INTERNATIONAL UNIVERSITY OF JAPAN

FINAL EXAM
Operation Management: Case Analysis: Six Sigma at 3M, Inc.
Dulguun Damdin-Od/2B0008 3/15/2011

Question No.1: Case Analysis - Six Sigma at 3M, Inc. 1. What will be the benefits, costs, and risks of the Six Sigma program, and how they will be tracked and reported? Six Sigma program could be defined by benefits, costs and risks. For the organization, the Benefits of Six Sigma will be: Low cost savings Analyzing data for making assessment Product or services quality improvement by the customers requirement Practical supply chain management Increase stabilization and improvements Saving process cycle time and wasting less Skillful staffs and vocational training

In the individual level, it will be different, such as: Vocational training and professionalization of individuals Proper knowledge of technology utilization Internationally recognized reputation, which met international standard of skill We can see the real success of Six Sigma, which is initiated and implemented at the 3M and resulted positive impact on the company. The customers, employees and shareholders have definitely benefited to this success.

Costs: Process cost involves more people, while implementing the Six Sigma program. To implement the project properly, there should be specialized team with high skills or should improve existing employees ability. The team member selection, which impacts on cost of employing and capacity building, is essential. Although, this cost should be carefully considered in terms of saving extra cost of consulting and timing by the 3M.

Risks: As well, risk should be reduced in order to escape of failing project in Six Sigma program implementation. Due to keep its success, companies exercise some sufficient actions of avoiding risks along with Six Sigma program. There are some steps to avoid risk, such as right selection of project, objectives and investment, as well Six Sigmas standard methods utilization and introduction to the organization.

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2. How should the various functional areas in the organization be included in the Six Sigma initiatives, and what role should senior and middle management play in this change initiative? As a project implementing process cycle, there are Six Sigma initiatives that should be included, such as: Marketing / Growth (Commercial cycling, Sales, Marketing, Customer satisfaction) Operations / Cost (Production and Retailer) Finance / Cash (Inventory and Receivables) As well, Management Strategy, Human Resources, Information Technology and Risk management are crucial in changing initiatives. Managers should encourage employees during the changing initiative. It means that managers encouragement to give motivation to employees is essential in order to succeed in the cultural change when restructuring organization. And this must show managers eagerness for benefits of Six Sigma initiatives for customer satisfaction.

3. What role should Six Sigma play in corporate strategy? It is well-known that Six Sigma creates proper procedure through continues improvement of the production and process. The basic principles of this system are a careful consideration of customer needs and business requirement, a measurement of performance gap, an analysis of fundamental source and an implementation of frequent correction along with modification. Therefore, Six Sigma takes part in the corporate strategy, such as connecting metrics/targets to critical quality factors, and addressing capability lacks with opportunity to improve project initiative. Hence, Six Sigma covers some important techniques to execute the corporate strategy. Sometimes it is necessary to change or improve basic procedure of company for accurate procedure and management. In the level of improving procedure, 3M Inc. had undertaken two core management actions of Strategic Project Selection (SPS) and Project Management Infrastructure (PMI). For the Strategic Project Selection (SPS), Six Sigma had improved the procedure of Strategic positioning, Customer requirement and Prioritization in terms of the strategic objectives of the company.

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For the Project Management Infrastructure (PMI), the program ensures the procedure improvement according to the standard method such as Standard project management methodology and Project leader accountability. SPS and PMIs impacts on each other results program success.

4. What are the human resource implications for deploying Six Sigma (e.g., employee selection, roles, organization structure, reward systems)? In order to implement Six Sigma program successfully, a support of necessary infrastructure and human resources is crucial. Capable, available, motivated and aligned human resources is key element of the successful implementation, because of the following reason: Capable (technical knowledge and experience) Motivated (positive result and belief on capacity) Available (proper timing, resource and space) Aligned (with contribution and support to achieving objectives)

A changing cultural norms and attitude of the company is one of the requirements of implementing Six Sigma program. All section employees should be appropriately trained to support successful implementation of Six Sigma program. The levels of Senior management, Functional managers, Quality leaders and Program leaders, assistants should be included. Senior management should adopt Six Sigma principles into their operational plans, since they are the key body of developing the corporate strategy and should be familiar with aspects of Six Sigma. Functional managers are charge of the implementation of projects in their section and have to be skilled in process management and updating senior management. Quality leaders take charge of supervising the program implementation, supporting the functional management and conducting training. For example there is Six Sigma Master Black Belt training, which should be taken by the leaders who want to be a best quality leader.

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Project leaders have direct responsibility of managing certain projects and its daily process under the supervision of the quality leaders. It is necessary that they should understand all Six Sigma tools, methodology and application in the level of Black Belts. Assistant Project Leaders are the employees responsible for assisting in daily management process of Six Sigma program who also have good understanding of Six Sigma tools in the level of Green Belts. As well, there is a crucial element of motivation in implementation of Six Sigma, such as rewards and acknowledgment. When the initiatives or performances are properly rewarded or acknowledged as a motivation, employees will be happy and encouraged to further improvements. There is traditional some methods of motivation in every organization, such as bonuses and certificates for acknowledging performances or successes in front of their colleagues and co-workers. Some companies utilize a bonus structure by the level of Black Belts and Master Black Belts, and highlight their benefits to the company and most of them organize a Luncheon Celebration for successful completion of the project to inspire all community of the organization or members of program implementing unit. 5. How will Six Sigma affect the innovative culture at 3M, and is Six Sigma enough? The innovation is always crucial factor of success and growth. 3M introduced Six Sigma in 2001 and increased its sales volume by products produced after Six Sigma program. On the other hand, the company lost revenue level by 1/4 during the Six Sigma program. The BusinessWeek has remarked that as "while process excellence demands precision, consistency, and repetition, innovation calls for variation, failure, and serendipity". As well, experts have noted the blanket approach to Six Sigma is generally not a good idea at least at a company like 3M. In the last few years, 3M has got its management back to former management from Six Sigma program, and Mr. George Buckley, the new CEO of 3M, has highlighted 3M is a technology company so its essential that we keep investing in and creating new technology and product platforms, and Six Sigma is restrained as a research and development level. Also he criticized that Six Sigma only responsible for creativity.

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The critics argued that 3M could improve its operation effectively and increase financial returns under the McNerney management. Moreover, experts stressed that DMAIC should work in the limit such as producing and processing order along with engineering. The 3Ms strategic business development director said that new CEO brought a hope of creativity again and quoted: "We feel like we can dream again." Based on these factors, it is easy to identify that there is the strong efficiency and creativity. The Six Sigma is a perfect system of controlling procedures and work flow by evaluating mathematical calculation. But Six Sigma system is not designed to measure innovation and creativity, which are difficult to compute. That is why Six Sigma was not suitable at all level, when 3M business is more to new and practical products deeply related with growth and innovation. In doing so, Six Sigma program should leave the design team and the creativity team out of program.

In conclusion, 3M Inc., as a one of the world-wide known top company on new products and solution, should consider more reasonable methodology towards efficiency and innovation. For example, combining Innovations factors (Risky and right product selection) with Six Sigma (less risk and right process selection) could be more appropriate method.

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Question No.2: Short essay Briefly explain Monozukuri. Do you think Japanese manufacturers can keep competency over foreign manufacturers (e.g., firms in Korea or China) by applying Monozukuri? The Monozukuri means - development, production, procurement and service understanding. Also Monozukuri could be explained by chain process of Creation-Copy-DistributionCommunication. The main essence of Monozukuri is creating value added product and deliver it to customers. In doing so, Monozukuri is the production process which involves high professional workforce or advanced technology. Monozukuri mostly occurs in chain production process, as I mentioned above, such as designing, engineering, assembly and construction etc. It is crucial that companies must have an organizational capability in order to keep competitiveness and to improve its production process. For having strong Monozukuri, different difficulties and challenges are faced and reacted by the Japanese experts. The introduction of JIT, TPS and other kaizen tools could strong support to Japan for its achieving capability. The Monozukuris organizational capability covers Integration, Improvement and Advancement with following peculiarities, such as: 1. Assuring proper knowledge of the designing process to facilitate development. 2. Consistency and reliability of the main line are improved where functionality is guaranteed. 3. Reduce costs without having unnecessary inventory using JIT, Kanban and TPM. 4. Short production line with few staffs, but high production using 5S and TQC. China has huge advantage of skilled workforce with low cost in broad exporting market. On the other side, Korea has a different strategy that importing cheaper workforce from developing countries. However, Japan has a unique methodology of manufacturing in designing and redesigning for optimization with strong commitment on delivering quality. In order to keep up the other fast developing Asian countries, Japan should maintain process of manufacturing, continuing JIT product with TPM cost reduction. To strengthen its competitive advantage, Japanese Monozukuri should maintain production of value-added products, which are produced by highly skilled engineering workforce with high quality and copyright protected. That would be key element of competing with other countries.

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