING THE PROFITABILITY PROCESS……Page 100
EXTERNAL FACTORS……Page 101
SIX SIGMA BUSINESS SCORECARD……Page 102
BUSINESS PROCESSES TO CONSIDER……Page 103
ELEMENTS OF THE SIX SIGMA BUSINESS SCORECARD……Page 104
1.LEADERSHIP AND PROFITABILITY……Page 106
2.MANAGEMENT AND IMPROVEMENT……Page 108
3.EMPLOYEES AND INNOVATION……Page 111
4.PURCHASING AND SUPPLIER MANAGEMENT……Page 113
5.OPERATIONAL EXECUTION……Page 114
7.SERVICE AND GROWTH……Page 118
SIX SIGMA BUSINESS SCORECARD MEASUREMENTS……Page 119
BUSINESS PERFORMANCE INDEX……Page 120
CORPORATE DPU AND DPMO……Page 121
COMPARING BALANCED SCORECARD AND SIX SIGMA BUSINESS SCORECARD……Page 122
LEADERSHIP AND IMPROVEMENT……Page 124
EXTENT OF IMPROVEMENT……Page 125
BUSINESS OPPORTUNITY ANALYSIS……Page 126
ORGANIZATIONAL ADJUSTMENTS……Page 127
VISION……Page 129
GOALS……Page 130
SYSTEMS THINKING……Page 131
EMPLOYEES’ INVOLVEMENT……Page 132
TEAM STRUCTURE……Page 133
UNDERSTANDING MEASUREMENTS……Page 134
IDENTIFYING PROCESS MEASUREMENTS……Page 135
ACTION PLAN FOR PERFORMANCE……Page 138
PROGRESS REVIEW……Page 141
CHAPTER SIX SIX SIGMA BUSINESS SCORECARD DEVELOPMENT……Page 144
PROFITABILITY VISIBILITY……Page 146
MEASUREMENT FAILURES……Page 147
FEATURES AND BENEFITS OF THE SIX SIGMA BUSINESS SCORECARD……Page 149
IMPACT OF CUSTOMER REQUIREMENTS ON MEASUREMENTS……Page 150
FACTORS INFLUENCING PROFITABILITY……Page 152
GROWTH AND PROFITABILITY……Page 153
OWNERSHIP FOR PERFORMANCE……Page 155
STEP-BY-STEP DEVELOPMENT OF THE SIX SIGMA BUSINESS SCORECARD……Page 156
SAMPLE MEASUREMENTS……Page 158
BPIn EXAMPLE……Page 159
CHAPTER SEVEN IMPLEMENTING THE SIX SIGMA BUSINESS SCORECARD……Page 162
BUILDING THE BUSINESS MODEL……Page 163
ESTABLISHING THE BPIn……Page 164
ESTABLISHING SIX SIGMA BUSINESS SCORECARD MEASUREMENTS……Page 165
ENSURING DATA COLLECTION CAPABILITY……Page 167
WAR ON WASTE……Page 169
MANAGING CHANGE……Page 170
INTEGRATING TECHNOLOGY AND THE SIX SIGMA BUSINESS SCORECARD……Page 173
SIX SIGMA BUSINESS SCORECARD AND BUSINESS SIZE……Page 176
IMPLEMENTING IN A SMALL BUSINESS……Page 179
MANAGEMENT REVIEW……Page 182
LEADERSHIP PERFORMANCE REVIEW……Page 185
EMPLOYEES’ PERFORMANCE REVIEW……Page 188
MANAGEMENT PERFORMANCE REVIEW……Page 189
COMPENSATION FOR PERFORMANCE……Page 192
ANNUAL REVIEW……Page 193
DOW JONES INDUSTRIAL AVERAGE COMPANIES……Page 196
PERFORMANCE AND PROFITABILITY……Page 197
MEASUREMENTS FOR GROWTH AND PROFITABILITY……Page 200
BALANCING THE SIX SIGMA BUSINESS SCORECARD FOR GROWTH AND PROFITABILITY……Page 201
BUSINESS PERFORMANCE INDEX (BPIn)……Page 203
MANAGING SALES……Page 206
REDUCING COSTS……Page 207
FACILITATING GROWTH……Page 209
INSPIRING FOR INNOVATION……Page 210
LEADERSHIP CHALLENGES……Page 212
LESSONS IN LEADERSHIP……Page 215
PERSONAL PRACTICES……Page 217
LEADERSHIP EXPECTATIONS……Page 218
LEADERSHIP ROLE MODELS……Page 220
LEADERSHIP CHARACTERISTICS ACCORDING TO THE MBNQA GUIDELINES……Page 222
LEADERSHIP IMPROVEMENT……Page 224
CHAPTER TWELVE SIX SIGMA BUSINESS SCORECARD VALIDATION……Page 226
THE 10 BPIn MEASUREMENTS……Page 227
2. PROFITABILITY (PERCENTAGE OF NET INCOME)……Page 228
4. RECOMMENDATIONS PER EMPLOYEE……Page 229
6. SUPPLIERS’ DEFECT RATE……Page 230
7. OPERATIONAL CYCLE TIME VARIANCE……Page 231
9. NEW BUSINESS/TOTAL SALES……Page 232
APPLICATION OF BPIn TO DOW 30 COMPANIES……Page 233
CORRELATION BETWEEN BPIn AND PROFITABILITY PERFORMANCE……Page 235
CHAPTER THIRTEEN INTEGRATING THE SIX SIGMA BUSINESS SCORECARD AND QUALITY MANAGEMENT SYSTEMS……Page 238
SIX SIGMA BUSINESS SCORECARD FOR EFFECTIVENESS……Page 241
COST CONTAINMENT……Page 243
THE IMPROVEMENT METHODOLOGY……Page 244
STEPS TO INTEGRATE SIX SIGMA AND ISO 9001……Page 248
CONDUCTING GOOD INTERNAL AUDITS……Page 250
BENEFITS OF INTEGRATING ISO 9001 AND SIX SIGMA……Page 251
REFERENCES……Page 254
INDEX……Page 258
ABOUT THE AUTHOR……Page 270