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CHAPTER ONE. TRENDS IN PERFORMANCE MEASUREMENTS
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Technology and Globalization 1 Macroeconomic Measures 2 Evolution in Performance Measurements 3 Juran s Financial and Quality Trilogies 5 Business Trilogy 6 ISO 9000 Quality Management System 7 Process Thinking 9 Malcolm Baldrige National Quality Award Guidelines Balanced Scorecard 14 Six Sigma Business Scorecard 14
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CHAPTER TWO. SIX SIGMA AN OVERVIEW
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Complexity and Performance 17 Cost of Poor Performance 18 Basics of Six Sigma 21 Traditional Approach to Six Sigma 22 The Breakthrough Approach to Six Sigma Define 24 Measure 26 Analyze 31
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CONTENTS
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Improve 36 Control 37 Challenges in Implementing Six Sigma
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CHAPTER THREE. NEED FOR THE SIX SIGMA BUSINESS SCORECARD
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Missing Rate of Improvement 45 Insufficient Process Performance Measurements 46 Deming s 14 Points 49 Measurement Challenges with Quality Systems 50 Limits of ISO 9000 50 Shortcomings of Six Sigma Measurement 53 Limits of the Balanced Scorecard 54 Measurements According to The Goal 56 Developing a New Measurement System 56
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CHAPTER FOUR. THE SIX SIGMA BUSINESS SCORECARD
Business and Leaders 59 Current Accounting Systems 61 Information Age Paradigm 61 SIPOC Analysis for Constraints 63 Managing the Profitability Process 65 External Factors 66 Process-Based Measurements 67 Six Sigma Business Scorecard 67 Business Processes to Consider 68 Elements of the Six Sigma Business Scorecard 69 1. Leadership and Profitability 71 2. Management and Improvement 73 3. Employees and Innovation 76 4. Purchasing and Supplier Management 78 5. Operational Execution 79 6. Sales and Distribution 83 7. Service and Growth 83 Six Sigma Business Scorecard Measurements 84 Business Performance Index (BPIn) 85 Corporate DPU and DPMO 86 Corporate Sigma Level 87
CONTENTS
Comparing Balanced Scorecard and Six Sigma Business Scorecard 87
CHAPTER FIVE. PLANNING FOR THE SIX SIGMA BUSINESS SCORECARD
Leadership and Improvement 89 Extent of Improvement 90 Business Opportunity Analysis 91 Organizational Adjustments 92 Vision 94 Goals 95 Core Competencies 96 Systems Thinking 96 Employees Involvement 97 Team Structure 98 Understanding Measurements 99 Identifying Process Measurements 100 Action Plan for Performance 103 Corporate Plans 106 Progress Review 106
CHAPTER SIX. SIX SIGMA BUSINESS SCORECARD DEVELOPMENT 109
Profitability Visibility 111 Measurement Failures 112 Features and Benefits of the Six Sigma Business Scorecard 114 Impact of Customer Requirements on Measurements 115 Factors Influencing Profitability 117 Growth and Profitability 118 Ownership for Performance 120 Step-by-Step Development of the Six Sigma Business Scorecard 121 Sample Measurements 123 BPIn Example 124
CHAPTER SEVEN. IMPLEMENTING THE SIX SIGMA BUSINESS SCORECARD
Creating Awareness 128 Building the Business Model 128
CONTENTS
Establishing the BPIn 129 Establishing Six Sigma Business Scorecard Measurements 130 Ensuring Data Collection Capability 132 War on Waste 134 Managing Change 135 Integrating Technology and the Six Sigma Business Scorecard 138
CHAPTER EIGHT. ADAPTING THE SIX SIGMA BUSINESS SCORECARD TO SMALL BUSINESSES
Six Sigma Business Scorecard and Business Size Implementing in a Small Business 144 141
CHAPTER NINE. MONITORING PERFORMANCE USING THE SIX SIGMA BUSINESS SCORECARD
Management Review 147 Leadership Performance Review 150 Employees Performance Review 153 Management Performance Review 154 Compensation for Performance 157 Communication with the Community 158 Annual Review 158
CHAPTER TEN. PERFORMANCE, PROFITABILITY, AND STANDARDS
Dow Jones Industrial Average Companies 161 Performance and Profitability 162 Measurements for Growth and Profitability 165 Balancing the Six Sigma Scorecard for Growth and Profitability Business Performance Index (BPIn) 168 Managing for Profitability 171 Managing Sales 171 Reducing Costs 172 Facilitating Growth 174 Inspiring for Innovation 175
CHAPTER ELEVEN. LEADERSHIP FOR PERFORMANCE 177
Leadership Challenges Lessons in Leadership 177 180
CONTENTS
Seven Practices of Good Leadership for Superior Execution 182 Personal Practices 182 Professional Practices 183 Leadership Expectations 183 Leadership Role Models 185 Leadership Characteristics According to the MBNQA Guidelines 187 Leadership Improvement 189
CHAPTER TWELVE. SIX SIGMA SCORECARD VALIDATION
The Ten BPIn Measurements 192 1. Employee Recognition (Percentage of Employees Recognized by CEO) 193 2. Profitability 193 3. Rate of Improvement in Process Performance 194 4. Recommendations per Employee 194 5. Total Spending/Sales 195 6. Suppliers Defect Rate 195 7. Operational Cycle Time Variance 196 8. Operational Sigma 197 9. New Business/Total sales 197 10. Customer Satisfaction 198 Application of BPIn to Dow 30 Companies 198 Correlation between BPIn and Profitability Performance 200
CHAPTER THIRTEEN. INTEGRATING THE SIX SIGMA BUSINESS SCORECARD AND QUALITY MANAGEMENT SYSTEMS
Six Sigma Methodology for Continual Improvement 206 Six Sigma Business Scorecard for Effectiveness 206 Integrating the Six Sigma Business Scorecard with ISO 9001 Cost Containment 208 The Improvement Methodology 209 Steps to Integrate Six Sigma and ISO 9001 213 Conducting Good Internal Audits 215 Benefits of Integrating ISO 9001 and Six Sigma 216
REFERENCES
Index 223
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BOB GALVIN S REFLECTIONS
ecause the Six Sigma Business Scorecard takes the Six Sigma methodology to a new level by creating performance standards, it must incorporate input from Bob Galvin, Chairman Emeritus of Motorola, Inc. Bob is the first CEO who has implemented Six Sigma companywide. During my association with Motorola over about 20 years I have looked up to Bob and his team of executives for lessons in leadership. In 1988 the Leadership section of the Malcolm Baldrige National Quality Award (MBNQA) guidelines was based on Bob s leadership practices when he was CEO of Motorola. His exemplary performance as a leader is still recognized and sought after worldwide. He has a reputation as a visionary. Although he s retired and spends time learning to play the cello and maintaining his energy through athletics, Bob continues to provide leadership advice on various aspects of business and to various sectors, including the U.S. government. Bob is involved in several projects to keep his ever-learning mind active in providing value for society and guidance to Motorola. I sought Bob s thoughts about the Six Sigma Business Scorecard and corporate performance in the current business environment. His personal vitality, the depth of his convictions, and his enthusiasm for sharing ideas are evident in his reflections.
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