1. What are the potential benefits and risks of implementing Six Sigma at 3M? Benefits:
Six sigma not only provides a platform to improve existing processes but also enables 3M to design new processes in an efficient manner so that it results in lowered costs, increased sales, improved customer satisfaction, improved managerial development, increased cash flow and increased pace of development of 3M. 3M Acceleration was implemented by 3M to improve efficiency and pace of product development and commercialization cycles so that 3M could reap greater benefits on their investments. Also new and better products reach the customers faster through 3M Acceleration which leads to better customer satisfaction. As part of the Six Sigma initiative, 3M tried to improve their online presence as well via E productivity.
By doing so, 3M will be able to better connect with the consumers which enables them to render quality service to the customers. Application of Six Sigma also demanded to make purchase decisions in smarter and more systematic way. By purchasing better, 3M can offer quality products to customers at competitive prices which will enhance their brand further. Six Sigma will also enable 3M to manage costs better. 3M can cut down on unnecessary spending by careful tracking of both direct and indirect costs. Six Sigma is a competency that can be transferred within organization. Six sigma is a core competency of 3M; it is ingrained in 3M’s system. It’s a difficult competency to build within a corporation (across firms in a corporation) and hence it’s inimitable, serving as 3M’s competitive advantage. Common approach with common goals.
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Case Analysis: Pizza Hut - A Customer Loyalty Program List of Facts In 1958 the Carney brothers opened their first Pizza Hut restaurant. The company was so successful that by 1977 it had more than 3,200 restaurants. Further it was acquired by PepsiCo. The quantity of restaurants increased to 12,300 and Pizza hut became the worlds largest pizza restaurant chain. In 1986 Pizza Hut implemented the ...
Risks:
Project, people and tool selection is another key aspect of Six sigma. Any errors in the selection of project, people or tool might lead to devastating effects. Six sigma places lot of emphasis on orderly and consistent approach to provide improved products with little variation. Six sigma requires detailed understanding of processes for successful implementation. Hence, employees should be properly trained on the principles six sigma. If the training program fails, entire system will fail. 3M tried to reduce risks by verifying requirements and outputs (from each stage) with target customers. 3M has to choose right target sample else the verification process will fail. Since 3M will be moving from a multiple quality management program to a single quality management program throughout the organization, every employee in the organization has to buy into the idea of six sigma and its potential benefits.
2. What role should Six Sigma play in their corporate strategy? By incorporating Six sigma, 3M should be able to provide better products at faster pace leading to improved customer satisfaction. It should bring a systematic and strategic approach to purchase decisions (purchase of raw materials) which will reduce costs. Since, it decreases the costs and increases sales, net income for the organization should improve as a result of this transformation. Since it is a process management system, Six Sigma should bring systematic approach to the processes already in place but not increase the overhead time significantly. By improving processes, a corporation will be able to decrease the variation in the output produced. If properly implemented within a corporation, Six sigma should act as a competency which is valuable, rare, inimitable and non-substitutable (VRIN).
It is difficult to implement a process improvement program like Six sigma across various firms in a corporation.
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If a corporation can successfully implement such a program, it will act as a competitive advantage for the corporation (Toyota and lean management system).
One of the main objectives for various firms within a corporation is to have shared vision. Six sigma provides a common approach for different firms with a corporation to work towards common goals. If successfully implemented, Six sigma should act as a skill that can be transferred across firms within a corporation. Six sigma should be aligned with the corporate values/vision of the corporation. 3. What are the human resource implications of Six Sigma deployment? The executives and managers should believe in the improvement that Six sigma will bring to the existing system thus enhancing the value provided to the customers. Employees at the lower levels of hierarchy should be educated on the importance of implementing Six Sigma since everyone in the organization should share similar vision. Rewards and recognition is another aspect that has to be taken care of while looking at human resource implications of Six Sigma deployment. By implementing Six Sigma, an organization hopes to reduce costs and make better profits.
The extent to which each team contributes to the improved profits is based on how effectively they implement Six Sigma. The team lead (Black belt holder) plays an important role in implementing Six Sigma effectively. But the other members play a role in doing that as well. So how are teams and individual members in the team rewarded is a huge question, A compensation plan that is aligned with the Six Sigma initiative will be helpful. Even HR professionals should have basic knowledge of Six Sigma so that they can implement proper compensation package. They should also have hands on knowledge of various tools that are used in Six Sigma program. HR team should work with Six Sigma Sponsors, Leaders, and Champions to identify elements of the culture that might hinder the achievement of Six Sigma goals. They should also design proper training programs for different employees ( a different training program will be required for a lead as opposed to the programs for a member in the team) 4. How will Six Sigma affect the innovative culture at 3M? Innovations can be broadly classified into two types in the new product development scenario: Product innovation
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Process innovation
The effect of inducting Six sigma at 3M was too much emphasis was given for process innovation while product innovation took a backseat. In financial terms, it was not a bad idea as 3M’s profit grew by 22 percent every year. But it slowed down the product innovation which was at the heart of 3M’s corporate strategy. It decreased costs incurred, improved sales and improved product manufacturing time. But the core ideas of 3M as a corporation was lost since it was difficult for R&D to work efficiently with so much focus on process innovation. Since it requires collecting and analyzing large data, Six sigma does not work well with customer service industry. Also service industry deals with a lot of intangible data which can’t be measured using Six Sigma procedures. Hence implementing Six Sigma across organization has slowed down the creativity which was integral part of 3M’s success. To overcome above limitations of Six Sigma and to take advantage of the improvements it brings to the processes, Buckley revamped the existing structure at 3M. New structure has 2 different facets: Implement Six Sigma in manufacturing and administrative areas Remove Six Sigma in R&D and invest more
He encouraged risk taking, thus bringing the innovative and creative atmosphere back at the fulcrum at 3M. He did that while placing emphasis on process improvement through Six Sigma program at the manufacturing and administrative areas, thus taking advantage of both improved output and creative rush.
