How the Future Will Impact Quality
The world is changing more quickly than many in business, government and society may realize. Rapid technological advancements, an increasingly global economy, the power of free market forces, customer demands for increased quality in products and services, and the critical need for efficiency and productivity gains in every organization will influence even greater changes in the quality of our lives, work, play and retirement.
How will customers define quality in the future? This question will be answered by some of the developments that will force enterprises to keep pursuing quality as a strategy. Dr. Joseph M. Juran, Chairman Emeritus and founder of Juran Institute, has noted that an organization will improve quality only when there is proof of the need for it. Today, the evidence of that need is inescapable.
Take a look at quality's evolution. First came the industrial revolution, which led to higher quality and higher costs. Then came mass production, a period ending well past World War II, when there was moderate quality and lower costs. We are in an era now in which technological changes are happening so fast that some events will be superseded before the ink is dry. We are looking to organizations that will create high quality at lowest costs.
One of the most significant imperatives for the future will be the developing relationship between higher quality levels and the speed of e-commerce. The dual impact of quality methodologies such as Six Sigma and the virtual reality of the Internet will bring a new dimension to the processes that enterprises must use to be competitive and provide what customers want, when they want it.
Competitive pressure to improve quality is not going to let up. Some may consider periods of weakness in the economy as a plateau also for quality improvement initiatives. Weakness in the economy only re-energizes an enterprise's need to improve even more. I have yet to find a company that will settle for erosion of top line growth without continuing to improve bottom line profitability. There will always be constant pressure to perform at higher levels. The same is true of quality. Customers will demand greater levels and will always push beyond the limit. Successful enterprises must be in competitive shape organizationally by incorporating a stronger quality focus into their strategic plans to link every operation toward customer satisfaction at accelerated rates.
The fiercely competitive global economy may become one big borderless market with fewer fences to climb. Markets of every description are opening wider every day.
Once loyal, customers are now forcing suppliers to higher levels of improvement in everything they do. To survive and grow in such an environment, organizations in developed and undeveloped economies will have no choice but to raise the levels of quality throughout their enterprises and achieve a competitive advantage in the cost of designing, producing, delivering, and supporting their products and services.
In manufacturing, where quality improvement initiatives were first applied, professionals realize that technological developments like the Internet create additional levels of quality and speed in meeting the demand for increased efficiencies. These initiatives are migrating into every aspect of life. In addition to the production of products and related customer services, quality initiatives will continue to expand into transactional processes of all kinds in fields as diverse as health care, government, and education. GE Capital's application of Six Sigma has prompted financial companies to look into the technique as well. Other services such as insurance companies are lagging, but they are beginning to use Six Sigma as a tool.
To keep up, quality professionals in manufacturing and other fields must broaden their own span of involvement and expertise. One major requirement will be to increase their roles in design processes, as businesses appreciate the value of moving the quality system upstream. Quality professionals will become multi-faceted experts, technicians, trainers, designers, and customer liaison people, while also involving themselves in purchasing, engineering, and public relations.
It isn't only the quality officers who will be leading the overall quality drives in the future. In many organizations, the prime movers in addition to the CEO will be the financial officers. Elsewhere it might be the information officer or the human resources officer. This will happen primarily in organizations in which the quality officer views his or her role as an authority in a highly specialized aspect of customer satisfaction.
Moreover, improvement will become a function of every job title in every organization. Just look at the number of Six Sigma Black Belts and Green Belts trained in the past few years. As the importance of employee quality performance grows, there will be more emphasis on employee satisfaction. Indeed, organizations will apply the same fervor to creating employee satisfaction as they do to customer satisfaction.
Making it easy
Training for employee skills development will continue to grow. New soft-ware will make the use of complex tools easier for non-technicians. There will be new, automated testing tools for e-commerce quality because the fluidity of the environment in which Web-based applications run requires constant testing and re-testing. New tools will be required for producing the near-perfect parts, products, services and processes that businesses and consumers require. Mass customization will increase. Bicycles, jeans, shoes, carpets and other products now come in design-your-own styles, as do financial services, meals and even health care. Look for more in this area as improvements in lean manufacturing create additional mass customization models. Next in line: embedded software to continually monitor customer views of performance and make needed changes quickly.
Demands for higher quality are migrating internationally. We will see Third World countries make quantum leaps. This has happened already in South Korea at Samsung Electronics, where Six Sigma is being implemented throughout the company's worldwide operations.
Quality will continue to improve at every level in the supply chain too as long as there is pressure to reduce costs. Volkswagen in Brazil now requires suppliers to install and test parts on the assembly line. Variety Perkins, a diesel engine maker, provides suppliers with daily measurements of their performance.
Honda of America Manufacturing asks its suppliers to provide detailed breakdowns of their costs so it can compare them with those of other suppliers and suggest improvements. Johnson Controls helps each of its key suppliers improve their productivity by assigning an individual employee to serve as a champion of each supplier. Downstream improvements are being made as well, as businesses develop customer partnering programs to improve packaging, shipping and even product development.
Mexico is making extraordinary strides. One reason for this is the high respect its universities enjoy, the large numbers of engineers they graduate, and the strength of university-private sector partnerships. When I speak at a university-sponsored function in the U.S., the audience is in the hundreds. In Mexico, the audience can be a thousand.
Bye bye, red tape
International trade, hidebound by red tape and currency issues for so long, is set to be revolutionized by e-commerce, practicality and common sense, population movements, competition, governments, and, yes, politics too, among other dynamics.
Quality, as an issue and driver, is far more horizontal and has taken on most of the parameters of classic best practices in financial performance, management strategy, human resource deployment, manufacturing process control, supplier relations, and use of advanced technologies such as the Internet. We tend to think someArial that technology has not opened up more time to do other things or enjoy leisure when, in fact, it has created a whole new world of opportunities.
If technological developments maintain the pace expected, productivity growth should continue. Though there will be blips, productivity has been growing steadily. Total computational power in the world has grown at an annual rate of over 80%.
One can debate issues of difference among the means to improve and focus on quality. The name could be anything. Today, Six Sigma carries the banner. What is important, of course, is the fundamental need to be competitive enough for healthy growth that creates jobs for a better world and a better bottom line.
That's why e-commerce and the Internet also play such major roles as partners for organizations to increase efficiencies, raise the levels of quality, and enhance customers' satisfaction. For example, costs triggered by shortages and surplus inventories will be cut in the future when inventories and production schedules are monitored in real time via the Internet by both suppliers and customers.
In every organization that focuses on improving quality, the basic Six Sigma Breakthrough Improvement Process and its cousins will become standard. The organizations that have made the most improvements from quality in the past will get the most value from Six Sigma. Engineering-driven companies and businesses in competitive industries will continue to be among the leaders.
Quality will become an increasingly important com-ponent of basic business plans, further intensifying the importance of chief executive leadership. As Dr. Juran has written, "The most decisive element in the success or failure of improvement initiatives is the extent to which the CEO provides personal leadership, involvement, and becomes a spokesperson on the value of quality and customer satisfaction."
Chief executives will continue to get involved and participate more actively in goal setting, providing resources, guiding the deployment process, establishing measures, approving the action plan and assessing performance against goals. To demonstrate their commitment, more top management will take part in recognition ceremonies and express their belief in quality in annual reports and at stockholder and security analyst meetings. Some responsibilities can be delegated, but leadership cannot.
How far can quality go? Only a few years ago, the idea of Six Sigma quality was considered utopian. Now that it has become possible, we can aspire to even higher standards. Like the Internet, Six Sigma provides an infrastructure that provides a common approach to major savings that fall right to the bottom line. Smaller and medium-size enterprises can now compete with larger companies on a broader basis by using these methods and e-commerce to reduce the costs of less efficient means.
Facts continue to indicate that e-commerce is alive and well. Many dot-coms may have failed due to economic conditions, or because business models were not right for the time or expectations exceeded realities. Major technological evolutions always cause a roller coaster effect for awhile. Despite rumors of dot-com demise, Webmergers.com's July Shutdown Report says the total number of failures represent only 6% to 8% of all dot-coms.
Current successes and developments are paving the way for e-commerce to help new and traditional businesses perform more efficiently, take advantage of new opportunities, become unified in what they do best and serve customers better. We must remember that the Internet is one of the tools for implementing business strategies, not just in being cost efficient.
E-commerce also requires defect-free processes to make it competitive. In the old economy, a dissatisfied supermarket shopper eventually returns to the store because there may be only a few stores in town to purchase the goods. But frustrated on-line buyers will immediately log on to another site and perhaps never again visit the first one because there are many options. Customer defections become instant and may be permanent. E-commerce requires perfection at the front end (order entry, transfer of payments, data gathering) and at the back end (supplier raw material ordering, monitoring of shipping, distribution).
Despite the economic downturn, earlier reports indicated online sales tripled in the past year. Bill Paulk, vice president of e-markets for IBM, was reported as saying the impact of electronic business-to-business, or B2B, solutions will be on supply chain, customer relationships, procurement, business intelligence, product design, and management; and that all will be interwoven to some degree.
Worldwide e-commerce, predicts eMarketer, will grow from $550 billion in 2001 to $3.2 trillion in 2004; and Forrester Research forecasts global e-commerce could reach as high as $6.9 trillion by that same year. Online trade will expand globally also as organizations use the Internet to reduce inefficiencies in international trade practices. Forrester also says international participation will grow as U.S. marketplaces expect over 40% of their volume to come from abroad by 2002.
The number of high-speed Internet connections jumped 158% last year, with 7.1 million lines reaching homes and businesses, according to the Federal Communications Commission. Forrester predicts Canada will become one of the largest Internet economies in the world, with B2B e-commerce surpassing $270 billion, and Internet connections in six out of 10 households. Even as dot-com retailers crashed in Europe last year, online retail sales nearly tripled. As sales grow to over 150 billion euros by 2006, 6% of retail, successful retailers will target profit-rich, supply-poor categories.
Most organizations are using the Internet to some extent, but many are beginning to implement it into vital parts of their operations. What better example to cite than General Electric Supply, a distributor of electrical and telecommunications equipment for 70 years. It sold $500 million worth of products last year through its online storefront from among 250,000 products produced by over 200 manufacturers.
Other bricks and mortar organizations like Hewlett-Packard are moving to secure a bigger slice of what's left of the market once dominated by e-consulting firms. The Web is a logical participant in helping to control quality and customer services because it's where people go for quick answers. It has the technology to help customers find their way through extensive content and it never closes!
With inexpensive chips and a worldwide Internet backbone, nearly every device powered by electricity will have an Internet connection through both wired and wireless networks. The number of Internet devices could boom from 100 million today to more than a billion by 2010. Carl Howe, research director and principal analyst at Forrester, said, "The extended Net will reshape technology's role in business by providing real-time information about what is going on and knobs and levers for companies to control their businesses. A data center, for example, might combine real-time data from both an electric power producer and customers to reduce consumption when demand peaks--all through extended Internet devices."
One of many reasons why GE embraces the Internet is the wider availability of high-speed access, which makes it more comfortable to use. The growth of wireless technology makes it portable and global. Retiring GE CEO Jack Welch calls e-business "the final nail in the coffin for bureaucracy at GE." In the midst of a slow economy, GE increased high-tech spending by over 10% to $3 billion earlier this year. The company's e-business strategy is going through a complete change to take advantage of new technologies that increase the values of universal connectivity, quality and service.
Who said that?
AT&T Labs says it will start selling speech software that reproduces inflections and intonations of a human voice. The software turns printed text into synthesized speech, and even makes it possible to use recordings of a person's voice to say things the person never actually said. IBM is supporting a new technology called grid computing, which many say is the next evolutionary step in developing the Internet. Everyone at a desktop or hand-held computer may soon have the power of a supercomputer at the tips of their fingers.
As the Internet moves to a second round of expansion beyond the browser, two new waves of innovation will enter the market. An executable Net will improve online experience such that users will get real-time, interactive experiences over the Net through disposable code. Programs can be downloaded quickly to PCs and handheld devices enabling users to have extended conversations with Net services. An extended Internet will emerge through devices and applications that sense, analyze, and control the real world.
Jupiter Media Metrix indicates that despite an economic downturn, companies are spending more on customer relationship management and related technologies by increasing spending on infrastructure. Jupiter estimates the number of individuals seeking online service will grow from 33 million this year to 67 million by 2005. Being first in new markets, however, does not guarantee leadership. The more that knowledge-based products become easily transportable, the greater the price restraints.
Internet searches will only get easier as Web HyperText Markup Language (HTML) is replaced by Extensible Markup Language (XML) software, which provides more precision in identifying needs. The Internet will become available on a broad range of existing and new appliances. Over the next five years, more than 80% of new corporate e-business applications will be designed for non-PC devices such as wireless phones, predicts IBM's Global Telecommunications division. Businesses have made enormous investments in infotech. Competitive advantage will go to those that use the information best.
Research will intensify as organizations become more aggressive about seeking competitive advantage. Look for more standardizing of concepts, such as the industry-wide five-step Define, Measure, Analyze, Improve and Control (DMAIC) process that has aided growth of the Six Sigma discipline. With this will come a more standardized terminology.
Highly accelerated life tests on products will be developed to predict performance through all phases from design to disposal. Business scorecards will encompass the entire design, production, distribution, and use process.
Already, the humble measuring microscope has evolved into an automated video inspection system that incorporates cameras, auto-focus and zoom lenses, motorized stages, and computerized analysis functions. New tools are only part of the story. Existing tools and measures will be applied with more discipline and diligence as employees better understand measurement and the value of tools they have ignored. Rather than simply fill in the blanks, employees will use the tools for rigorous analysis and decision making.
Once customers experience quality in products as well as services, they want more. How else to explain the declining American Customer Satisfaction Index scores in the face of increasing quality? Responding to increased demands, businesses are shifting their focus from satisfying customers to exceeding their expectations. Home pages, e-mail and hot lines will become increasingly valuable in this effort.
Observers as well as participants in the Six Sigma process must be careful not to let its structure, methods of measurement and control, and the ingrained culture of being the best obscure the real objective. The goals should include defining the problems, measuring the deviations, analyzing the existing structure or procedure and reducing the cost of poor quality while making breakthrough improvements, and controlling the gains.
Six Sigma has proved it can generate employee enthusiasm, empowerment, and focus. Results like that produce major benefits, which clearly help entire organizations if the right leadership is involved and there is enthusiastic support from talented and dedicated people who want to grow.
The substance of Six Sigma also raises the level of professionalism in employees and its "personality" provides a process around which people can identify and rally. Names and methods may change over time, but the name of the game is still something that produces consistency in reducing costs of poor quality, is measured, controlled, and meets customer needs with the best product or service.
History tells us we should not get carried away with great predictions and inevitable outcomes, but the writing is on the wall. There is proof that the pervasive focus of successful enterprises in a high tech world will be leadership in management, quality, financial performance, and, above all, customer satisfaction.