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Implementing Six Sigma via TQM improvement: an empirical study in Taiwan

Jung-Lang Cheng
Department of Industrial Engineering and Management, Cheng-Shiu University, Kaohsiung, Taiwan
Abstract
Purpose This paper aims to review the related literature on TQM and Six Sigma, and then to construct and explore the conceptual framework via an empirical study. Discussions follow on the conceptual framework, and there is a case study on the experience of Kinpo Electronics (KE) company in Taiwan implementing Six Sigma via TQM improvement. Design/methodology/approach The objective of the research is to examine the relationship between TQM and Six Sigma. To achieve this, the paper conducted a conceptual framework with six improvement factors system, product, control, training, technical, and assessment. The six factors are considered in detail in a discussion of the case of KE Company with regard to its implementing Six Sigma via TQM improvement. Findings The results of using TQM improvement activities to implement Six Sigma may be divided into two main paradigm shifts, namely transfer and adjustment. Transfer means the requirements for macro change in implementing Six Sigma via TQM improvement, and adjustment refers to the micro changes undertaken in moving from TQM toward Six Sigma. Practical implications According to KEs experience in Taiwan, TQM is a prime component of Six Sigma, and KE added a Six Sigma program to its existing business system which used almost all of the elements of TQM. The formula is KEs current business system Six Sigma TQM. Based on this, TQM remains important and prevalent in modern industry. Originality/value The value of the paper is that TQM is the fundamental basis of Six Sigma. The new quality management system is integrating TQMs activities with the Six Sigma approach to gain a new competitive advantage. Keywords Six Sigma, Total quality management Paper type Case study

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Introduction The Six Sigma improvement methodology has received considerable attention recently, not only in the statistical and quality literature, but also within the general business literature. World-class transnational enterprises like Motorola, GE, and CitiGroup have achieved great performance in customer satisfaction by the using Six Sigma method (Hoerl et al., 2004). Wyper and Harrison (2000) interpreted Six Sigma as a useful management philosophy and problem-solving methodology that is a direct extension of total quality management (TQM). In fact, Six Sigma has a much better record of effectiveness than TQM, lean enterprise and re-engineering (Bailey et al.,
The TQM Journal Vol. 20 No. 3, 2008 pp. 182-195 q Emerald Group Publishing Limited 1754-2731 DOI 10.1108/17542730810867218

The author would like to thank the National Science Council of the Republic of China, Taiwan for nancially supporting this research under Contract No. NSC: 92-2626-E-230-002. Kinpo Electronics, Inc. (www.kinpo.com.tw/english/) is appreciated for kindly providing the data of practical implementation Six Sigma.

2001). In the history of quality evolution, Six Sigma followed TQM to become the focus of quality management and business administration in the very early twenty-rst century. Although some conceptual differences exist between TQM activities and Six Sigma systems, the shift from TQM activities to a Six Sigma program is a key to successfully implementing a quality management system. The paper seeks to reach the following research goals: . The literature review reveals TQM and Six Sigma are a dichotomous concept, i.e. TQM is separate from Six Sigma, with no connecting points and contacts between the two systems. However, the evolution of quality management systems is a continuous improvement process. The issue of using philosophy TQM of to implement Six Sigma needs to be explored. Furthermore, the research topics of how TQM is integrated Six Sigma and how Six Sigma evolved via TQM activities also need to be answered. . In most literature reviews, experiences of implementing Six Sigma systems are related to organizational culture. Accordingly, the question of how to apply the organizational culture of Six Sigma to Taiwanese enterprises experience must be considered. The paper empirically studies the practice process of TQM activities and Six Sigma programs via the example of one Taiwanese company. After reviewing the literature to acquire a general understanding of TQM and Six Sigma, the paper describes research its methodology and presents research the results of using TQM activities to implement Six Sigma in KE. Conclusions and implications for both practice and theory will end the paper. A review of the literature on TQM and Six Sigma Reading the history of quality management with regard to TQM activities and Six Sigma program, the approach of quality improvement management can be divided into two stages, namely the plan, do, check, action (PDCA) management cycle relationship with TQM activities and the dene, measure, analyze, improve, control (DMAIC) methodology with the Six Sigma program. TQM and PDCA management cycle Bushell (1992) noted that the PDCA management cycle means to build the concept of continuous improvement into daily management activity which data collection on the effectiveness of processes. Figure 1 shows the general concept of the PDCA management cycle that comprises four basic stages (a plan stage, do stage, check age and action stage). A plan conrms the targets (plan stage), the plan is tested in daily management (do stage), the effects are evaluated and the results reviewed (check stage), and appropriate corrective actions are taken on the process (action stage) (Benneyan and Chute, 1993). Dakin and Wood (1995) demonstrated that the PDCA management cycle can serve as a catalyst and a centerpiece for the practices of TQM activities in an organization. Via integrating TQM activities, PDCA translates scientic hypotheses testing into daily management. Most efforts toward process or quality improvement are linked to the Deming PDCA cycle, which is also the most common quality improvement model in the

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Figure 1. PDCA management cycle

TQM framework (Luebbe and Snavely, 1997), and through its integration all activities of the organization business excellence can be reached (Van der Wiele et al., 2000). Six Sigma and DMAIC methodology DMAIC methodology provides a structured framework for solving business problems by assuring correct and effective process execution (Hammer and Goding, 2001). Figure 2 shows each phase of the DMAIC methodology, in which teams take total employee involvement approaches to complete the cycle of process management and

Figure 2. DMAIC methodology

use self-diagnosis skills to fulll the goals of each phase. When all key processes within a business are completed for each of these ve each phases, the business will naturally reach the Six Sigma quality. To ensure the success of a DMAIC methodology, the companys top leaders must undertake the role of Champion, giving active support and encouragement to all business process owners. The process owners in the specic Six Sigma project implementation must emphasize the bottom-line, which has a prot contribution to the business (Byrne, 2003). Although Six Sigma and TQM have different management concepts and philosophies, Six Sigma and TQM operates in the same eld, advocating dedication to a total process and quality improvement approaches (Gordon, 2002). Six Sigma is also a useful management philosophy and problem-solving methodology, and is a direct extension of TQM which is based on the principles and teachings of the Deming PDCA management cycle. Lucas (2002) found that Six Sigma uses a modied PDCA management cycle as its breakthrough strategy for its Americanized kaizen system. In fact, DMAIC is at heart of the Six Sigma strategy, and closely resembles Demings PDCA cycle for continuous improvement (Voehl, 2004). However, quality management transformation from TQM to Six Sigma is a continuous improvement, which asks how precise a transformation system needs to be, what index factors of the transformation system need to be explored, and in what context should factors of the transformation system. The paper uses a case study to understand the signicance of using TQM to implement Six Sigma, to discover the contexts of TQM extension to Six Sigma. An empirical study in Taiwan Although the literature contains many cases of successful applications of Six Sigma, few studies have examined the Six Sigma system in a Taiwanese enterprise. In Taiwan there are more and more enterprises that have implemented the Six Sigma system, although most have not done so for very long. However, there are three reasons why we selected select KE as a case study to consider: (1) The infrastructure of the quality system in KE is very good, as evidenced by it winning the Taiwan governments highest honor of the National Quality Award in 1998, and the Chairman gaining a personal achievement of at the National Quality Award in 1999. KEs upper management has a clear policy of implementing Six Sigma and their efforts have led to considerable success. (2) The kind of Six Sigma implemented by KE involves integrating business strategy with management by objective (MBO). KE implements Six Sigma using TQM improvement tools, i.e. it also can follow the Six Sigma system via a TQM approach, and its experiences in implementing Six Sigma are worth exploring because its particular methodology is not found in the current literature. (3) KE is a model information technology (IT) enterprise in Taiwan. It is the world leader in electronic calculators, Taiwans largest manufacturer of fax machines and HPs main OEM printer supplier. KE was also the rst company to implement Six Sigma projects in Taiwan, doing so in 1994. The reason for KE implemented the Six Sigma system was to meet the requirements of its main outsourcing buyers. While competing through outsourcing has become the

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dominant mode in Taiwans IT industries, different contract electronics manufacturers and own-design manufacturing have emerged as value-added manufacturing suppliers for their outsourcing buyers. KEs main outsourcing buyers include Texas Instruments and HP, and both of which have implemented the Six Sigma system. Consequently, KE also had to implement the Six Sigma system to avoid losing orders. Meanwhile, before adopting Six Sigma, the production department was recording a high rate of defects and customer complaints were frequent. KE thus decided implement the Six Sigma system to benet from its relationship with outsourcing buyers and to increase its competitiveness. KE participated in Motorola University Consulting and Training Services (MUCTS) courses to learn Six Sigma methodology. MUCTS, the education and training division of Motorola, offers courses in Six Sigma concepts and has saved billions of dollars for its parent corporation by practicing what it teaches (Douglas, 2000). The participating members of KE included the general manager, vice general managers and related employees of the quality assurance department. After nishing courses in MUCTS, the upper management considered inviting MUCTS consulting to provide the Six Sigma system, despite the considerable expense of the necessary consulting and training. In the end, KE managers decided to save management cost and make use of the companys solid infrastructure in TQM by developing Six Sigma from their existing TQM mechanisms by themselves. TQM factors to implement Six Sigma Figure 3 displays the quality management history of KE, in which the quality improvement activity can be divided into the PDCA management cycle and DMAIC methodology. The quality level of Six Sigma was 3.5s in 1994 and the value of PPM

Figure 3. KE quality history of Six Sigma and TQM

was 22,700. KE reached the target of 4s in 1995, at which the value of PPM was 6,210. Meanwhile, the quality level was 4.74s in 1999, and the company was awarded the National Quality Award. KE spent four years constructing TQM mechanisms before setting Six Sigma goals and objectives, and had been implementing TQM mechanisms since 1994. These TQM mechanisms were based on a PDCA management cycle. KE started to introduce Six Sigma tools and methods in 1998. During the introduction of Six Sigma, the DMAIC methodology also employed traditional quality improvement tools of TQM mechanisms such as JIT, 5S, process management, and 6s quality of culture mechanisms to achieve Six Sigma goals. KEs TQM improvement factors to implement Six Sigma were based on six indices: system, product, control, training, technical, and assessment (Figure 4). Denition of factors with relationship the literatures review is as follows: (1) System factor System indicates the context of the TQM and Six Sigma quality management system which contain some tools for quality methodology. Voelkel (2005) claimed that the Six Sigma system emphasizes a data driven, process-oriented approach, such as the DMAIC roadmap, which contributes to the Six Sigma projects success. The PDCA management cycle is part of TQM, and is well understood as the platform for quality improvement and policy-led change (Witcher, 2002). Both TQM and Six Sigma systems have common improvement tools, but also some differences. Six Sigma is synonymous with the DMAIC methodology and its associated tool kit. TQM also has related improvement tools that are used in Six Sigma system. (2) Product factor Product means product quality capability index for reaching 6s level. Edson and Zoyhofski (1999) found that product capability index is one way to decide how a system needs to improve toward Six Sigma. TQM is based on 3s level, which controls the upper and lower limit, while Six Sigma has a unique measurement to get zero defects.

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Figure 4. Key factors of TQM extension to Six Sigma

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(3) Control factor Control represents the requirements of quality technology to maintain a steady process. Six Sigma and TQM can only be implemented at an optimum level when the signicant characteristics inuencing nal output are identied, understood, optimized, and maintained (Harrold, 1997). A well-designed, well-executed process keeps TQM and Six Sigma under control at an existing performance level. (4) Training factor Training means to the training and education courses for TQM and the Six Sigma system. Training is a critical success factor for implementing TQM. Six Sigma organizations also need to use a methodology involving fundamental concepts and tools of Six Sigma application to train all individuals (Ingle and Roe, 2001). Hahn et al. (2001) found that the training conditions of Six Sigma and TQM require adding proven concepts and tools, professional techniques and quality skills. Training can create quality awareness throughout an organization, and a common language and problem-solving approach can thus be adopted. (5) Technical Technical indicates the skills of quality improvement. Technical skills of TQM and Six Sigma include statistical and non-statistical topics, such as QFD and FMEA. Six Sigma tends to combine traditional statistical tools with tools from other disciplines, such as FMEA, organizational effectiveness, problem solving, or QFD, and the skills of FMEA and QFD also employed in TQM (Hoerl, 2001). (6) Assessment Assessment represents performance measurement of quality improvement. Via performance measurement assessments of quality improvement, the organization can maintain and increase high levels of quality improvement in areas that pin-pointed as being weak (Kelly, 1993). Also, TQM activities and the Six Sigma system will provide better understanding of quality performance and how to implement improvement projects. Discussion Investigation of how TQM factors can be used to implement Six Sigma is based on KEs history of quality management, which is shown in Figure 3. Six factors of system, product, control, training, technical, technical, and assessment are considered. Although the six factors will be discussed independently, all of them are integrated and interrelated. (1) System Constructing TQM at KE took four years (1994-1998). Under TQM mechanisms, improvement activities included traditional quality improvement activities of quality control circle (QCC) in 1994 to 1995, quality improvement teams (QIT) in 1995 to 1996, quality assurance (QA) systems in 1996-1997 and ISO 9000s system in 1997 to 1998. Figure 5 displays the context of systems in the PDCA management cycle and DMAIC methodology. In the rst step, the context in the PDCA management cycle may include QCC activity, QIT, QA systems, and ISO 9000s system. In the second step, the

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Figure 5. Contents of system

context in Six Sigma will include green-engineering, designing software by design of experiment (DOE), value analysis/value engineering (VA/VE), and benchmarking. The author nds in KE that the PDCA management cycle in the rst step was a basic improvement activity for the Six Sigma, and the DMAIC methodology in the second step was an advanced improvement skills of the PDCA management cycle. (2) Product Figure 6 shows that KEs quality product index is based on the defect rate, and that corrective action is required to reduce the rate of defects during the TQM period. Meanwhile, Six Sigma activities are based on Cpk, which minimizes the special-cause variation. Based on minimizing the special-cause variation, Six Sigma causes a sample mean to shift. (3) Control Figure 7 shows that control skills of TQM are based on SPC analysis and employ QITs activities such as 5S, ZD, to QCC and JIT. The control skills of Six Sigma are to combine SPC with design for Six Sigma (DFSS) via cross function team (CFT) function.

Figure 6. Index of product quality

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Figure 7. Context of quality control skills in TQM transfer to Six Sigma

CFTs aims are to meet customer requirements and, when manufactured, prevent defects from occurring in the real time. The function of CFT also includes understanding customer requirements, developing product concept and implementing ISO 9000s system. There are three stages of key elements in KE design methodology: understanding customer requirements, product concept development, and ISO 9000s series activities. Conducting quality function development (QFD) to understand customer requirements and implementing benchmarking (BM) to remove design ambiguity within the concept development stage. The last stage during ISO series activities is to perform failure modes and effects analysis (FMEA), DOE to identify critical variables, design for manufacturing (DFM) and reliability engineering. (4) Training To let employees understand and acquire the skills of quality management, KE organized a task force committee to plan, follow-up and evaluate quality management training courses. Table I shows the TQM and Six Sigma training courses. Courses
System Course Table I. A comparison of the training content between TQM and Six Sigma Basic Advanced TQM ISO 9001, ISO 9003, QCC, suggestion improvement, TQM, SPC, management by objective ISO 14001, QFD, Taguchi method, FMEA, reliability engineering, concurrence engineering and problem Six Sigma Basic statistical, 6s-PPM, customer satisfaction, process management, value engineering, cost of quality Green design, concurrence engineering, 6s of quality design

include basic quality tools and advanced improvement skills. TQM basic courses include QCC, suggestion improvement, and advanced quality tools such as QFD, Taguchi method, SPC, reliability engineering, FMEA and VE. The training also included basic courses with such topics as statistical skills, and customer satisfaction. KE also trained and educated its employees in how to use DMAIC methodology. DMAIC methodology teaches how to integrate the various tools into an overall approach of process improvement. Each tool is then taught within the context of DMAIC roadmap, so it is immediately obvious why, when, and where each tool should be used. As employees learn and understand the skills of Six Sigma they will in turn develop their own new ideas on concepts of quality management. (5) Technical Under TQM mechanisms, the context of technical skills is based on QCC activity, QIT, QA system and ISO 9000s series. The improvement concept of TQM is based on the inter-organization workforce, while Six Sigma technical skills are placed and reversed back in the process, applying DOE techniques, FMEA and SPC technical skills to analyze and identify possible causes of problems, and then organize CFT to implement Six Sigma projects for trouble-shooting. (6) Assessment TQM uses ppm, yield and customer satisfaction (C/S) index to assess the quality performance index, and then react to the problem solution. Meanwhile, the Six Sigma assessing indices use Cp (USL-LSL/6s), Cpk (m-nearer specication/3s), s and C/D (customer delivery). TQM and Six Sigma indices are used to enhance customer satisfaction by continuously eliminating defects and improving processes. Regarding the quantitative performance outcome shown in Figure 8, KEs productivity has improved each year from 1994 to 1998. The return of investment rate after-tax grew from 2000 to 2002. This result is equivalent to bringing in about NT$ one hundred million (cash equivalent to US$ three million) in additional revenue each year with no major capital expansions. Business performance also yields increases in suggestions for improvements, faster responses to customer requirements, decreasing customer complaints, and decreasing PONC from 1998 to 2002 (Table II).

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Figure 8. After-tax of return of investment in KE

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Conclusions and implications Conclusion The key points of implementing Six Sigma via TQM activities are given in Table III. A summary of this papers ndings with regarding to using the context of TQM factors to implement Six Sigma now as follows. (1) System. Judged from the evolution of quality history, the PDCA management cycle is a fundamental activity for Six Sigma and DMAIC methodology is an advanced improvement activity. The PDCA management cycle includes traditional improvement activities such as QCC, QIT, QA and the ISO system. These activities represent the basic mechanisms of TQM that cannot be abandoned and must be secured when starting to implement Six Sigma. (2) Product. TQM emphasizes the correct action to reduce defect rates, while Six Sigma is based on Cpk to minimize the special-cause variation. Although both product quality indices have different terminologies, both improvement concept and goals are the same. Both TQM and Six Sigma emphasize deciding on an evaluation system of quality index and then conducting follow-up actions. (3) Control. Judged from KEs quality history, during the TQM period the company needed some quality technologies such as DOE and QFD, which are also very

Item/year Proposal suggestion (piece/year) Quick response to customer requirements (average/days) Customer complaints (case/year) PONC (expense/revenue)

1998 294

1999 341 133 14.84

2000 346 39 79 13.38

2001 333 15 35 9.36

2002 825 9 4 7.62

2003 900 8 3 7.40

2004 912 6 2 6.69

Table II. Performance of implementing Six Sigma

Factors System Product

Key critical points Some activities representing TQM basic mechanisms cannot be abandoned and must be stable when starting to implement Six Sigma TQM and Six Sigma emphasize an evaluation system of product quality index along with follow-up actions. Both evaluation systems may have different terminologies, but their improvement concepts and goals are the same TQM and Six Sigma have similar quality improvement technology. TQM can be classied as inter-organization of quality improvement team, and Six Sigma as intra-organization of cross-function team It is necessary to integrate the basic requirements of TQM courses into Six Sigma advanced courses TQM quality technical skills focus on the inter-organization workforce. Meanwhile, Six Sigma skills focus on the process management of intra-organization Six Sigma emphasizes the importance of the nancial bottom line, but implementing TQM also indirectly contributes to nancial performance

Control

Training Technical Table III. Findings on the context of implementing Six Assessment Sigma via TQM activities

important quality skills in Six Sigma, thus reveals TQM and Six Sigma have similar quality improvement technology. The only difference between TQM and Six Sigma is that TQM is classied as inter-organization of quality improvement team and Six Sigma is as intra-organization of cross function team. (4) Training. Both training contents of TQM and Six Sigma include basic and advanced courses. TQM teaches basic quality control skills, and Six Sigma may also use basic quality control skills to integrate DMAIC methodology. Judged from the content of KE training in Table I, the conclusion is that it is necessary to combine the basic requirements of TQM courses into the advanced courses of Six Sigma. For example, KE has implemented the ISO 14001 system, and advanced courses may include such topics as Green Design and experiments with the environment to meet customer requirements. (5) Technical. The technical skills of TQM focus on the inter-organization workforce, such as QCC, ZD and QIT activities. Meanwhile, Six Sigma skills focus on the process with relevant technical skills that include DOE, FMEA, SPC and CFT. Both TQM and Six Sigma have intercommunity quality improvement skills; however if TQM technical skills are not completely solid it is impossible to implement the Six Sigma. (6) Assessment. TQM and Six Sigma have almost the same quality improvement indexes for assessment, such as ppm, yield Cp, Cpk, and C/D and C/S. Although Six Sigma emphasizes the importance of the bottom line used in nancial performance, implementing TQM also indirectly contributes to nancial performance. The assessment of quality between TQM and Six Sigma is similar, and all that is necessary to extend TQM to Six Sigma is to shift to focus on nancial performance. Implications From KEs experience, using TQM activities to implement Six Sigma may lead to two paradigm shifts, one is macro changes of transfer in which the organization needs re-engineering, and the other is micro changes of adjustment which requires system coordination to implement Six Sigma. Macro changes of transfer mean to develop necessary conditions for DMAIC methodology, and adjustment approaches indicate a micro change is required if TQM activities are to be extended to the Six Sigma system: . Elements of the transfer approach may include moving from the PDCA management cycle to DMAIC methodology and from inter-organization activities to cross function teams. . Adjustment elements include moving from TQMs quality index to reduce the systems defect rate and to the prot-focused of the Six Sigma system. Regarding the experience of KE, it has achieved continuous improvements using TQM mechanisms. The company has made changes and adapted quickly via the requirements of outsourcing buyers to meet customer needs. KE has not abandoned TQM, but has integrated TQMs activities with the Six Sigma approach to gain a new competitive advantage. TQM is become to the prime component of Six Sigma, and the author nds that KE added a Six Sigma program to its business system, giving the rm almost all of the elements of TQM: i.e. the current business

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system Six Sigma TQM. Based on this formula, TQM as an over all quality program remains prevalent in modern industry, and the example of KE suggests one way of extending this kind of formula to incorporate a strategic element into the process.
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