When many think of Six Sigma, they first think of massive corporations utilizing the methodology for quality and process improvement. They do not generally associate it with the mom-and-pop shop down the street. The truth is that plenty of smaller companies use the Six Sigma method to optimize their businesses. The only reason that most people only associate Six Sigma with large organizations is that massive companies and the currency levels that they are dealing with make for splashier headlines. If you run a smaller company, it can be hard to relate the dealings of one of these big corporate entities to what you are doing in your own organization. Let’s look at a more compact business today and how it was able to use Six Sigma to improve its operations.
Change can be difficult and can be met with a significant amount of resistance from your team. In giant corporate structures, the members of the team who are not on board can be difficult to notice until it is too late. Also, with a large organization, a lot of the minutiae involved in improvement processes can be lost in translation. For these reasons, a small company has some major advantages in the implementation of quality improvement strategies. For Ideal Aerosmith, the bulk of its improvement came from its team adopting a fairly simple Six Sigma tool known as a scorecard.
Ideal Aerosmith Had a Problem
Ideal Aerosmith began in 1938 and has facilities in both Minnesota and Arizona. The company’s bread and butter is in the designing and manufacturing of motion simulators that are utilized as test equipment for aviation. Along with this main aspect of its business, the company also provides assembly services and engineering assistance for commercial test equipment.
Approximately 100 people work at Ideal Aerosmith and the culture among the staff has always been one of dedication to customer service and company growth. For a number of years, a solid amount of profitability allowed the team to focus on those two facets of the organization that they felt were most important. Unfortunately, as time went on, the level of profitability began to dip as market conditions changed. The organization had been regularly working with the ISO 9001 quality management system but only saw marginal improvement and only sporadic involvement in keeping up with its requirements. Lonnie Rogers, the president of Ideal Aerosmith, knew that the organization would have to improve significantly in order to remain competitive and provide the best service for its customers.
A road trip opened the doors to his company seeing incredible benefits from embracing the Six Sigma method.
Many of us are familiar with putting on a podcast or audiobook to help pass the time during a long drive. Some even like to put on recordings that focus on self-help. For Rogers, a road trip taken during this period provided the perfect opportunity to hear the perspectives of other business owners. He listened to an audio recording of the former CEO and president of General Electric, Jack Welch. What Welch had to say about Six Sigma sparked his interest, and he decided to look into what it could do for Ideal Aerosmith.
Rogers had some hurdles to consider in taking this idea to Ideal’s management team. The team had a great sense of camaraderie and was a collectively easygoing bunch. While this was ideal for a pleasant working environment, there was concern that this approach ultimately played a factor in leaving the larger problems in the organization unsolved out of a group-wide desire to not rock the boat. Another potential roadblock would be that Ideal was not General Electric. The company did not have the resources to allow for multiple implementations in pursuit of improvement. The margin for failure was small, so if Ideal was going to make a go of Six Sigma, the method would have to work the first time out.
Rogers brought in a Six Sigma service provider to go over the costs and consequences of implementation with the team. Management expressed concerns about the costs as well as showed skepticism about the benefits of embarking on this journey. After collectively going over the pros and cons, the company’s capability and resources, the possibility of the project taking away from everyday business, and the need to overcome potential employee resistance, an agreement was made. Ideal Aerosmith was going to see just what Six Sigma could do to improve its operations.
Ideal Aerosmith Utilizes a Six Sigma Scorecard
Ideal began its Six Sigma project with a gap analysis and an assessment of the organization’s performance. For the gap analysis, it was important to the team to get an unbiased perspective, so they brought in consultants. It was found that inventory management, engineering, and project management were all areas that could benefit from improvement. The analysis also found that the use of ISO 9001 was not an ideal match for Ideal as a quality management system. Ideal would need to change its QMS approach to focus on the process and business approach instead of the rigid documentation required by the current QMS. Modifying its QMS would allow for sustained process improvements as well as the incorporation of Six Sigma.
Once the various areas for improvement were identified, the team worked out an implementation plan that incorporated its vision. In order to make sure that the entire organization was on the same page, all employees were trained in Six Sigma awareness. The company’s vice president introduced the Six Sigma scorecard company-wide, in order to help keep the transition as simple and thorough as possible. The scorecard covered process performance, recognition, profitability, and employee involvement.
Implementation of the scorecard took about two months. The company organized its recommendation and recognition processes, which allowed for the measurement of departments among management. The results were then posted on an intranet bulletin board and discussed during meetings. Measurements would then be taken to compare against the organization’s goals. After a year, the company evaluated these measurements to see which ones provided significant value. The scorecard would then be revised to reflect the changing needs of the company.
The company found the Six Sigma scorecard to be beneficial during its journey in a number of ways. It was a simple tool that allowed for the Six Sigma method to begin quickly. The scorecard also made it easy for employees to track their progress. Accountability improved as well as the company’s system of checks and balances. The scorecard also provided measurements that facilitated improvement as well as assessed the progress of the company as a whole, beyond the individual employee.
The Outcome Was Impressive
Ideal Aerosmith showed some pretty incredible improvement a year after adopting the Six Sigma methodology and utilizing its scorecard tool. On-time deliveries jumped from 60% to 90%. A 25% improvement in production and engineering labor efficiencies was reported, as well as a 5% increase in profits. Other improvements included improved teamwork, more reliable data, increased confidence from customers, and better staff communication. Management is now trained at the Six Sigma Green Belt level, and engineers are trained in quality function deployment and problem-solving.
3 Best Practices for Implementing Six Sigma in a Small Business
Train and involve staff early
Ideal Aerosmith found it beneficial to get all of its staff involved in the Six Sigma journey right when it began the process. This served to help promote unity among the staff toward a collective cause.
Keep the process simple
Ideal Aerosmith was able to keep staff engaged and committed by utilizing a scorecard. This simple tool helped simplify the Six Sigma process and allowed employees to easily monitor their progress. It would have been more difficult for the staff to stay committed to the project if the process was complex and progress was not as easy to interpret.
Keep it fluid
One thing that is easier with a small business is the ability to make revisions when they are needed. Ideal Aerosmith was able to change its measurements over the course of the year based on the need to adapt to changing issues that were found. The ability to navigate these changes played a significant role in its success.
Six Sigma in Small Businesses
Ideal Aerosmith was definitely able to see major improvements from its use of the Six Sigma methodology. This example shows that advancements in things like quality, profitability, and customer satisfaction that come from the utilization of these tools are not exclusive to massive corporations. Ideal Aerosmith has only around 100 employees. There are examples available of companies that are much smaller than Ideal that have had great success with Six Sigma as well. The Six Sigma method can be beneficial to all kinds of companies, whether large or small. Smaller companies only look at the benefits gained by large organizations and prorate the costs associated with those benefits to accommodate their own needs. Improving quality should be a goal of every business, and Six Sigma can help any business get there.