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| Kung Fu Fighting: Green belt and CEO
manoj Kohli (foreground) and his quality team show how they
put defects on the mat at Escotel |
A
little over two years ago, Escotel's activation team in Uttar Pradesh
was faced with a nagging problem. No matter how hard it tried, it
just couldn't get its new subscribers up and running fast enough.
From the time all the paperwork like verification of address and
payment, was done, it took the team nine hours to activate the connection.
Earlier, in 1996, Escotel had embarked on a Toal Quality Management
(TQM) drive, but in this case it wasn't helping make any significant
headway. That was when Escotel's CEO Manoj Kohli asked the team
to attack the problem with a new quality concept he had recently
introduced his team to-Six Sigma.
There was good reason for the 43-year-old Kohli
to push Six Sigma. As an Executive Director at aerospace giant Allied-Signal
(merged with Honeywell in 1999) from mid-1997 to early 1999, Kohli
had seen its CEO Lawrence Bossidy pull Six Sigma out of the manufacturing
businesses and apply it to accounting and other non-manufacturing
functions to transform the corporation. Now at Escotel, the green
belt Kohli (Six Sigma leaders are categorised in ascending order
of expertise into green belt, black belt and master black belt)
was itching to test its transformational powers for himself.
THE SIX SIGMA PAYOFFS
Areas where Escotel is reaping benefits
from Six Sigma. |
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Activation
Simplification of processes and elimination of paperwork between
channel partners and district office have reduced activation
time in UP from 9 hours to 90 minutes.
Billing
Ironing of glitches has increased on-time bill delivery from
1.8 sigma to 4.4 sigma, and lowered billing-related complaints
from 64% to 4%. Annual savings: Rs 11 lakh.
Collections
Performance-based payouts to collection agencies and automation
of daily exposure management led to savings of Rs 3.4 crore
last year alone.
Pre-Paid Sales
Improvement in visibility and availability of coupons and
cards resulted in a four-fold increase in pre-paid sales between
July 2000 and July 2002.
Customer Management
Training of contact officers and implementation of a web-based
software solution have reduced defects per million opportunities
from 308,000 to 14,000.
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FROM SOFTWARE TO STEEL: EVERYBODY LOVES
SIX SIGMA
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| Six sigma was
first used by statistics-happy engineers in manufacturing and
R&D, but since the early 90s has found its way into almost
all aspects of an organisation's activities. In India, Wipro-thanks
to its association with General Electric-was one of the early
adopters of Six Sigma in 1996. Since then, Wipro has used it
not just to improve quality, but also to change the organisational
culture. It has applied Six Sigma across its businesses (IT,
consumer care, and lighting) and functions-from simple transactions
like demand draft delivery to more complex ones such as mobile
communication services. Today, Wipro has 160 black belts, eight
master black belts and a host of green belts. The company says
its cumulative savings due to Six Sigma in the last six years
are $36 million, but believes that the bigger benefits lie beyond
savings: in moving decision-making from intuition to data-based.
Says Anurag Behar, Corporate VP for mission quality, brand,
innovation and corporate communication: "The whole organisation
has been trained to think data." Wipro's next challenge
is to increase its Six Sigma engagement with its customers.
The fact that Six Sigma can work in as traditional a business
as steel making is being proved by Tata Steel. It's been three
years since the steel giant started on its Six Sigma journey,
as part of its overall initiative to lower cost of steel production.
Therefore, the quality tool is at work in most parts of the
organisation-from manpower deployment, to use of slag and
refractories, to production schedules, to managing inventory
and delivery schedules. Says T. Mukherjee, Tata Steel's Deputy
Managing Director: "We want to ensure that all our activities
are competitive and directly contribute to our bottomline."
Last year, Tata Steel was one of the only four global steel
companies to report profits. The goal, however, is to become
the world's first EVA (economic value added) positive company,
with a net profit of Rs 1,000 crore in the next couple of
years. Watch this space.
-Debojyoti Chatterjee
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| TOOLS |
Processing For Six
Sigma (PFSS)
This is about reducing risks associated with systems and processes
regardless of their basic nature (manufacturing or commercial).
This goal is often translated into the language of quality by
using Six Sigma improvement tools and breakthrough initiatives.
Designing For Six Sigma
DFSS is concerned with two equally important goals. First,
reducing the extent of risk inherent in the functional performance
of a design in line with customer requirement. Second is in
reducing the risk associated with operational viability of a
design. The ultimate goal, however, is Six Sigma. Or 3.4 defects
per million opportunities.
Managing For Six Sigma
This is concerned with the creation, installation and utilisation
of deployment plans, reporting systems and implementation processes
that support PFSS & DFSS. The eventual goal of MFSS is to attain
best in class business performance by improving the operational
capabilities of an organisation. |
Thus, in mid-2000 Kohli roped in Arun Kumar
Malik as GM (TQM), and repurposed the hr and TQM chief, Rajan Datta,
who was just a year old at Escotel. With some help from General
Electric, the company that gave Six Sigma its current oomph and
credibility, Escotel got going. To everybody's surprise, results
were amlost immediate. An analysis of the activation problem in
up revealed that the bottlenecks primarily related to paperwork.
Either the subscriber forms would come to the verification officer
late or they were improperly filled. Slowly, the team attacked the
problems one by one. Along with the education of the channel partners,
the entire process was mapped. Unnecessary steps in activation were
eliminated and the paperwork between vendors and the regional office
was automated. The result: by June 2001, the activation time was
down to two hours. Today, new connections go live in just 90 minutes.
On the whole, Kohli reckons, Six Sigma projects have saved the company
Rs 10 crore. Says Kohli: "Given the high level of computerisation
and automation in telecom services, we could measure everything,
which is the basic premise of Six Sigma."
WEEDING OUT VARIATION
But just what is Six Sigma? Put simply it is
a process improvement system that aims to eliminate defects. The
Six Sigma philosophy assumes that all activities of an organisation
are processes, that all processes are prone to variations, and that
by rectifying the variations it is possible to achieve near perfection.
In fact, the word Sigma is a statistical term that measures how
far a process deviates from perfection. The higher the sigma, the
closer the process is to perfection. Six Sigma represents a defect
rate of 3.4 per million-or an accuracy of 99.999997.
The concept was born in Motorola in the early
80s when the then CEO Robert Galvin challenged his engineers to
achieve a ten-fold reduction in product failure in just five years.
Since then a host of companies have used Six Sigma for customer
satisfaction and higher profits. In India, Wipro and Tata Steel
are some prominent users of Six Sigma (See From Software to Steel).
Says T. Mukherjee, Tata Steel's deputy Managing Director: "Six
Sigma is one of the intitiatives that we have undertaken among others
to ensure we have the best management practices that are directly
related to profitability."
At Escotel, Six Sigma projects are focused
on key areas such as activation, billing and network management.
There is a specific management structure that supports all such
initiatives. Every project starts with a sponsor (usually a member
of the senior management), business heads serve as leaders and functional
heads, as coaches. The best few from the project team are designated
as champions. The structure ensures that Six Sigma projects do not
become an additional job, but merely a new way of doing existing
tasks.
When a project is identified, the team-comprising
green belts and black belts; currently there no master black belt
in Escotel-follows a DMAIS approach: define, measure, analyse, improve,
and standardise. First, the most important metrics are identified
and then they are analysed for trends, patterns and causal relationship.
It is often necessary to use the define, measure and analyse steps
more than once to zero down on improvement areas. Once performance
targets are met, the team figures out ways to retain them. Thereafter,
DMAIS is used all over again to go to the next level of Sigma.
In the past two years, a lot of Escotel's processes
have moved to 4 sigma, which corresponds to 6,210 defects per million
opportunities. The most significant gains have been in the areas
of billing and collections. For instance, two years ago, bill delivered
on time was at about 2 sigma (308,537 errors per million opportunities),
and billing accuracy was an abysmal 1 sigma (600,000 errors PMO).
Today, they are at 4.4 and 4.2 sigma respectively. The result: billing-related
queries have dropped from 26 per cent to 2 per cent, and billing-related
complaints from 64 per cent to 4 per cent.
In some processes, it is possible not just
to save costs, but to actually boost revenues. That's exactly what
Escotel did by using six sigma to make its network more robust.
Since July 2000, call blocks are down to one-fourth while call drops
have declined from 5.9 per cent to 0.19 per cent, leading to a revenue
enhancement of about Rs 35 lakh a year in the Kerala circle alone.
Says GM (TQM) chief, Malik: "Being a services company, we first
attacked issues involving the most customer interface."
That also means that Escotel so far has been
picking all the low-hanging fruits. Improvements will now get harder,
also given that the company has no master black belts-experts with
a deeper understanding of six sigma.
However, Kohli believes that it is still possible
for Escotel to reach 5 Sigma level. Says he: "Beyond that we
need to understand everything better than our rivals." That
could take another year, and one more thereafter to get near the
coveted goal of Six Sigma. But what Kohli is really happy about
is the fact that unlike two years ago, nobody in Escotel is questioning
the power of Six Sigma.
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