To Be the Best
In Their Quest for Success, More Medical Device Companies and Their Manufacturing Partners Are Implementing Six Sigma
Stacey L. Bell
Six Sigma has helped Donatelle maximize the efficiency and productivity of its clean room (among other areas). Photo courtesy of Donatelle.
A 75% reduction in product returns from customers. A 62% drop in the rework queue. Change-over times down by 71%, and 66% of parts now fed by “supermarkets” located next to production lines, creating superior quality products and saving significant labor and time.
Such are the gains achieved by Solectron Corp. since implementing Lean Six Sigma in June 2003. At the time, the company was facing financial difficulty, and new President and CEO Mike Cannon was convinced that Lean Six Sigma manufacturing would provide the impetus necessary for a turnaround.
Lean Six Sigma combines the principles of Lean manufacturing with the data-driven methodology of Six Sigma for achieving near perfection in all business and manufacturing processes. A process must not produce more than 3.4 defects per million opportunities while removing waste, improving flexibility and reducing costs.
“We consider Toyota to be the best manufacturer in the world, and we wanted to be the Toyota of the contract manufacturing world,” noted Ashok Tiwari, director of functional excellence for Solectron, which is headquartered in Milpitas, CA.
Therefore, Solectron adopted Toy-ota’s Lean production system, married it with the Six Sigma quality discipline and called the result the Solectron Production System (SPS). A newly hired operations executive from GE Medical and a Japanese consultant trained employees in Lean manufacturing and implemented SPS throughout the company. In less than four years, Solectron has achieved substantial, quantifiable gains in every area, from quality, flexibility and productivity to reduced inventory levels.
A Popular Choice
Solectron is in good company in its choice of Six Sigma as a process improvement methodology. About 80% of the nation’s Fortune 500 companies use Six Sigma, estimated Patricia C. La Londe, vice president of supply chain management for Cardinal Health Inc.’s Clinical Technologies and Services Division in San Diego, CA. La Londe, an American Society for Quality (ASQ) fellow, also serves as a spokesperson for ASQ, which certifies Six Sigma professionals and holds annual conferences on best practices in the discipline.
“It does appear that the major medical device companies are using Six Sigma, too,” La Londe reported. “Consumer product manufacturers may not be as aggressive on the risk and hazard analysis portions of Six Sigma as we are. It is critical to identify what is an acceptable level of defects in products. However, an acceptable level of defects in a pacemaker versus in a radio will be very different due to the impact of a defect.”
As a result, medical device organizations are more likely to strongly emphasize critical to quality requirements as a driver for Lean Six Sigma projects, La Londe said. In comparison, consumer product companies may select a Six Sigma project based on anticipated cost savings.
Medical device OEMs and their outsourcing partners always put product quality first. For decades, manufacturers have turned to total quality management, kaizen and other continuous improvement philosophies to gain a competitive edge—whether in better quality, faster time to market or reduced use of resources. When Motorola introduced Six Sigma in 1985, business executives found yet another path to improving manufacturing excellence.
Over time, the philosophy has evolved, and today it frequently is used to enhance customer service, finance, human resources and other transactional functions as well as manufacturing operations.
“Companies have adopted the methodology to best suit their culture,” explained Richard C. Smith, executive consultant to PricewaterhouseCoopers’ Operational Excellence Group in New York City and co-author of Strategic Six Sigma: Best Practices From the Executive Suite (Wiley; 2002). “Six Sigma takes a business problem, converts it into a statistical problem and then converts that statistical answer into a business solution. Its very rigid statistical steps can be off-putting to some people—for example, to salespeople. Therefore, Johnson & Johnson streamlined and adapted Six Sigma to meet its sales culture. Other companies have customized the methodology for their own use. Today, there is much more flexibility in the model and much more adaptation among companies and among different groups within those organizations.”
A blend of Six Sigma and Lean concepts is extremely popular now, Smith said. Lean focuses on reducing cycle time, waste and the flow of materials on the manufacturing floor, allowing for reduced scrap and inventory and just-in-time manufacturing. However, Smith noted, a Lean process may not meet all of a customer’s needs. Therefore, Six Sigma, with its emphasis on first gathering customer requirements and then designing and executing a process to meet those expectations, is an excellent complementary process. “In the past five or six years, we’ve seen many companies put Lean and Six Sigma together to create an optimal improvement methodology for their own environment,” Smith said.
With the right focus and commitment, using Six Sigma to solve business challenges usually becomes self-funding within the first nine to 12 months of implementation, experts said. Six Sigma black belts—those individuals who have reached the highest level of achievement—typically save companies more than $230,000 per project and can finish four to six projects per year after completing training, reported the Six Sigma Academy, based in Scottsdale, AZ.
Numbers aside, the implementation of Lean Six Sigma will have a huge impact on OEMs for another reason: Its processes allow for “pull” rather than “push” manufacturing cycles. “In the past, as product was consumed in the marketplace, that would create a ‘push’ for additional manufacturing,” explained
Dick Rubin, Solectron’s medical marketing director. “With Lean Six Sigma, cycle times are optimized to the point that you can wait to build the product until it’s already been bought, creating a ‘pull’ model instead. This eliminates waste and has a lot of implications for customers.”
Another element that reduces waste is the use of “supermarkets.” A small amount of material inventory is located next to the production line, providing easy accessibility; first-in, first-out consumption; and visual controls to manage trigger and replenishment. Its tiny size—compared with big warehouses and high racks—helps minimize the risks of excess and obsolescence, Tiwari noted.
Six Keys to Success
To get the most from Six Sigma, experts recommend that firms within the medical device sector follow these six steps.
1. Determine your business goals to ensure Six Sigma is the right philosophy for your organization. As the old saying goes, if you don’t know where you’re going, any road will take you there. To make the most of the implementation of any business improvement methodology, someone needs to do the initial work of determining the company’s current standing in various areas and what results should be achieved and by when. Do you need to lower product defects? Reduce customer returns? Ease the billing process? Six Sigma says you first must talk with customers to find out where your company can improve, since customers ultimately drive a firm’s success.
Companies must work on the things that are most important to their business, with a focus on those things customers value most, explained Greg Eckerman, managing director and a master black belt at the Six Sigma Academy. “You must define all of your customers and what they value,” he said. “For instance, regulatory agencies are a customer and their concerns should be built into your process for developing new products and improving current offerings.”
Eckerman noted that what customers value is a moving target. Different customers will place different values on items such as inventory control and supply chain management, depending on their own priorities. Needs also will change as OEMs and their suppliers achieve ever-higher levels of performance. Regardless, customer feedback must be tied into organizational goals, which, in turn, will be tied into which Six Sigma projects are tackled in what sequence.
To be most effective, companies should aim to gather customer feedback from at least 25% to 30% of their target customer base, Smith noted. “The power of the method is in what customers say about manufacturing defects, service levels, products, etc. You need to talk with a critical mass of customers to achieve a high confidence factor that you clearly understand their needs,” he said.
For a high confidence factor in achieving gains with Six Sigma, companies will spend more time at the outset determining their goals and priorities, talking with customers and then developing a thoughtful pathway to move the company from good to great.
“In the early days of Six Sigma, training was based on learning quality tools and statistical analysis,” Eckerman said. “Today, companies want more confidence that they’re working on the right things. Six Sigma is not a silver bullet, but it does help you focus on doing the right work right the first time.”
In fact, that is one of the changes the methodology has undergone. Six Sigma’s “DMAIC [define, measure, analyze, improve and control steps] was really MAIC until the late ’90s,” said Michael S. Potosky, corporate director of Six Sigma for Motorola, which invented the philosophy. “The define stage was added because Motorola and others were discovering that the methodology wasn’t always being applied to the opportunity that had the greatest impact on the organization. The define stage exists to ensure that the most important issues are being worked on.”
Bob Bubencik, president of Eagle Stainless in Franklin, MA, said companies should take a big picture approach when it comes to Six Sigma. “Most companies take Six Sigma and look for a bottom line cost deduction,” Bubencik said. “It’s not an overnight journey, and it’s not fast. You make gains little by little. How much did Six Sigma save us last week? Not so much. But since we introduced it in 2002, our overall corporate profit is up by more than 10%.”
Little improvements have compounded over time to deliver large gains, Bubencik explained. “One of the biggest company killers is rework. We don’t do much rework because, with Lean Six Sigma, we do it right the first time. When we first used Six Sigma, we wanted to reduce our level of defects. We then looked at our receiving function. We moved a staging area 25, 30 feet closer to shipping and receiving, where the inventory is stored. Employees don’t have to walk a total of 75 miles a year between the two areas now to move inventory. How much is that worth? It’s a soft cost. But that subtle change allowed us to improve throughput by 3% to 5%.”
Currently, Eagle Stainless is focusing its Six Sigma efforts on reducing overproduction, excess inventory and defects because “these areas tend to have the most negative effect and affect our bottom line,” explained Roland “Butch” Souza, a black belt at the company who was hired as plant manager in 2002 and tasked with helping to develop Eagle’s Six Sigma program. Souza has since retired as plant manager, but he continues to train the organization’s 84 employees in Six Sigma, Lean manufacturing and kaizen principles.
As time progresses, so, too, must an organization’s business plan and how it uses Six Sigma. “We concentrated on the low-hanging fruit when we first started—what we could correct immediately,” Souza said. “We’re working on more complex issues now.”
2. Enlist top-level management support. Six Sigma—indeed, any business improvement methodology—requires top leadership’s full commitment and support if it is to produce results, noted Treasa Springett, president of Donatelle in New Brighton, MN. From tying the Six Sigma philosophy into the company’s overall business plan to prioritizing projects, allocating resources and ensuring improvements are implemented, the president/CEO will be integral to any program’s success.
Donatelle first instituted Six Sigma several years ago when addressing a yield problem for a customer. One of its first steps was creating a Continual Improvement Steering Committee—composed of the president, director of quality and regulatory affairs, director of manufacturing, director of engineering and systems manager—to help design and manage the process. The committee continues to oversee the company’s Six Sigma priorities and project today.
“The one common thread in all the success stories is the involvement of senior management,” Potosky agreed. “Continuous improvement, the intent of Six Sigma, requires continuous change. For organizations [and thus the people within those organizations] to change, senior management must be setting expectations for a new or revised measurement system, rewarding those who achieve new high levels of performance [organizational and individual], and communicating the results.”
3. Create a Six Sigma corporate culture. In the most successful implementations, Six Sigma has been instituted throughout the organization, achieving performance gains everywhere from the manufacturing floor to inside the human resources department.
“We have no one sitting in the stands as a spectator in this company. Everyone is a player,” Bubencik said. “Everyone in every area is charged with removing waste and finding ways to make their process work smoother.”
Within six months of joining Eagle Stainless, new employees must earn their Six Sigma yellow belt by completing two to four hours of training. Employees then are encouraged to progress through the green (two weeks of training) and black belt (18 to 24 months of instruction) levels.
“Everyone from manufacturing to finance must have a clear understanding of the process and buy into it. You’re no longer a production worker, you’re an inspector. Everyone in this company is a customer. Manufacturing works to satisfy shipping, for example,” Souza said.
Eagle Stainless maintains project sheets, assigning Six Sigma champions—those who have completed special training—to head each project. One to seven employees may work on any given project; teams average three employees. Some projects take as little as two days to complete; others can take six to eight months.
In exchange for constantly being on the lookout for improving one’s area of the company, employees share in the gains they achieve. “I compare it to winning the World Series,” Bubencik said. “You don’t become a champion all by yourself. When you work together and achieve victory, you all get a ring, a bonus and accolades. You share the glory. Here, everyone shares in the accolades and monetary rewards. Sure, there are discouraging times when you get unexpected results, but what matters is what you do with that discouragement. We focus on the big picture, on making gains little by little.” And on winning the ultimate prize: continued customer loyalty and satisfaction.
Solectron, winner of two Malcolm Baldrige National Quality Awards, also has focused on creating a Lean Six Sigma culture throughout its more than 50 locations on five continents. Most of its 50,000-plus employees have undergone training, and each site has a dedicated Lean Six Sigma team responsible for training employees and deploying SPS throughout the location.
4. Think beyond manufacturing applications. Certainly, Six Sigma has helped companies reduce waste and streamline the factory floor, but its ability to improve customer relationships is fast becoming a competitive advantage.
“Customers want to know if you have a successful problem-solving thought process that encompasses your whole organization, and Six Sigma is very powerful when it’s agreed upon and supported by everyone in the organization,” said Jeff Esselman, Donatelle’s director of quality and regulatory affairs and an ASQ-certified black belt. “The process makes you define the problem so well and design a path to follow so thoroughly. When you’re sitting with the customer and going through the process—defining project parameters, identifying critical to quality requirements and determining how to most efficiently apply resources—it leads to more efficient time lines and an increased ability to deliver great quality at a competitive price. You get payback before the project even begins just by spending that time with them.”
Companies also get payback by applying Six Sigma tenets to other parts of the business. “As Six Sigma becomes part of your culture, it becomes ingrained in how you think about everything,” Esselman said. From streamlining customer communications and billing to allowing human resources employees to find ways to help everyone in the company perform at his or her best, the management philosophy is increasingly being used to improve processes in nontraditional areas.
5. Keep growing. Many companies jump-start their Six Sigma effort by hiring black belts from another company and employing a consultant to train their other employees. “Any credible Six Sigma program strives to develop self-sufficiency in the client,” noted Eckerman, adding that employees should learn Six Sigma on projects that are meaningful to the client and be able to lead projects independently within one year of initial instruction.
“When we first implemented Six Sigma, we searched for black belts who were certified, not just trained,” La Londe said. “Just because you have black belt training doesn’t mean you know how to apply it. It’s very helpful when you’re hiring a black belt to have an independent third party’s assessment that your expert is indeed competent at demonstrating cycles of learning and achieving results.”
How will black belts stay infused with new ideas over time? By participating in a variety of projects. “If you’ve only worked on how to reduce the variation in a particular manufacturing process then you will have a narrow perspective on providing solutions,” La Londe explained. “Also include transactional projects to round out the black belts’ experience and sharpen their skills in both Lean and Six Sigma methodologies.”
“One of the best ways to advance is to do more projects and interact with more people in different areas,” Esselman agreed. “Expertise is about more than knowing how to use the tools.” It’s the perspective and experience practitioners will pick up from others over time.
6. Cultivate collaboration. Six Sigma works well in individual companies. Combined with similar programs throughout the supply chain and at the customer’s company, real power can result.
“You, as the OEM, will have the greatest success when working with suppliers who have the capability to deliver what you value the most, who truly understand your processes, and who can analyze their own data and have mechanisms in place to track processes,” Eckerman said. “Six Sigma can help you speak the same language, and the good thing about Six Sigma is anyone who does it well has the data to prove it.”
“Motorola has learned that it is impossible to provide our customers with products and services developed at a Sigma Level Six if we are receiving products and services from our suppliers at a Four Sigma. Therefore, the OEM must insist upon the highest level of quality from its contract manufacturers,” Potosky said. Note that the difference between Four Sigma, in which parts are 99.379% error-free, and Six Sigma, in which parts are 99.99966% error-free, may not seem significant, but simply moving from Four Sigma to Five Sigma requires a 27-fold improvement in performance.
To ensure your outsourcing partner can meet your expectations, every OEM should consider the answer to this question: When you go onto a prospective partner’s floor, what do you see?
“Everyone talks about practicing Lean Six Sigma today, but you should be able to see it in action during your visit,” Rubin explained. “The proper use of Lean Six Sigma reduces the factory floor size, allowing for very complex system integration in a very compact, efficient area.”
Some contract manufacturers have found that the success of their Lean Six Sigma program has so impressed their customers, they are seeking yet another service. “We’re getting requests from more customers to do Lean Six Sigma with them and help clean the entire supply chain,” Tiwari said.
From cleaner supply chains to faster product launches, Six Sigma is delivering solid advances to companies seeking to be the best.