In 1997, SYLVANIA was facing numerous challenges. Competitors were moving to low-cost manufacturing areas, prices were dropping, and the company’s cost of quality—managing scrap, customer returns and quality inspections—was estimated to consume 15 percent of sales.
Intent on turning this situation around, SYLVANIA’s president approved a plan for quality to make the company more competitive and to improve the way SYLVANIA’s seven divisions worked together. He also presented this challenge: For every dollar invested in the program, Process Quality Improvement (PQI) had to return $10.
“With programs including ISO 9000 and Total Cycle Time in place, we built on their success rather than start from scratch,” explained Russ Liddle, a director of quality for SYLVANIA. “That was the birth of SYLVANIA’s Process Quality Improvement (PQI), our version of Six Sigma.”
SYLVANIA selected a Six Sigma approach for several reasons. First, a number of major manufacturers, including Motorola and Allied, proved it effective. Second, it fit in with all aspects of the company and processes, including manufacturing, business and design/development. It also worked with the company’s team and project-tracking tools and ISO documentation practices.
Launched in 1998, the SYLVANIA Six Sigma program focuses on key projects and the individuals involved with them. For instance, process engineers and R&D project owners are trained as Black Belts, and key business process owners as Green Belts. And programs are customized and constantly reviewed and upgraded, so results are optimized over time.
The projects support company and division goals that flow down from top-level company objectives. A review of formal project charters for each project ensures a fit with the Six Sigma methodology. Lastly, each project is rated and ranked by its impact on the customer and organization goals and is selected based on its grade.
John Schoonover, a division manager of quality for materials at SYLVANIA and an instrumental program leader, observed, “Having tools in so many hands has helped spread Six Sigma throughout our organization, created the synergies and sped up the culture change we were after. In addition, we created our own teachers and mentors through a Master Black Belt program that gives our best Black Belts an additional nine to 11 weeks of training.”
After five years, SYLVANIA is completing the job of integrating Six Sigma into the corporate culture, and it has established appropriate training for salaried employees. In addition, “graduates” are expected to use tools based on data and continual improvement on their jobs every day.
According to Liddle, the process is working. “Now plant managers are asking for proof that a process is robust before implementing in manufacturing,” he said. “The CFO has directed that Six Sigma be used to improve asset management. An e-commerce group uses SPC to decide if new equipment is needed. We would not have seen this kind of thinking five years ago.”
SYLVANIA teams have clearly proven that Six Sigma can be used outside the manufacturing and design environments. An excellent example is the reduction of breakage at the Bethlehem, Pa., distribution center. After using Six Sigma data collection and analysis tools to identify the root causes of breakage, the team created new guidelines for handling and reporting breakage and enacted a plan to bring it under control. Breakage was cut nearly in half, saving $200,000 annually.
Cumulative savings from SYLVANIA’s Six Sigma program total more than $80 million to date, and savings from last year alone totaled $30 million. SYLVANIA has also reduced the cost of training by about two-thirds by using an in-house team of trainers and incorporating e-learning.
Dr. William T. Franz, director of education and training at SYLVANIA, noted, “While Internet training cannot fully replace ‘face time’ in our traditional Six Sigma module, an e-learning segment lets our PQI candidates train from their desktops, work in small groups and maintain one-to-one contact with their leader while still following activities of others engaged in the module. Over 85 percent of the engineers who participated in the inaugural distance learning program last October stated it was effective. And, we were able to cut company training expenses by nearly 20 percent.”
Finally, and best of all, instead of returning $10 on every dollar that the president wanted with the Six Sigma program, SYLVANIA is returning $15.
J. Jeffrey Johnston is a principal with Greystone Partners (www.greystonepartners.net), a leading marketing communications firm based in New York and Montana.