In your quest to become first-rate facilities decision-makers, there are plenty of methodologies to choose from for help along the way. (Do International Organization for Standardization, Baldrige criteria, or Total Quality Management sound familiar?) Six Sigma, although it has been practiced in other industries for more than 20 years, has just recently been added to the virtual list of options for facility and corporate real estate management professionals. Regardless of the myths; despite what you may have heard about this methodology being practical only in cases where work is an exact science, not an art, Six Sigma can and is being used in this industry – and it’s becoming one of the most successful set of improvement principles to-date.
Initially developed by Motorola in the early 1980s for use in manufacturing lines, the concepts of this methodology are unique. Based on process improvement and problem-solving, Six Sigma operates on the theory that variation in an organization’s processes is the source of defects; therefore, Six Sigma aims for long-term precision by eliminating variations in business proc-esses. It focuses on customer requirements; is driven by data collection; and provides techniques for defining, measuring, analyzing, improving, and controlling efforts to maximize productivity and efficiency (see Six Sigma Speak, right, and Six Sigma's Toolbox, below).
To translate: Six Sigma takes a problem (based on customers’ goals and feedback), expresses it in terms of data, analyzes that data, identifies and implements improvement opportunities, and turns the problem into a solution. It streamlines operations, improves product/service excellence, and eliminates mistakes so professionals can provide customers with top-quality service – swiftly and economically. Six Sigma abandons the notion that revenue should be conserved by cutting costs to improve short-term figures. Instead, it emphasizes process improvement as the approach and near-perfection as the ultimate goal.
Six Sigma offers the same bottom-line benefits to small- and medium-sized companies as it does to larger companies like Motorola (and General Electric, Johnson & Johnson, Polaroid, and Black & Decker, to name a few others) that are already employing Six Sigma. Dearborn, MI-based Ford Motor Land Development Corp. (Ford Land) used Six Sigma to revamp and advance its “move” process. As a result, this leading provider of comprehensive and integrated real estate services now benefits from an 82-percent reduction in lost work time per person moved; a 47-percent reduction in overall move cycle time; and a 61-percent jump in customer satisfaction. Ford Land has also put Six Sigma into practice to improve the effectiveness of energy shut-downs during unoccupied periods of time – and the organization saved $200,000 in one year (in just one building). “With these successful implementations, it was inevitable that Six Sigma would expand beyond its initial manufacturing roots and be applied to core business processes such as finance, human resources, marketing, sales, and real estate management,” says Hermann Miskelly, senior consultant for Global Productivity Solutions, headquartered in Clinton Township, MI. “Companies that have used Six Sigma in real estate projects have generated huge financial benefits. There are direct savings that result [and] there are indirect savings that are often overlooked. And there are the ongoing savings that accrue in the future. The benefits show up more dramatically in the first or second year – that’s when everyone is watching them. But, they continue for years into the future if the improved state is properly controlled – Six Sigma addresses [how to do] that. Any company that is not using Six Sigma to improve its corporate real estate operations is doing a huge disservice to its shareholders.”
Making it Work
Six Sigma, by definition, means that a specific process must not produce more than 3.4 defects (3.4 failures) per million opportunities (per million times the process is performed): The process should operate at 99.99996-percent precision. “In manufacturing, when you’re producing the same widget – millions of them – day after day, you’ve got a lot of data to analyze and you can achieve perfection,” explains John Englert, president of Rochester, NY-based CMT Consulting Inc. “In service support, it’s different. We’re not dealing in millions of things – we’re dealing in maybe dozens of things, or even just a few things. Right away, there’s a [worry]: ‘But I don’t have the volume that they do in manufacturing to test out the Six Sigma principles.’ However, the principles themselves are useful. They will drive you to a continuous improvement methodology that is both process-oriented and has very good measures.”
Chris Ahoy, associate vice president of facilities for Iowa State University’s (ISU’s) Facilities Planning and Management department in Ames, IA, agrees with Englert’s assessment of Six Sigma in corporate real estate and facility management: “Most Six Sigma examples reside in manufacturing. It’s easy to observe a process in a production line. Reduction of errors and variance are issues [with] the machines, methods, materials, and environment of product development and shipping. Monitoring these devices is more predictable, since the ‘people’ variance is removed. In the transaction world [which includes facility management], the biggest variance is in the non-standard behaviors of people.”
How important is it to strive for error-free performance? Consider this: At the Three Sigma level (99.7 percent functionality – sounds impressive, right?), according to QualityAmerica.com, virtually no modern computer would function; 54,000 checks would be lost each night by a single large bank; and 10.8 million healthcare claims would be mishandled each year. Now imagine what might happen (or is already happening) in your facilities when daily processes aren’t as flawless as possible. According to ISU’s Ahoy, it’s estimated that U.S. companies not utilizing Six Sigma spend between 25 and 40 percent of their revenue each year on fixing problems (he attributes this to the cost of poor quality); companies taking advantage of Six Sigma’s philosophies spend less than five percent of their revenue on correcting setbacks.
Incorporating Six Sigma into facilities-related processes means something different for every organization. The methodology supplies various tools for practitioners to utilize in order to accomplish specific tasks – whether these tasks include gathering customer feedback, streamlining existing processes, creating new processes, identifying current defects, or generating a timeline for implementation (see Six Sigma’s Toolbox, below). Six Sigma doesn’t just focus on doing the right things; it compels organizations to question current procedures to ensure employees are doing the right things right. It helps convey the magnitude of existing problems and prioritizes elimination. As Englert points out, a 98.5-percent customer satisfaction rate sounds good – but what is that 1.5-percent dissatisfaction rate costing your company? “Those are unhappy customers. They might be very important customers. You don’t know until you collect the data and figure out the problem,” he emphasizes.
Read on to discover how industry professionals are putting Six Sigma into practice by assessing relevant data and streamlining processes …
Iowa State University
Iowa State University’s (ISU’s) Facilities Planning and Management (FP&M) department, Ames, IA, uses Six Sigma in conjunction with other initiatives that have been established in the strive toward excellence.
“When I first arrived here, the system wasn’t broken,” says Chris Ahoy, ISU’s associate vice president of facilities. “My boss (the vice president for business and finance) and the former president at the university said, ‘Chris … let’s take it a notch up.’ People were doing things right for a long time. The question was: ‘Were they doing the right things right?’ Those two things are different. They weren’t doing the right things. There were lots of process flaws and waste to focus on and [eliminate].”
ISU has a three-part mission of “learning, discovery, and engagement,” and an aspiration to be the best land grant institution in the nation. Partnering with ISU in this mission, the FP&M department is now on a journey to become a world-class operation. Ahoy began by introducing the Baldrige criteria to his staff of more than 450. He also incorporated Balanced Scorecard Plus metrics, Dashboard measurements, and Lean Manufacturing techniques to evaluate department operations and eliminate actions with no value. After reading a book on the subject, Ahoy also decided to make use of Six Sigma for his department’s process improvement and variance elimination. Ahoy has found that Six Sigma is most effective for FP&M after using Lean Manufacturing techniques to eliminate “waste” that this methodology identifies (according to Lean Manufacturing, “waste” includes waiting, over-processing, correction, etc.).
“Everything in facilities planning and management operations is process-driven,” says Ahoy. “It should be the aspiration [of] each facilities operation to create an effective organization with operational excellence and to provide products and services through evidence-driven data. In an institution of higher education, some of our trustees are CEOs from major corporations. They expect us to emulate practices that work well in the private sector. Old models no longer work, and in today’s competitive environment, there’s no room for error. We must delight our customers with delivery of products, goods, and services – better, faster, and cheaper. We must look for new ways to meet or exceed [customers’] expectations. That’s why Six Sigma must be part of the facilities management culture.”
Many current Six Sigma practitioners acknowledge that it can be difficult to introduce the topic to other staff members and departments. The methodology often reveals that the organization’s current approach to doing things isn’t necessarily the most resourceful. “I saw a lot of resistance initially to these new business management concepts,” Ahoy explains. “Old habits are hard to change; many culture-keepers resist pathways to new methodologies that could remove non-value-added work.” But once the ISU department began to focus on quality initiatives and implemented Six Sigma methodology, they began to see results; Ahoy says it was a natural fit within the organization.
Besides the topic of implementation, another fear voiced by those considering Six Sigma is a loss of employment positions – a valid concern. If Six Sigma simplifies processes and eliminates non-value-added steps, the outcome may affect the amount of necessary manpower. However, when new standards are introduced at ISU, Ahoy considers it his responsibility as a leader to make sure this fear is alleviated through counseling, orientation sessions, and meetings about the new concepts and the value they bring to the organization. One case in point: ISU operates a call center that formerly utilized six full-time employees to answer calls that came in from students, faculty, and staff on campus. After the department introduced Web-based work order technology, clients could get online and create work order requests themselves – without needing assistance from a FP&M employee. The number of employees necessary at the call center dropped from six to one, so Ahoy assisted in finding areas for the five other employees to work.
Knowing that most facilities professionals don’t currently have Six Sigma initiatives in place, Ahoy offers this advice: “Insanity is doing the same thing over and over again but expecting different results. You have to think out of the box. That’s how I got started. I was moving away from my own industry and saying, ‘What else is out there?’ You have to really get out of the mindset of what you’ve been doing before, and look at things differently. In the times that we are living now, if you are not competitive and leading-edge, your competition will [knock you] out of the running.”
Six Sigma has more than paid off for ISU’s FP&M department. In 2003, the team won the Award for Excellence for Facilities Management, presented by APPA (The Association of Higher Education Facilities Officers). The award is based on leadership, customer satisfaction, information analysis, process management, and several other considerations; and there’s no doubt that Six Sigma is one of the tools that helped ISU achieve this distinguished status.
John Gross, PE, GDX Automotive’s Six Sigma Master Black Belt, Farmington Hills, MI, was introduced to Six Sigma in 1997 when GDX Automotive’s parent company, GenCorp, brought in a practitioner to initiate a Six Sigma program. “Our [former] chairman saw the power of Six Sigma while at GE, and wanted it to be part of our future; so GenCorp began to train people,” explains Gross. “Six Sigma has to be directed from the top. That’s the key. You have to create buy-in at all levels. The best thing to do is create a roadmap of how you want to proceed and execute the plan. Bring in senior managers. The roadmap [outlines your plan and provides] timing, schedule, and expected payback. Senior leadership, at least in the companies I’ve been associated with, always wants to know: ‘What is it going to cost and what’s my return?’ You’re committing resources for training and you’re committing money, so it must be top-down directed.” He believes that even if the rest of an organization isn’t currently abiding by Six Sigma, when the facility management/corporate real estate team has the support of top management, they can still initiate a program and serve as the “pilot” for the rest of the organization to observe. In this situation, some practitioners indicate they’ve faced problems when dealing with other departments: If the corporate real estate/facility management team is using Six Sigma philosophies but other departments (finance, IT, etc.) aren’t, the process can slow considerably.
Gross explains that if the choice is made to implement Six Sigma, everyone in the organization needs to understand the basics – but not everyone needs to be trained to the same level. The methodology is set up so certain individuals can learn the philosophies and theories more thoroughly and then fill part-time and full-time roles dedicated to identifying and completing Six Sigma projects (see Designations of Six Sigma, right). “Too often, organizations train people in Six Sigma techniques and then return them to their original, full-time jobs. Organizations must realign job descriptions to allow time for conducting projects if they want to continue to reap the benefits of training. People cannot (and will not) work 10- or 11-hour days in their regular jobs, and then do a project on the side,” Gross emphasizes.
His other piece of advice, based on experience: Find the right person (or group of people) to conduct Six Sigma training. “There are all kinds of people out there. You have to find a fit. They’re going to take 15, 20, 30, or 40 of your brightest minds and train them. They’re going to be in your [organizations], mentoring and participating, so you need to have a fit there.”
With Six Sigma training programs placing such an emphasis on customer response and satisfaction, Gross indicates that there are several ways to obtain the necessary information for process improvement. Professionals need to use the correct tools to gather this data – whether it’s via surveys, one-on-one conversations, or even focus groups. “If your brokers are the people out there doing the face-to-face meetings with customers, send them out with a list of questions and [they can] query the [customers]. In all honesty, if you have a sales force, they should know what the customer wants since those are the things that will help them sell the product better. Or if you have a very unique process you’re working on, include a customer as a member of your team,” Gross advises. But no matter what method you choose, make sure you collect client feedback. Once the feedback is obtained, you can gather the statistics and form data to quantify customer issues: This sets the stage for selecting projects that will have the most impact on customer service and the bottom line.
But don’t let the word “statistics” scare you, Gross emphasizes. “We’re business guys. We’re not statisticians. Statistics isn’t what this is all about. It’s about the process. You’re collecting data to [perform] a statistically valid analysis. The beauty here is that there are a number of excellent statistical [software] packages out there that will do the actual analysis for you. The old adage, ‘The fool with a tool is still a fool,’ applies here – you need to have enough knowledge to select the correct analysis and [perform it]. But let the software do [it] for you; it takes out all the grunt math, which lets you focus on making data-driven changes vs. worrying about the number-crunching.”
Gross provides a perfect example of the purpose of careful data examination. He explains that a facilities engineer on his staff utilized Six Sigma techniques to analyze his facility’s energy usage. “He started by looking at where we spent our money in [that] building, and [electricity] showed up as the largest item. So then he started looking at the elements that composed the bill and where [we used] the most electricity. Of course, in a project like this, there are two or three things that jump out – high-efficiency [lamps] and things of that nature. But when he dissected [the] problem, he discovered that we were inefficiently scheduling one of our major electric users. Through his analysis, he [identified] where we used it, when we used it, and why and how we used it. Then, in a very straight-forward process, without buying any capital equipment, he was able to reschedule the process. He was able to make a change for minimal dollars, and as an off-shoot with some of the savings, he funded a small project where he actually started to track electrical usage in departments.”
CMT Consulting’s Englert, previously in corporate real estate (including facilities management) at Rochester, NY-based Eastman Kodak, has several success stories regarding the use of Six Sigma in this industry. One of his proudest moments: saving the company between $8 million and $10 million in just two years. Eastman Kodak’s help desk was receiving reports about lamps that needed replacement. Employees were replacing the bulbs, but not realizing the underlying cause of the burn-out problem. When Englert applied Six Sigma philosophies to this situation, he discovered there were other problems that needed attention. “The equipment that the light bulbs went into was old and faulty,” he explains. “Secondly, the analysis pointed out that the light level was insufficient for workers. That drove a whole relamping issue and all-new equipment. That cut our energy bill. We did it all without spending a dime, because we saved so much in energy costs and energy rebates. Most people don’t even think about doing this kind of stuff.”
Englert also used data collection to challenge the reasons why some Eastman Kodak employees were changing work locations and requesting moves. “There was no economic reason why we should have been doing some of those [moves]. People just felt they had the right to more space if the space was open and they could grab it. It was an ‘entitlement’ culture: ‘I just got a promotion. That means I can have more space.’ But Six Sigma comes along and says, ‘Wait a minute. What are the space standards? What’s the cost of doing this? What are the benefits?’ We did an economic model and challenged people as to why they were doing all these things. We eliminated a lot of moves, adds, and changes that didn’t add any value. And on the other hand, the ones that did [have value], we put a process in place that did it faster, better, and cheaper. It helped to change corporate culture.”
There are many tools that the methodology offers to facilitate the decision about whether or not Six Sigma is right for your organization.
For assistance in the decision-making process, GDX Automotive’s Gross recommends performing a gap analysis (see Six Sigma’s Toolbox, below) to answer the following questions:
Where do we want to be?
Where are we right now?
What are the obstacles that are keeping us from being where we want to be?
The answers to the first two questions involve collecting data and analyzing processes as they currently exist. The answer to the third question will help you decide if Six Sigma can help.
Six Sigma implementation isn’t something that should be attempted without outside help. Professional consultants can provide training and help you build a realistic Six Sigma framework. They can also help you identify projects that will provide the most return on investment (ROI); Gross estimates that with proper project selection, an organization will see a positive ROI within six months. Start-up costs can be expensive (in terms of time and money), but Global Productivity Solutions’ Miskelly indicates that once a Six Sigma implementation has been under way for several months, it becomes self-sufficient in terms of cost.
The first step Miskelly suggests for those interested in Six Sigma is to attend a Six Sigma overview course (several are available around the country). There are some courses available that can even explain Six Sigma in the context of corporate real estate/facility management. The second step he recommends is an evaluation of current operations. “If your company is using Six Sigma in other operational areas, you may be able to borrow some expertise to assist in this endeavor, but you’re probably going to have to engage some third-party expertise for this,” he says. The third tip he offers: Create a compelling business case to present to upper management – include examples of other companies succeeding with Six Sigma principles, as well as instances where it could help your organization (identify dollar and opportunity losses, process flaws, and customer complaints).
“There’s a load of interest in this subject,” says CMT Consulting’s Englert. “From an interest level, it’s now peaking. But from an application level, I’d say we’re only a quarter of the way there. [However,] five years from now, I’ll bet you it’s going to look a lot different than it does now.”
Leah B. Garris (email@example.com) is associate editor at Buildings magazine.
Six Sigma’s Toolbox
Six Sigma supplies various tools for practitioners to utilize in order to accomplish specific tasks. Here are just a few:
Cause and Effect Diagram.
A visual tool used to logically organize possible causes for a specific problem or effect by graphically displaying them in increasing detail. It helps to identify root causes and ensures common understanding of the causes.
DMAIC (Define, Measure, Analyze, Improve, Control).
A start-to-finish process improvement method. DMAIC refers to a data-driven quality strategy for improving processes, and is an integral part of Six Sigma. Each step in the cyclical DMAIC process is required to ensure the best possible results.
DMADV (Define, Measure, Analyze, Design, Verify).
A start-to-finish method for new product/service introduction. DMADV is a data-driven quality strategy for designing products and processes and is an integral part of Six Sigma.
Failure Modes and Effects Analysis (FMEA).
A procedure and tool that helps identify every possible failure mode of a process or product to determine effect on other sub-items and on the required function of the product or process.
Gap analysis measures the breakdown that exists between implied/specified customer requirements and existing processes.
A bar chart that displays, by frequency and in descending order, your most important defects.
A hierarchical method for displaying processes that illustrates how a product or transaction is handled; a visual representation of the work-flow either within a process – or an image of the whole operation.