Market-Driven Quality: IBM, Rochester, MN
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--------------1_------------ Midwestern Region Market-Driven Quality: IBM, Rochester, MN Rao J. Tatikonda Building on basic beliefs - respect for the other recommendations during the annual Event Reports individual, the best customer service, and update of five-year strategic plans. Market Driven Quality: 25 excellence in all pursuits - IBM's Baldrige 2. Improve the requirements definition pro IBM, Rochester, MN winning facility in Rochester, MN embarked on cess. a transformation to market-driven quality Self·Directed Work Teams: 28 3. Implement Six Sigma defect level quality starting in the early 1960s. Now Rochester Basics and Success Factors strategy. IBM Rochester's goal is Six Sigma employees are driving toward defect-free per Global Supply Management: 30 by 1994. That means no more than 3.4 formance by 1994, as part of the corporate You Can't Be Excellent defects per million units or opportunities. All By Yourself wide effort to qualify the entire company for Specific steps include eliminating manual the national quality award. Multifin Workshop, May 14-15, 32 operations in interpreting specifications, Change, Choice, and Continuous Following are elements of IBM and continuously improving design tools Improvement Rochester's approach to market-driven quality, and techniques to prevent defects early in Tour America 1991: 34 shared during the recent AME workshop. Several the design cycle and to improve cycle Something Special in Wisconsin perfonnance measures are shown in Figure 1. times. Market·Driven Quality Success Factors 4. Create and deploy an Excellence in Educa IBM Rochester's market-driven quality tion plan. cycle integrates six critical success factors, with 5. Enhance and enable employee involve the goal of customer satisfaction leadership: ment. 1. Enhance total product strategy and plans. 6. Develop and implement cycle time reduc Customers, suppliers, and employee teams tions. contribute product direction, sourcing, and Market-driven quality begins with under standing the customer's needs and providing Performance Improvements - IBM Rochester solutions through administrative, marketing • 35 percent increase in revenue per employee since 1986 and sales support, technical, delivery, and • 70 percent shorter production time on AS/400 computers since 1986 maintenance and service support (see the cus • More than 50 percent decrease in product development time for new mid-range computer tomer perspective shown in Figure 2). systems since 1986 Cycle Time Progress • 55 percent decrease in write-ofts since 1983 Process management is a major reason • 45 percent cut in engineering change costs as a percentage of output since 1984 for IBM Rochester's improved quality results. • Empioyee morale rated highest in IBM-USA (annual employee surveys) The owner of each process in the product • IBM's share of the global market for intermediate computers increased a full percentage point in development, manufacturing, and administra both 1988 and 1989, and 1988-90 revenue growth (15.2 percent) was more than double the tive areas must define the process and their industry average. customers and suppliers. Their objective: to • Product reliability rose three-fold (mean time to failure) and product warranty periods rose from continuously improve quality and reduce cycle three to 12 months from 1984 to 1990. times. • Customer satisfaction index increased five points in one year, according to company surveys Serial processes for producing System/36 (1989-90). and System/38 computers were transfonned to Flgur. 1. IBM Rochester cut product development times and turned in other performance improvements during the past several years. a concurrent, oontinuous flow system for pro ducing the AS/400 system. Simulation, Early 25 March/Aprli 1992 ---------------I_~------------- Customer View • Responsiveness • Technical ability and coverage • Ease of doing business • Knowledge of customer's business Marketing and sales Maintenance and Administration oUerings Technical solutions Delivery services support • Terms and conditions • Expectations defined and set • Low price and high performance • Complete shipments • Single person to contact (no hidden costs) • Wants and needs understood • Quality and reliability • Shipped on time • Problem source identified quickly • Order accuracy • Solutions and applications • Low cost of ownership • Order-Io-invoice lime shortened • Knowledgeable customer engineer • Billing accuracy provided • Solutions available • Upgrade and systems engineer • Late billings • Solution affordable • Incorporale wants and needs into Reduced complexity • Complaint management accurate specifications Reduced lime • Excellent hardware and • Products announced on lime software service • Telephone support • Trial period permitted • Easy to use Flexible policy • Reduced cycle time (rapid • lnstallability • Parts available • Channel management Free of defects • sales and volume increased product introductions) Short lime Sufficient quanti~ • Customer education • Rich in function Not complex Near customer's location • Gain and loss management • Easily migratable Free ot defects • ConnectiVity with vendors • Easy to use documentation Marketing branch offices Product development Manufacturing Service Customer solution L-- -----.J~I FI/11Im2. Taking aim on customer satisfaction, IBM Rochester looks for administrative, technical and other improvements from the customer's perspective. Manufacturing Involvement (EMIl, software mation for cross-functional root cause analysis products cycle time decreased 76 percent and component development, and parallel system teams. inventory dipped 55 percent; Minnesota suppli tests contributed to a 40 percent reduction in Using what IBM calls Continuous Flow ers' cycle time (from the time an IBM order is the development cycle time (see Figure 3). EMI Manufacturing (CFM), employees and suppli- received to shipment) decreased 80 percent; teams include design, manufacturing, and and warehouse space fell 30 percent. supplier representatives. They begin working in Customer orders validated CDntlnulng CustDme, Links the early design stages to improve manufactur (using expert system technology) Several techniques integrate customers ing processes. in IBM Rochester's product development pro IBM Rochester uses process management by a branch office go directly to cess. For example, customer and business part and simulation tools to cut cycle time by the ManufactUring Control ner councils bring together customers world removing defects before fabricating hardware System (MCS) and then to the wide to review future product development and integrating software. An Early Verification plans twice a year. Customers visit an executive Engine (EVE) simulates system design, result assembly line.... briefing center supported by development and ing in an 80 percent reduction in the time to manufacturing teams. An independent user debug hardware from the initial design. ers examine each step in the total process from group named COMMON meets regularly, pro Customer orders validated (using expert customer order to raw material gathering viding AS/400 requirements to IBM Rochester. system technology) by a branch office go through manufacturing and customer installa In the Software Partner Lab, customers directly to the Manufacturing Control System tion. Since IBM Rochester began using CFM and business partners are provided an opportu (MCS) and then to the assembly line in this concepts in the early 1980s, systems manufac nity to jointly develop solutions for future highly-automated facility. On-line systems turing cycle time (physical assembly and test product releases. Usability testing enables cus enable assembly and sub-assembly areas to time on the assembly floor) decreased 80 per tomers to verify that products meet their monitor production and provide timely infor- cent and inventory dropped 50 percent; storage requirements. 26 Target •• II from a few members to hundreds. Ad hoc Comparing Svstem/3X with AS/400 tearns and permanent tearns (such as product Syslem136 and Svstem138 sequen1ial development development) use this disciplined approach: Confirm the details of the problem and related information, analyze data for frequency and Manulocturing trends, correlate data with recent actions or changes in processes or materials, and isolate causes through statistical techniques and con trolled experiments. On one manufacturing line, for example, a team made more than 95 improvements on the on-line production soft AI/4Dll s,nchronlmdJpar'llllel developmenl ware to detect the correct EC (engineering change) for cards being installed in the system. IBM Rochester also relies heavily on cross-functional process improvement teams to create defect prevention methods, simplify pro cesses, and reduce cycle times. For example, one team transformed the engineering change process from the traditional printed copy method to an efficient, on-line process. The process owner, a line manager, served on the team. Customers from various site locations identified bottlenecks, root cause analysis indi Figure 3. Simulation, Early Manulacturing Involvement (EMI), software component development, cated process upset causes, the process flow was and paraiiel system tests contributed to a 40 percent reduction in cycle time compared to the changed, and on-site customers were trained development 01 Systeml36 and System/3S systems. how to use the new system. Results: IBM An early availability program provides measure, it would