CHAPTER 3 Frameworks for Quality and Performance Excellence

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1 CHAPTER 3 Frameworks for Quality and Performance Excellence

2 Outline Describe the philosophies of Deming, Juran, and Crosby
Provide an overview of the Malcolm Baldrige National Quality Award and other related award programs, ISO 9000, and Six Sigma Understand the differences in scope, purpose, and philosophy of these frameworks W. Edwards Deming, Joseph Juran, and Philip Crosby are recognized as the most influential thinkers and leaders of modern quality management. A. V. Feigenbaum and Kaoru Ishikawa have also made significant contributions to modern quality management practices.

3 Deming Philosophy The Deming philosophy focuses on continual improvements in product and service quality by reducing uncertainty and variability in design, manufacturing, and service processes, driven by the leadership of top management. Continuous improvement refers to both incremental changes, which are small and gradual, and breakthrough improvements, which are large and rapid. Improvement depends on learning. A learning cycle consists of four stages: 1. Planning 2. Execution of plans 3. Assessment of progress 4. Revision of plans based upon assessment findings Process improvement should be viewed as an opportunity, not simply a reaction to problems. Kaizen, the Japanese term for improvement, is a philosophy of quality improvement in all areas of business using small, frequent, and gradual improvements over the long term. A kaizen blitz is an intense and rapid improvement process in which a team or a department throws all its resources into an improvement project over a short time period, as opposed to traditional kaizen applications, which are performed on a part-time basis. Deming’s philosophy is based on improving products and services by reducing uncertainty and variation in design, manufacturing, and service processes, driven by the leadership of top management. The Deming Chain Reaction suggests that quality improvement leads to long-term business and economic prosperity. The 14 Points represent the practices that Deming advocated for achieving quality excellence.

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5 Plan (1 of 2) Define the process: its start, end, and what it does.
Describe the process: list the key tasks performed and sequence of steps, people involved, equipment used, environmental conditions, work methods, and materials used. Describe the players: external and internal customers and suppliers, and process operators. Define customer expectations: what the customer wants, when, and where, for both external and internal customers. Determine what historical data are available on process performance, or what data need to be collected to better understand the process. 5 5

6 Plan (2 of 2) Describe the perceived problems associated with the process; for instance, failure to meet customer expectations, excessive variation, long cycle times, and so on. Identify the primary causes of the problems and their impacts on process performance. Develop potential changes or solutions to the process, and evaluate how these changes or solutions will address the primary causes. Select the most promising solution(s). 6 6

7 Do Conduct a pilot study or experiment to test the impact of the potential solution(s). Identify measures to understand how any changes or solutions are successful in addressing the perceived problems. 7 7

8 Study Examine the results of the pilot study or experiment.
Determine whether process performance has improved. Identify further experimentation that may be necessary. 8 8

9 Act Select the best change or solution.
Develop an implementation plan: what needs to be done, who should be involved, and when the plan should be accomplished. Standardize the solution, for example, by writing new standard operating procedures. Establish a process to monitor and control process performance. 9 9

10 Deming Chain Reaction Improve quality Costs decrease
Productivity improves Increase market share with better quality and lower prices Stay in business Provide jobs and more jobs

11 Deming’s System of Profound Knowledge
Appreciation for a system Understanding variation Theory of knowledge Psychology Deming synthesized the underlying foundations of the 14 Points into four simple elements that he called a System of Profound Knowledge: 1. Appreciation for a system 2. Understanding variation 3. Theory of knowledge 4. Psychology

12 Systems Most organizational processes are cross-functional
Parts of a system must work together Every system must have a purpose Management must optimize the system as a whole A system is a set of functions or activities within an organization that work together for the aim of the organization. Systems thinking is critical in applying quality principles because the organizational linkages among various functions of an organization must be in alignment to meet the needs of customers and other stakeholders.

13 Variation (Değişkenlik)
Many sources of uncontrollable variation exist in any process Excessive variation results in product failures, unhappy customers, and unnecessary costs Statistical methods can be used to identify and quantify variation to help understand it and lead to improvements Variation exists in any production and service process, generally due to factors inherent in the design of the system, which cannot easily be controlled. Excessive variation results in products that fail or perform erratically and inconsistent service that does not meet customers’ expectations. Common causes of variation are inherent to a process, generally account for most observed variation, and cannot be identified on an individual basis or controlled. Special (assignable) causes of variation are sporadic in nature and result from external disturbances that can usually be identified statistically and either explained or corrected. A system governed only by common causes is called a stable system. Statistical methods are the primary tools used to identify and quantify variation. Deming suggested that management first understand, and then work to reduce variation through improvements in technology, process design, and training.

14 Theory of Knowledge Knowledge is not possible without theory
Experience alone does not establish a theory, it only describes Theory shows cause-and-effect relationships that can be used for prediction The theory of knowledge is the branch of philosophy concerned with the nature and scope of knowledge, its presuppositions and basis, and the general reliability of claims to knowledge. Basically, managers need to understand how things work and why decisions that affect the future should be effective.

15 Psychology People are motivated intrinsically and extrinsically; intrinsic motivation is the most powerful Fear is demotivating Managers should develop pride and joy in work Much of Deming’s philosophy is rooted in psychology and based on understanding human behavior and treating people fairly. People can be motivated intrinsically and extrinsically; however, the most powerful motivators are intrinsic.

16 Deming’s 14 Points (Abridged) (1 of 2)
1. Create and publish a company mission statement and commit to it. 2. Learn the new philosophy. 3. Understand the purpose of inspection. 4. End business practices driven by price alone. 5. Constantly improve system of production and service. 6. Institute training. 7. Teach and institute leadership. 8. Drive out fear and create trust. Deming’in bu on dört ilkesine ilişkin ayrıntılı açıklamalar şu kaynakta bulunmaktadır: Mesiha Saat Ersoy, Abdullah Ersoy, Kalite Yönetimi, s

17 Deming’s 14 Points (2 of 2) 9. Optimize team and individual efforts.
10. Eliminate exhortations (teşvikler) for work force. 11. Eliminate numerical quotas and M.B.O. Focus on improvement. 12. Remove barriers that rob people of pride of workmanship. 13. Encourage education and self-improvement. 14. Take action to accomplish the transformation.

18 Juran Philosophy Juran proposed a simple definition of quality: “fitness for use.” (kullanım açısından uygunluk) This definition of quality suggests that it should be viewed from both external and internal perspectives; that is, quality is related to “(1) product performance that results in customer satisfaction; (2) freedom from product deficiencies, which avoids customer dissatisfaction.”

19 Juran’s Quality Trilogy
Quality planning Quality control Quality improvement Joseph Juran’s philosophy seeks to provide change within the current American management system. Juran defined quality as fitness for use – the user-based definition we described in Chapter 1. His Quality Trilogy—planning, control, and improvement—provides a direction for quality assurance in organizations. Juran specified a detailed program for quality improvement, known as the breakthrough sequence, consisting of proof of the need, project identification, organization for breakthrough, the diagnostic journey, the remedial journey, and holding the gains.

20 Quality is free . . . (kalite bedavadır)
Crosby Philosophy Quality is free (kalite bedavadır) “Quality is free. It’s not a gift, but it is free. What costs money are the unquality things -- all the actions that involve not doing jobs right the first time.”

21 Crosby’s Absolutes of Quality Management
Quality means conformance to requirements Problems are functional in nature There is no optimum level of defects Cost of quality is the only useful measurement Zero defects is the only performance standard Philip Crosby’s approach to quality is summarized in his Absolutes of Quality Management – conformance to requirements, no such thing as a quality problem, doing the job right the first time, cost of quality measurement, and zero defects as the only performance standard – and Basic Elements of Improvement – determination, education, and implementation. He places more emphasis on behavioral change rather than on the use of statistical techniques as advocated by Deming and Juran.

22 Malcolm Baldrige National Quality Award
Help improve quality in U.S. companies Recognize achievements of excellent firms and provide examples to others Establish criteria for evaluating quality efforts Provide guidance for other American companies . Baldrige Ödülü’nün Deming’in 14 ilkesinin her birini destekleyen spesifik bölümleri şu şekilde özetlenebilir: 1. Amacı İfade Edin: Strateji geliştirilmesi bir misyon ve vizyonun olmasını gerektirir. Üst yöneticilerin hedeflere ve amaçlara bağlılığı spesifik olarak Liderlik kategorisinde ve müşteri tatminini ve ilişkilerini geliştirme başlığı altında ele alınmıştır. 2. Yeni Felsefeyi Öğrenin: Değerlerin, beklentilerin, müşteri odaklılığın ve öğrenmenin iletilmesi Örgütsel Liderlik konusunun temel konuları arasındadır. 3. Muayenenin Ne Olduğunu Anlayın: Süreç Yönetimi kategorisi uygun ölçüm planlarının geliştirilmesi konusunu ele alır. Destek Süreçleri başlığı altında Ölçümler şirketin muayene ile ilişkili maliyetleri nasıl minimize etmeyi hedeflediğine ilişkin kanıtları araştırır. 4. Fiyata Dayalı Kararlardan Vazgeçin: Bu, Süreç Yönetimi kategorisinin tümünde ve Ölçümlerin genel performansa ve süreçler ile sonuçlar arasındaki bağlantıya yaptığı vurguda dolaylı olarak ele alınmıştır. 5. Sürekli Olarak İyileştirin: Sürekli iyileştirme ve öğrenme Baldrige’ın temel değerlerinden biridir. Bu ölçüm spesifik olarak şirketin kendi süreçlerini nasıl değerlendirdiği ve iyileştirdiği sorusunu sorar. 6. Eğitimi Sağlayın: Çalışanların Eğitimi, İşbaşı eğitimi ve Geliştirilmesi bölümü performans amaçlarının gerçekleştirilmesinde eğitimin ve çalışanların geliştirilmesinin önemini ifade eder. 7. Liderliği Öğretin ve Oluşturun: 1. kategori tümüyle liderliğe ayrılmıştır ve yukarıdaki şekilde gösterilen Baldrige ölçüm çerçevesindeki yönetim sisteminin temel yönlendiricisi olduğu kabul edilmektedir. Malcolm Baldrige, former U.S. Secretary of Commerce

23 Criteria for Performance Excellence
Leadership Strategic Planning Customer Focus Measurement, Analysis, and Knowledge Management Workforce Focus Process Management Business Results 8. Korkuyu Ortadan Kaldırın ve Yenilik Yapın: İnsan Kaynakları Odaklılık, Müşteri ve Piyasa Odaklılık ve Stratejik Planlama kategorileri iş tasarımı, personel güçlendirme ve bunu destekleyen uygulama konularını üzerinde odaklaşır. 9. Takımların ve Takım Üyelerinin Çabalarını Optimize Edin: Ölçümler İnsan Kaynakları Odaklılık kategorisinin yanı sıra, ürün/süreç tasarımında ve süreç yönetiminde takım çalışmasına ve müşterilere ilişkin bilgilere özel bir önem verir. 10. Sıkı Öğütler Vermekten Vazgeçin: Doğrudan ele alınmamakla birlikte, yüksek performansa yol açan çalışma ve iş tasarımına verilen önem, bunu tartışmalı bir konu haline getirmektedir. 11. Kotaları ve Amaçlara Göre Yönetimi Ortadan Kaldırın; İyileştirme Sistemini Oluşturun ve Süreçleri Kavrayın: Bilgi ve Analiz ve Süreç Yönetimi kategorilerinin yanı sıra, Örgütsel Liderlik ve Stratejinin Yaygınlaştırılması başlıkları verilere dayalı yönetim ve kavrama süreçlerini ele almaktadır. 12. Engelleri Ortadan Kaldırın: Müşteri Tatmini ve İlişkileri başlığının yanı sıra, Liderlik ve İnsan Kaynakları Odaklılık kategorileri bu amacı desteklemektedir. 13. Eğitimi Teşvik Edin: Bu konu, Çalışanların Eğitimi, İş Başında Eğitimi ve Geliştirilmesi ve Çalışanların Refahı ve Tatmini başlıkları altında doğrudan ele alınmıştır. 14. Harekete Geçin: Bu liderlik rolü Liderlik kategorisinde doğrudan ele alınmıştır. Baldrige Award trophy

24 The Baldrige Framework – A Systems Perspective
Organizational Profile: Environment, Relationships, and Challenges 2 Strategic Planning 5 Workforce Focus The framework is the 30,000 foot view of the Criteria. [Note: Education and Health Care Criteria have slightly different nomenclature.] The building blocks, or Categories, are essential -- performance in the Baldrige categories is the cost of entry -- but excellence in the linkages will be the mark of competitive leadership. The arrows point to excellence. The umbrella over strategy and action plans: It is the set of customer and market focused company-level requirements. These are derived from short- and long-term planning. They are the things that must be done well for the strategy to succeed. The action plans “bring the strategy to life.” They guide overall resource decisions. They drive the alignment of measures for all work units to ensure customer satisfaction and market success. The system: The leadership triad -- leadership, strategic planning, customer & market focus -- emphasizes the importance of a leadership focus on strategy and customers. The results triad is HR focus, process management, and business results. Its focus is on the employees and key processes that accomplish the work of the organization that yields results. ALL company actions point toward results. The large arrow in the center connects the leadership and results triads -- a critical linkage for company success -- and shows the role leaders must play in driving results improvement. Information and analysis are critical to a fact-based system; they are the foundation for the performance management system. 1 Leadership 7 Business Results 3 Customer Focus 6 Process Management 4 Measurement, Analysis, and Knowledge Management

25 Baldrige Web Site www.baldrige.nist.gov
Links to award recipients and application summaries Updated criteria versions CEO issue sheets Other information

26 Baldrige Award Evaluation Process
Examiner review of application to identify strengths and opportunities for improvement and preliminary scores Consensus review by examiner teams to reach agreement on comments and scores Judges’ selection of site-visited organizations Judges’ recommendation of recipients Feedback reports finalized for all applicants The four-stage evaluation process is illustrated in this chart. After each stage of review, the Panel of Judges meets to decide which applicants should go forward to the next stage -- consensus or site visit. The Judges’ guidelines encourage giving “benefit of the doubt” to make certain that all potential Award recipients proceed to each succeeding stage of review. When it is determined that an applicant will not proceed to the next stage of the process, the feedback report is prepared and sent within 45 days. All information remains strictly confidential throughout the process. There are strict conflict-of-interest rules that are followed by all Examiners, Judges, and National Quality Program staff.

27 Scoring and Evaluation
Approach - the methods the company uses to achieve the requirements addressed in each category Deployment - the extent to which the approaches are applied to all requirements of the item Results - the outcomes and effects in achieving the purposes given in the item

28 Approach Appropriateness of methods
Effectiveness of use of the methods. Degree to which the approach is Repeatable, integrated, and consistently applied Embodies evaluation/improvement/learning cycles Based on reliable information and data Alignment with organizational needs Evidence of innovation

29 Deployment Use of the approach in addressing item requirements relevant to the organization; Use of the approach by all appropriate work units

30 Results Current performance
Performance relative to appropriate comparisons and benchmarks Rate, breadth, and importance of performance improvements Linkage of results measures to key customer, market, process, and action plan performance requirements

31 Impacts of the Baldrige Program
Economic return on investment of 207:1 Changed the way organizations around the world manage themselves Use of self-assessment State, local, and national awards around the world Author Jim Collins: “I see the Baldrige process as a powerful set of mechanisms for disciplined people engaged in disciplined thought and taking disciplined action to create great organizations that produce exceptional results.”

32 International Quality Award Programs
Deming Prize European Quality Award Canadian Awards for Business Excellence Australian Business Excellence Award Chinese National Quality Award Many others!

33 Deming Prize Instituted 1951 by Union of Japanese Scientists and Engineers (JUSE) Several categories including prizes for individuals, factories, small companies, and Deming application prize American company winners include Florida Power & Light and AT&T Power Systems Division

34 ISO 9000:2000 Quality system standards adopted by International Organization for Standardization in 1987; revised in 1994 and 2000 Technical specifications and criteria to be used as rules, guidelines, or definitions of characteristics to ensure that materials, products, processes, and services are fit for their purpose.

35 Rationale for ISO 9000 ISO 9000 defines quality system standards, based on the premise that certain generic characteristics of management practices can be standardized, and that a well-designed, well-implemented, and carefully managed quality system provides confidence that the out-puts will meet customer expectations and requirements. According to the ASQ online glossary, a quality management system (QMS) can be considered a mechanism for managing and continuously improving core processes to "achieve maximum customer satisfaction at the lowest overall cost to the organization." A quality management system represents a specific implementation of quality concepts, standards, methods and tools, and is unique to an organization. A QMS provides a basis for documenting processes used to control and improve operations. A quality policy is a formal document that demonstrates a commitment to achieving high quality and meeting customer expectations. A quality manual serves as a permanent reference for implementing and maintaining the system. Internal audits focus on identifying whether documented procedures are being followed and are effective, and reporting the issues to management for corrective action.

36 Objectives of ISO Standards (1 of 2)
Achieve, maintain, and continuously improve product quality Improve quality of operations to continually meet customers’ and stakeholders’ needs Provide confidence to internal management and other employees that quality requirements are being fulfilled

37 Objectives of ISO Standards (2 of 2)
Provide confidence to customers and other stakeholders that quality requirements are being achieved Provide confidence that quality system requirements are fulfilled The ISO 9000 family of standards are a set of standards and guidelines for quality management systems that represents an international consensus on good quality management practices. They provide a comprehensive framework for designing and managing a quality management system and help organizations establish a process orientation and the discipline to document and control key processes.

38 Structure of ISO 9000 Standards
21 elements organized into four major sections: Management Responsibility Resource Management Product Realization Measurement, Analysis, and Improvement 1. İlke: Müşteri Odaklılık Örgütler müşterilerine bağımlıdır ve bu yüzden de mevcut ve gelecekteki müşterilerinin ihtiyaçlarını anlamalı, müşteri ihtiyaçlarını karşılamalı ve müşteri beklentilerini aşmak için çalışmalıdırlar. 2. İlke: Liderlik Liderler amaç birliğini ve örgütün gideceği yönü belirlerler. Yöneticilerin, örgüt amaçlarının gerçekleştirilmesine insanların tam olarak katılacakları iç ortamı yaratmaları ve sürdürmeleri gerekir. 3. İlke: Çalışanların Katılımı Her düzeydeki insanlar örgütün temelini oluştururlar ve bunların tam olarak katılımı yeteneklerinin örgütün yararına kullanılmasına olanak sağlar. 4. İlke: Süreç Yaklaşımı Faaliyetlerin ve bununla ilişkili kaynakların bir süreç olarak yönetilmesi durumunda istenen bir sonuç daha etkin bir şekilde elde edilir.

39 ISO 9000:2000 Quality Management Principles
Customer Focus Leadership Involvement of People Process Approach System Approach to Management Continual Improvement Factual Approach to Decision Making Mutually Beneficial Supplier Relationships 5. İlke: Yönetimde Sistem Yaklaşımı Birbiriyle ilişkili süreçlerin bir sistem olarak belirlenmesi, anlaşılması ve yönetilmesi örgütün amaçlarına ulaşmadaki etkinliğine ve verimliliğine katkıda bulunur. 6. İlke: Sürekli İyileştirme Örgütün genel performansının sürekli olarak iyileştirilmesi, örgütün sürekli amacı olmalıdır. 7. İlke: Karar Vermede Gerçekçi Yaklaşım Etkin kararlar verilerin ve bilginin analizine dayanır. 8. İlke: Karşılıklı Olarak Yarar Sağlayan Tedarikçi İlişkileri Örgüt ve tedarikçileri birbiriyle karşılıklı olarak bağımlıdır ve karşılıklı olarak yarar sağlayan bir ilişki her ikisinin de değer yaratma yeteneğini arttırır.

40 TÜRKİYE ULUSAL KALİTE ÖDÜLÜ
Avrupa Kalite Ödülü Çerçevesi (EFQM Mükemmellik Modeli) Bu ödül için yapılan değerlendirme müşteri tatminine, iş sonuçlarına, süreçlere, liderliğe, insanların tatmin derecesine, kaynaklara insan yönetimine, politika ve stratejiye ve toplum üzerindeki etkilere bağlıdır. Aşağıdaki şekilde İş Mükemmelliği Modeli olarak bilinen Avrupa Kalite Ödülü’nün bütünleşik yönetim çerçevesi yukarıdaki şekilde verilmiştir. TÜRKİYE ULUSAL KALİTE ÖDÜLÜ Türkiye Ulusal Kalite Ödülü, Türkiye Sanayici ve İş Adamları Derneği (TÜSİAD) ile Türkiye Kalite Derneği’nin (KalDer) yönetim kurullarının işbirliğiyle 1993’ten beri her yıl verilmektedir. Türkiye Ulusal Kalite Ödülü ile ülkemizde kalite bilincinin yükseltilmesi ve yaygınlaştırılması, kuruluşların kaliteye yönelik çabalarının özendirilmesi ve başarılı kalite stratejilerinin tüm ülke yararına sunulması amaçlanmaktadır. Bu ödül Avrupa Kalite Ödülü’nde kullanılan EFQM Mükemmellik Modeli (European Foundation for Quality Management, Avrupa Kalite Yönetimi Vakfı) esas alınarak oluşturulmuştur. 40

41 Six Sigma Six Sigma – a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and a clear financial return for the organization. Based on a statistical measure that equates to 3.4 or fewer errors or defects per million opportunities Pioneered by Motorola in the mid-1980s and popularized by the success of General Electric Six Sigma can be described as a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and a clear financial return for the organization. The term six sigma is based on a statistical measure that equates to 3.4 or fewer errors or defects per million opportunities. Some of the contrasting features between TQM and Six Sigma include: TQM is based largely on worker empowerment and teams; Six Sigma is owned by business leader champions. TQM activities generally occur within a function, process, or individual workplace; Six Sigma projects are truly cross-functional. TQM training is generally limited to simple improvement tools and concepts; Six Sigma focuses on a more rigorous and advanced set of statistical methods and DMAIC methodology. TQM is focused on improvement with little financial accountability; Six Sigma requires a verifiable return on investment and focus on the

42 Key Concepts of Six Sigma (1 of 2)
Think in terms of key business processes, customer requirements, and overall strategic objectives. Focus on corporate sponsors responsible for championing projects, support team activities, help to overcome resistance to change, and obtaining resources. Emphasize such quantifiable measures as defects per million opportunities (dpmo) that can be applied to all parts of an organization

43 Key Concepts of Six Sigma (2 of 2)
Ensure that appropriate metrics are identified early and focus on business results, thereby providing incentives and accountability. Provide extensive training followed by project team deployment Create highly qualified process improvement experts (“green belts,” “black belts,” and “master black belts”) who can apply improvement tools and lead teams. Set stretch objectives for improvement. The principal problem solving methodology used by Six Sigma is DMAIC—define, measure, analyze, improve, and control. The Define stage identifies the problem. The Measure stage includes collecting good data, observation, and careful listening. The Analyze phase of DMAIC focuses on why defects, errors, or excessive variation occur, and focuses on root cause. The Improve stage focuses on idea generation,evaluation, and selection. Finally, the Control stage focuses on how to maintain the improvements.

44 Six Sigma as a Quality Framework (1 of 2)
TQ is based largely on worker empowerment and teams; Six Sigma is owned by business leader champions. TQ activities generally occur within a function, process, or individual workplace; Six Sigma projects are truly cross-functional.

45 Six Sigma as a Quality Framework (2 of 2)
TQ training is generally limited to simple improvement tools and concepts; Six Sigma focuses on a more rigorous and advanced set of statistical methods and a structured problem-solving methodology DMAIC—define, measure, analyze, improve, and control. TQ is focused on improvement with little financial accountability; Six Sigma requires a verifiable return on investment and focus on the bottom line. A problem is a deviation between what should be happening and what actually is happening that is important enough to make someone think the deviation ought to be corrected. Quality related problems often fall into five categories: conformance problems, unstructured performance problems, efficiency problems, product design problems, and process design problems. Projects are the vehicles that are used to organize team efforts and to implement the DMAIC process. Being able to manage a large portfolio of projects, as would be found in Six Sigma environments, is vital to organizational success. Project teams are a vital part of Six Sigma efforts and are comprised of champions, master black belts, black belts, green belts, other team members, who each provide different levels of knowledge and expertise in solving problems. Factors that should be considered when selecting Six Sigma projects are: financial return, as measured by costs associated with quality and process performance, and impacts on revenues and market share, impacts on customers and organizational effectiveness, probability of success, impact on employees, and fit to strategy and competitive advantage.

46 Transactional Six Sigma
Applications in service organizations Issues: The culture of services is usually less scientific and service employees typically do not think in terms of processes, measurements, and data. The processes are often invisible, complex, and not well defined or well documented. The work typically requires considerable human intervention, such as customer interaction, underwriting or approval decisions, or manual report generation. Although Six Sigma was developed in the manufacturing sector, it can easily be applied to a wide variety of transactional, administrative, and service areas. Services are generally driven by four key measures of performance: Accuracy, as measured by correct financial figures, completeness of information, or freedom from data errors Cycle time, which is a measure of how long it takes to do something, such as pay an invoice Cost, that is, the internal cost of process activities (in many cases, cost is largely determined by the accuracy and/or cycle time of the process; the longer it takes, and the more mistakes that have to be fixed, the higher the cost) Customer satisfaction, which is typically the primary measure of success Therefore, differences between services and manufacturing make opportunities in services more difficult to identify, and projects more difficult to define. Small organizations (including manufacturing and services) can use Six Sigma, although perhaps in a more informal fashion.