In 1979, when executive Art Sundry stood up at a management meeting and declared, “The real issue at Motorola is that our standard stinks!” the search to attain Six Sigma had its birth at Motorola.
The declaration by Sundry ignited a new era within Motorola and contributed to the discovery of the critical connection between higher quality and lower cost of production in the manufacture of all kinds of goods.
At a time when most American businesses assumed that quality cost money, Motorola discovered that improving quality would potentially minimize costs when performed correctly.
They thought that high-quality items could cost less, not more, to manufacture. They reasoned that the lowest-cost producer should be the highest-quality producer.
At the moment, 5 to 10 percent of annual revenue was spent by Motorola, and in some cases, as much as 20 percent of revenue, thus correcting low efficiency.
That converted every year into a whopping $800 million to $900 million, capital that could be returned straight to the bottom line through higher-quality processes.
As Motorola executives started searching for ways to eliminate waste, Bill Smith, an engineer in the Communications Division of Motorola, was secretly working behind the scenes to research the connection between the field life of a product and how frequently during the development period the product was repaired.
Smith submitted a report in 1985 concluding that if a component was found to be faulty and repaired during the development process, further flaws were bound to be ignored and subsequently identified by the consumer during early use of the product.
However, since the commodity was manufactured error-free, the user seldom refused to do so during its early use.
While Smith’s results were initially met with cynicism, there was very real consumer frustration with a product that struggled shortly after it was acquired. As a consequence, a fierce debate within Motorola was sparked by Smith’s discovery.
Is the initiative really based on identifying and repairing defects to achieve quality? Or could consistency be obtained in the first place by production controls and product design by eliminating defects?
Later data would reveal that a deliberate attempt to find and repair flaws would only result in Motorola putting it marginally ahead of the average American company by four sigmas.
Around the same time, the company found that international rivals made goods during the production process that did not need maintenance or rework.
At Motorola, others started taking a second look at Smith’s work. Shortly after the consumer started buying it, more needed to be done to change the development process if hidden flaws forced a product to crash.
As a result, by concentrating on how the product was produced and made, Motorola began its mission to increase consistency and simultaneously minimize manufacturing time and costs.
It was this connection between higher quality and lower cost that led to the growth of Six Sigma’s initiative, which initially concentrated on improving quality through the use of reliable metrics to predict and not only respond to problem areas. In other terms, Six Sigma will encourage a business leader to be constructive rather than attentive to quality problems.
The disparity between previous overall consistency approaches and the Six Sigma principle was a matter of emphasis. Total quality management (TQM) systems concentrate on optimizing individual activities of unrelated procedures.
As a result, for many quality projects, no matter how extensive they are, it takes many years before all processes within a given process (a process is a set of actions or measures to produce a product or service) are changed.
The Six Sigma architects at Motorola concentrated on optimizing all processes in the process, generating results both quicker and more efficiently.
A quantum leap in manufacturing technologies occurred at Motorola by adding Six Sigma to the production of the Bandit pager-a name chosen by the company because those interested in the project “borrowed” every good concept they could find from goods already on the market.
Under 18 months, and at a price tag of less than $10 million, Motorola’s 23 Bandit engineers developed a pager that could be manufactured in its automated factory by machine from every Motorola sales office.
Pagers could be purchased with a range of options and could be custom-built for specific consumers. In comparison, Bandit’s superior architecture and production process resulted in an overall life expectancy of 150 years.
The company’s pagers were so accurate that the quality testing was eventually eliminated; it was much more cost-effective to repair the pager, in the unfortunate event that it crashed than to waste time and resources testing a product that was practically defect-free.
When Motorola saw a decline in errors and development time, the firm also started to gain financial gains from the Six Sigma concept. In other words, the company had better-quality goods and satisfied consumers at a lower rate. Six Sigma has saved the organization $2.2 billion in four years. The Six Sigma Architects of Motorola had done what other corporations felt was unlikely.
By 1993, Motorola had been working at nearly six sigma locations in several of its manufacturing facilities. In a short period, Six Sigma started to spread like a flame to other markets and beyond the development divisions alone.