Remembering Joseph Juran And His Impact on Quality PDF

A DMAIC Six Sigma Improvement
Story

About Juran Institute
Juran Institute is a benchmarking, consulting and training firm
founded in 1979 by Dr. Joseph M. Juran. Dr. Juran is one of the
most internationally recognized pioneers and visionaries in attaining
business results by managing quality. By concentrating on clients'
needs over the years, Juran has offered professional consulting
services and developed training and education materials in a wide
variety of Operational Excellence methods and tools.
Juran offers best-in-class assessment, benchmarking, consulting,
and training services to implement your operational excellence
programs aimed at improving your business results. Our services
include assessment tools that benchmark you against international
best practices and training programs to deploy operational
excellence, change management, and quality management.
Contact Juran Institute at [e-mail]
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A DMAIC Six Sigma Improvement
Story
The Company Background
Avidco is a large engineering firm that provides engineering, technical design,
and construction services to its clients. Clients include energy utilities and
companies that develop and produce chemicals, pharmaceuticals, foods, and
beverages. Houston, Texas, is headquarters for 250 engineers and 50
administrative staff. Six small regional offices are found in major metropolitan
locations scattered across the U.S. Each region has five to six engineers and a
manager responsible for sales and service of local clients.
Avidco reorganized six months ago to address its major business challenges.
The following chart shows Avidco’s organizational structure.
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AVIDCO ORGANIZATION CHART
CEO
President
Engineering
Services
Construction
Services
Research &
Development
Regional
Offices
Technical
Services
Finance &
Administration
Sales &
Marketing
Proposal
Management
Dept.
Avidco Corporation: A DMAIC Six Sigma Improvement Story does not reflect every
step of Juran’s Six Sigma Breakthrough Process. Nor is this abbreviated case study
meant to demonstrate all of the possible tools of analyses.
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A DMAIC Six Sigma Improvement
Story
The departments’ responsibilities are outlined below:
 Senior Management: CEO, President, and six Senior Vice Presidents who
head each major Avidco department.
 Engineering Services (ES): Engineers in this department work day-to-day
with clients and are responsible for project delivery. Most of the Avidco
professionals and support staff are in this department.
 Construction Services (CS): Responsible for overseeing the client’s
construction project once a proposal has been accepted.
 Research and Development (R&D): Engineers in this department create
new, state of the art products that anticipate clients’ future needs and
develop new products and services that are not standard client offerings.
 Technical Design Services (TS): Engineers in this department translate
client needs into a technical design and work plan. This department works
with the Research and Development department when requirements fall
outside the standard services offered by Avidco.
 Finance and Administration (F&A): Manages all financial and investment
matters for Avidco.
 Sales and Marketing (S&M): Focus is on new business development with
both current and potential clients.
 Proposal Management Department (PMD): This six-month-old department
reports to Finance and Administration and coordinates the proposal
development process for Avidco. The department includes a Manager,
desktop publisher, an administrative assistant, two writers, and a
reproduction and photocopy operator.
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A DMAIC Six Sigma Improvement
Story
The following chart shows the PMD organizational structure.
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PROPOSAL MANAGEMENT
DEPARTMENT (PMD)
Organization Chart
Proposal
Management
Manager
Desktop
Publisher
ReproductionWriterAssistant
Writer
The Company Goals and Challenges
Avidco has faced rapid growth over the last decade, especially during the past
two years. The number of Avidco clients has more than doubled; projects have
become more complex, and regional offices have been added to respond more
rapidly to clients. The engineering staff has grown from 120 in the past year to
250 in this year, and the support staff has also doubled. Avidco has been able to
expand the firm by at least 20 percent each year and maintain profitability
levels of 15 percent. Along with this desired growth, however, have come
problems.
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A DMAIC Six Sigma Improvement
Story
Identify Project Ideas; Draft Charter
Steering Team
To deal with their problem, the company has recently formed a Steering Team,
composed of the president and direct reports, along with their newly trained
Black Belt. They meet twice per month, as they are eager to identify the best
opportunities to improve business performance and make improvements.
The Situation
Historically, the Avidco engineers wrote all client proposals. Engineers heard
about client needs either from the Sales and Marketing department, or through
their own work with a current client who wanted to expand or start a new
project. While responsive to customer needs, this had resulted in many different
proposal formats, varying pricing structures, “reinvention of the wheel,”
inconsistent work methodologies, and staffing problems. A prior study
completed last year indicated that a more effective method for handling
proposals led to the creation of the Proposal Management Department (PMD) to
coordinate the proposal process for all of Avidco. Additionally, the Sales
Manager for each region had to “sign off” before proposal work was begun.
Unfortunately, today the proposal management process at Avidco is not proving
to be as effective as it was envisioned. While the goal of PMD was to simplify
the process and reduce the time associated with developing a proposal, they
have been unable to meet their goal of 55 workdays per proposal. Avidco’s
average cycle time is 65 days. This means that many of the proposals arrive at
the potential client’s location late, i.e., longer than the 55 days Avidco has
quoted in their estimates to clients. Many times, this has resulted in the loss of a
contract. Market research has discovered that Avidco’s competition is able to
turnaround a proposal in 45 days or less and is often awarded the contract when
Avidco has submitted a late proposal. In addition, overtime and related costs
have skyrocketed and threaten to have a significant impact on Avidco’s
profitability. Annual overtime costs have escalated.
These added costs and loss of business have contributed to Avidco’s loss of
market share and profits. Plans to take the company public have had to be put
on hold.
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A DMAIC Six Sigma Improvement
Story
Initial interviews have revealed that few in Avidco understand the proposal
management process, and all underestimate how long it takes to develop a
proposal. Some engineers expect the manager of the Proposal Management
Department (with a few words of guidance) to develop all segments of a
proposal, including creative segments that outline and address the client’s
specific needs. Others do not want PMD’s help, except to insert standard
segments.
The Proposal Management Department is increasingly frustrated with the
Finance and Technical Services departments. Both departments make constant
revisions to proposals that then require major rework by the Proposal
Management department. PMD also receives last minute changes from Senior
Management, but these are relatively easy to implement since they generally
only require reformatting. All this rework is causing significant overtime, which
is hurting the department’s morale.
Members of PMD are:
 feeling as though they are blamed for the late proposals while they have no
control over revisions that take time
 late in picking up children from day care and missing parent-teacher
conferences
 missing company social functions, such as the bowling league
A Six Sigma improvement team was formed by the Steering Team to improve
the timeliness of responses to client’s requests for proposals.
The processes for developing a proposal are quite complex. Proposals make
several different stops along the development route, and the route is different,
depending upon the type of proposal.
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A DMAIC Six Sigma Improvement
Story
Before sending the Six Sigma team out to begin its work, the Vice President of
Sales and Marketing, who is also a member of the Steering Team, described the
broad problem that the Council wanted the team to focus on:
“Six months ago, we created the Proposal Management department as a means
for Avidco to more efficiently write client proposals. We established our goal of
responding to client requests for proposals within 55 days from the time that we
receive the inquiry. The studies we did at that time indicated that this was an
achievable goal, and I remain convinced that we can accomplish this.”
“But there are just too many instances when we have missed this goal and have,
in fact, missed the client’s deadline. Our competition is being awarded too
many of the projects that should have been ours; we responded to our clients
too late. We are all worried that if this trend continues, Avidco will lose its
leadership position and will no longer be a major player in the construction
engineering field. This will allow the competition to become even stronger.”
“My charge to you is simple. Improve the timeliness of our proposals.”
The Vice President of Sales and Marketing also emphasized that the team was
to solve this problem using the Six Sigma Process. The V.P., who is their
project champion, encouraged the team to be “true to the process” and not
attempt to skip any steps, noting that she was convinced that the results would
be worth it.
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