How to adapt and implement six-sigma successfully in order...

How to adapt and implement six-sigmasuccessfully in order to improve quality andreduce waste: An African Explosives Limited

experience

EMBA 6 DISSERTATION

Presented ToThe Graduate School of Business

University of Cape Town

In partial fulfilment of the Executive MBA

By

Cyril Vuyani Gamede

For

Associate Professor Tom Ryan

Student Number: GMDCYR001 2 May 2006

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Acknowledgements

Kagiso 1996 Kagiso 200410 years 19 years

This work is dedicated to my son, Kagiso Gamede, who passed away on 29 December2004, midway through my EMBA studies. His spirit gave me courage when I wanted toquit. I also could have not continued without the support of my wife and daughter(although always demanding quality time with me), Rosemary (Mphamore) and Neo.

The EMBA 6 class also kept me going during the difficult times. Thanks to my group(Group 4) for carrying me when my legs and heart could not keep me going. Theunderstanding and support from The Graduate School of Business academic and non-academic staff is greatly appreciated.

My thanks also go to AECI and African Explosives Limited (AEL), who made my studiespossible. Special thanks go to Dr Graham Edwards, Managing Director of AEL, for hisprovocative thinking and continued support through the turbulent times. This was anexcellent example of the Care and Growth philosophy that AEL adopted five years ago.

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UNIVERSITY OF CAPE TOWN

GRADUATE SCHOOL OF BUSINESS

2 May 2006

DECLARATION

1. I know that plagiarism is wrong. Plagiarism is to use another’s work andpretend that is yours.

2. I have used a recognized convention for citation and referencing. Eachsignificant contribution and quotation from the works of other people hasbeen attributed, cited and referenced.

3. I certify that this submission is all my own work.

4. I have not allowed and will not allow anyone to copy this essay with theintention of passing it off as his or her own work.

Signature:………………………….. Date:……………………C V GAMEDE Student No.: GMDCYR001

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TABLE OF CONTENTS

Contents Page

Plagiarism Declaration …………………………………………………………………. 3

Abstract ………………………………………………………………………………….. 10

Glossary …………………………………………………………………………………. 12

Chapter 1. INTRODUCTION …………………………………………………………. 17

1.1 The Format of the Dissertation ……………………………………………. 181.2 Problem Overview…………………………………………………………….. 181.3 Problem Formulation…………………………………………………………. 21

1.3.1 Development of the Problem Formulation CLD…………………………. 22

1.4 Research Methodology …………...…………………………………………. 26

1.4.1 Foundational Philosophy (Epistemology vs Ontology)………………… 261.4.2 Reductionism vs Holism / Systems Thinking…………………………….. 281.4.3 Creative Holism (Jackson’s Four Paradigms or Lenses)………………. 281.4.4 Grounded Theory………………………………………………………………. 29

1.5 Data Collection………………………………………………………………… 32

1.5.1 Interviews………………………………………………………………………. 321.5.2 Literature Review……………………………………………………………… 321.5.3 Participant Observation……………………………………………………… 33

1.6 Selection of the Dominant Paradigm……………………………………… 341.7 Outline of the Dissertation………………………………………………….. 35

Chapter 2. SITUATION……………………………………………………………….. 37

2.1 African Explosives Limited…………………………………………………. 38

2.1.1 Defining the Business or Function…………………………………………. 452.1.2 Stakeholders…………………………………………………………………… 462.1.3 Regulation and Laws………………………………………………………….. 482.1.4 Competition and Laws………………………………………………………… 482.1.5 Competitors and Suppliers………………………………………………….. 482.1.6 Past and Present Performance……………………………………………… 492.1.7 The Organisation Structure and Management System………………….. 592.1.8 Operations………………………………………………………………………. 51

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2.1.9 Rules of the Game……………………………………………………………… 522.1.10 Management Style……………………………………………………………. 53

2.2 Obstruction Analysis………………………………………………………….. 53

2.2.1 Internal Discrepancies………………………………………………………….532.2.2 Internal Conflicts……………………………………………………………….. 54

2.3 Reference Projection………………………………………………………….. 542.4 Reference Scenario………………………………………………………….... 552.5 The Quality versus Cost Challenge………………………………….……. 572.6 The Response to Quality and Cost Challenges………………….……….. 572.7 The Decision Process to Implement Six-Sigma…..………………..…….. 57

Chapter 3. CONCERN……………………………………………………………..…… 59

Chapter 4. QUESTION…………………………………………………………………. 64

4.1 Picking the Right Stakeholders……………………………………………… 664.2 Expanding the Options……………………………………………………….. 66

4.2.1 Scientific / Technical Perspective…………………………………………… 664.2.2 Interpersonal / Social Perspective………………………………………….. 674.2.3 Existential Perspective……………………………………………………….. 674.2.4 Systemic Perspective…………………………………………………………. 684.2.5 Synthesis of Perspectives……………………………………………………. 69

4.3 Phrasing the Problem Correctly…………………………………………….. 714.4 Expanding the Boundaries of the Problem……………………………….. 724.5 Managing the Paradoxes…………………………………………………….. 72

Chapter 5. ANSWER…………………………………………………………………….73

5.1 Development of the Answer…………………………………………………. 745.2 Key Elements of the Research Answer………………….…………………. 79

5.2.1 The leadership / top management must be fully committed toquality improvement, waste reduction and the implementation ofsix-sigma………………………………………………………………………… 80

5.2.2 The six-sigma culture must be created, launched, supported andnurtured by the leadership / top management…………………………… 80

5.2.3 The leadership / top management must be able to deal withparadoxes………………………………………………………………………. 80

5.2.4 Six-Sigma expertise must be developed at all levels of theOrganisation…………………………………………………………………… 81

5.2.5 The right projects must be selected and the right people allocated

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to these projects……………………………………………………………… 815.2.6 Six-Sigma must be communicated effectively and efficiently

throughout the organisation……………………………………………….. 825.2.7 There must be objective performance management processes of

people and processes………………………………………………………. 825.2.8 Six-Sigma must be integrated with the current organisation

Processes in order to improve understanding of the process……… 82

5.3 Creating Actionable Knowledge from the Research Answer………….. 825.3.1 Developing the lower abstraction causal loop diagram………………… 845.3.2 Action Plans for Six-Sigma Implementation in AEL…………………….. 96

Chapter 6. RATIONALE………………………………………………………………. 98

6.1 The Data Gathering Process…………………………………………………. 1006.2 The Categorisation Process………………………………………………….. 1016.3 Further Research Review…………………………………………………….. 1046.4 Broad Perspectives on Quality Programmes………….………………….. 105

6.4.1 Historical Perspective and Theoretical Framework……………..………. 1056.4.2 Further Research on Deming’s Methodology……………………………. 1086.4.3 Total Quality Management (TQM)……….………………………………….. 1096.4.4 Lean Manufacturing…………………………………………………………… 1106.4.5 Total Productive Maintenance (TPM)……………...……………………….. 1116.4.6 Toyota Production System…………………………………………………… 1126.4.7 ISO 9000……………………………………..…………………………………… 1126.4.8 Six-Sigma……………………………..……………………………………….. 112

6.5 Position Taken…………………………………………………………………. 1136.6 Brief History of Six-Sigma…………………………………………………… 1146.7 Defining Six-Sigma……………………………………………………………. 115

6.7.1 Scientific / Technical Definition of Six-Sigma……………………………. 1156.7.2 Interpersonal / Social Definition of Six-Sigma……………………………. 1166.7.3 Existential Definition of Six-Sigma………………………………………….. 1176.7.4 Systemic Definition of Six-Sigma…………………………………………… 1176.7.5 Employee Understanding of Six-Sigma in AEL………………………….. 1176.7.6 General Electric Definition of Six-Sigma……………………………………1186.7.7 Personal Philosophy of Six-Sigma………………………………………….. 119

Chapter 7. EVALUATION……………………………………………………………… 120

7.1 Relevance…………………………………………………………………………1217.2 Utility……………………………………………………………………………… 1237.3 Validity……………………………………………………………………………. 124

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7.3.1 Dependability……………………………………………………………………. 1247.3.2 Credibility………………………………………………………………………... 1267.3.3 Confirmability…………………………………………………………………… 1277.3.4 Transferability……………………………………………………………………128

7.4 Ethics…………………………………………………………………………….. 129

Chapter 8. CONCLUSIONS AND CRITIQUE…………………………………….…. 133

8.1 Level of Leadership / Top Management Commitment…………………… 1348.2 Level of Mobilisation of the Whole Organisation………………………… 1348.3 Level of Six-Sigma Expertise in the Organisation……………………….. 1348.4 Ability to Create a Six-Sigma Agenda…………………….……………….. 1358.5 Level of Effectiveness and Efficiency Implementation Plans………..... 1358.6 Level of Understanding the Process……………………………………….. 1358.7 Level of Performance Measurement (People and Process…………….. 1368.8 Data Collection…………………………………………………………………. 1368.9 A Critique of Six-Sigma……………………………………………………….. 136

8.9.1 Pros of Six-Sigma……………………………………………………………….1378.9.2 Cons of Six-Sigma……………………………………………………………… 137

8.10 Generalising the Results……………………………………………………… 1388.11 Further Research………………………………………………………………. 1388.12 Reflection on Personal Learning and Development…………………….. 141

8.12.1 Preparing myself for the “last lap” of my career………………………… 1418.12.2 Consolidating and enhancing performance in my current employment1428.12.3 Closing the gap between my current knowledge and the

ever-changing business environment……………………………………… 1428.12.4 Personal Learning and Development………………………………………. 142

REFERENCES…………………………………………………………………………… 1145

FIGURES

1. The Management Practice Causal Loop Diagram Template…………… 212. The Legitimacy Loop………………………………………………………….. 223. The Effectiveness Loop………………………………………………………. 224. The First Loop of Efficiency…………………………………………………. 235. The Second Loop of Efficiency……………………………………………… 236. A Causal Loop Diagram for Quality at AEL………………………………. 247. Conceptual Model of the Postmodernist Paradigm…………………….. 258. The Research Context, Framework and Process Followed…………… 279. The Müller-Lyer Illusion………………………………………………………. 2810. Grounded Theory and Connections Among Data Generation,

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Treatment and Analysis………………………………………………………. 3011. The 10-Year Growth Plan of AEL……………………………………………. 3912. AEL Historic Performance……………………………………………………. 4013. AEL Initiating Systems Volumes……………………………………………. 4014. AEL Estimated Market Share in Africa – 2004……………………………. 4115. AEL Presence in Africa………………………………………………………. 4216. Global Explosives Market………………………………………………….… 4317. Markets Targeted by AEL for Growth……………………………………… 4318. The AEL Executive Committee Team………………………………………. 4919. A Four-Quadrant Reference Projection of AEL…………………………… 5420. The Rich Picture of AEL………………………………………………………. 5621. Customer Complaints in AEL – A 5-Year Horizon………………………. 6122. BOT of Waste in AEL – A 5 – Year Horizon………………………………. 6323. Synthesis of Questions from Different Perspectives…………………… 7024. The Modified Management Practice Causal Loop Diagram……………. 7525. The Legitimacy Loop………………………………………………………….. 7626. The Legitimacy Strategic Loop……………………………………………… 7627. The First Legitimacy Strategic Implementation Loop…………………… 7728. The Second Legitimacy Strategic Implementation Loop……………….. 7829. The Six-Sigma Implementation Model (Higher Abstraction)…………… 7930. The First Normative Management Loop…………………………………… 8431. The Second Normative Management Loop ………………………………. 8532. The Complete Normative Management Loop………………………………8633. The First Strategic Management Loop………………………………………8734. The Second Strategic Management Loop…………………………………. 8835. The Third Strategic Management Loop……………………………………. 8836. The Complete Strategic Management Loop………………………………. 8937. The Combined Normative and Strategic Management Loop…………… 8938. The First Control and Co-ordination Loop………………………………… 9039. The Second Control and Co-ordination Loop…………………………….. 9040. The Complete Control and Co-ordination Loop………………………….. 9141. The Combined Normative-Strategic-Control and Co-ordination Loop.. 9242. The First Implementation Loop……………………………………………….9343. The Second Implementation Loop………………………………………..….9344. The Complete Implementation Loop……………………………………….. 9445. The Six-Sigma Implementation Loop………………………………………. 9546. The Interrelation Diagraph of Concepts…………………………………… 10347. The Original Intention of the Quality Initiative……………………………. 10548. The Resulting Production Process from the Quality Initiative………… 10649. The “Simplified” Factory……………………………………………………… 10850. Elements of Total Quality Management……………………………………. 11051. Themes of Total Quality Management……………………………………… 11052. Generic Theoretical Representation of a Quality Management

Programme………………………………………………………………………. 11453. The Visual Definition of the Six-Sigma Concept………………………… 11654. The OPI Diagram………………………………………………………………. 119

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55. The Wheel of Learning………………………………………………………… 14056. Lewin’s Cycle of Adult Learning……………………………………………. 14057. Double Loop Learning………………………………………………………… 141

TABLES

1. Examples of Discrepancies in AEL…………………………………………. 532. Summary of Trends and Performance Indicators…………………………553. Definition of Six-Sigma Levels………………………………………………. 1164. My Personal Perspective of Levels of Business Acumen……………… 143

APPENDICES

1. FORCE FIELD ANALYSIS DURING PROBLEM FORMULATION………. 1522. AVOIDING THE E3 ERROR DURING PROBLEM FORMULATION…….. 1543. PROBLEM FORMULATION OF THE POSTMODERNIST PARADIGM…. 1554. QUESTIONNAIRE DESIGN PROCESS……………………………………… 1565. QUESTINNAIRE SCHEDULE…………………………………………………. 1606. QUESTIONNIARE CONCEPTS………………………………………………. 1627. LITERATURE REVIEW CONCEPTS…………………………………………. 1688. MY PERSONAL SIX-SIGMA PROJECT SCOPE…………………………….1759. PARTICIPANT OBSERVATION CONCEPTS……………………………….. 17910. THE SIX-SIGMA READINESS ASSESSMENT PROPOSAL……………….18111. BRIEF REPORT ON AEL SIX-SIGMA READINESS……………………….. 18512. FIRST SIX-SIGMA PROJECTS CLOSE OUT REPORT…………………….19413. WASTE LEVELS OF DETONATORS IN AEL……………………………….. 19714. AEL QUALITY REPORT……………………………………………………….. 20415. AN EXAMPLE OF A COMPLETED INTERVIEW…………………………… 23916. AFFINITY DIAGRAM FORMULATION………………………………………. 24217. TECHNICAL EXPLANATION OF SIX-SIGMA………………………………. 24418. ETHICS STATEMENT FOR THE INTERVIEWS……………………………. 24719. SCHEDULE OF INTERVIEWEES…………………………………………….. 249

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ABSTRACT

One of the first things I learnt in the Executive MBA (EMBA) class is the concept oflessons. The most fascinating lesson I learnt in the first week was “Opportunities comefrom discontinuous changes”. It was only towards the end of my studies that I discoveredthat the South African explosives industry is going through a discontinuous change. Mycompany, African Explosives Limited (AEL), is also going through discontinuous change.Strebel (1992) refers to discontinuous changes or ‘sudden radical shifts in the rules of thebusiness game’ as breakpoints. AEL cannot use its history of more than 100 years tocreate its future, but must fill in the blank pages with the available information. Grulke(2000: xix) says “the future itself is a blank slate, waiting to be filled in by you and youalone”.

It is the combination of the above thoughts that have turned what seems to be aninsurmountable task, to something possible. The road ahead for AEL will need realcommitment, effort and money, as Strebel (1992) puts it. The turbulent times will requiremore leadership than the ability to manage the day-to-day operations. Kottler (2001)proposes “breakthrough thinking” for discontinuous changes as follows:

“The breakthrough session puts pressure on senior management to leave behindtheir normal assumptions and day-to-day concerns and to think collectively andcreatively about significant new initiatives”.

Kottler (2001: 46)

AEL is faced with what seems to be a paradoxical demand from its customers. Thecustomers are looking for cheaper products with better quality. The first reaction is todismiss this as an unreasonable proposal. The market has indicated clearly that it canlook for solutions from China if AEL cannot provide what it wants. This type of demandcannot be negotiated through a clever marketing ploy. The company must undergo aradical, fundamental transformation in order to meet such a demand.

AEL went through radical changes in the mid 1990s when competition increaseddramatically. It had to close certain parts of the business and change the business modelradically. Ten years later, mid 2000s, it is faced with a similar problem. Currently, it is notjust the rules of the game in South Africa that are changing, but the global rules arechanging very fast. AEL has also outgrown the shrinking South African explosive market.

AEL has decided to face the paradoxical demand from customers and the changing globalrules of the game by employing the six-sigma methodology. Many companies like GeneralElectric, Motorola and Honeywell, to mention but a few, have claimed huge successesfrom using the six-sigma methodology. What is not mentioned clearly in the literature isthe hard, arduous road these companies went through. The six-sigma failures are also notwell documented in the literature. The six-sigma consultants oversell the methodology asa perfect solution. They do not highlight the contextual environment that could render this“perfect solution” useless.

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The six-sigma methodology is built on a robust platform. Even the critics, Dalgleish (2003)agree that six-sigma content is good and is built on the fundamental quality concepts thathe is passionate about. However, there are possible weaknesses in the implementation ofthe six-sigma methodology, like any intervention process. The success is thereforedependant on the interaction between the implementing agent and the company. Antony(2004) raises a concern that academics have not conducted enough research on the six-sigma theory and methodology.

The aim of this research paper is to explore from an academic perspective of how toimplement six-sigma successfully. Whilst the emphasis is on the implementation process,an attempt is also made to explore the content of the six-sigma theory. The end goal is tocreate a model or theory that would help companies, AEL in particular, to implement six-sigma successfully.

Grounded theory was used to develop the model. This methodology was chosen becauseof its appropriateness to the research question and also my experience in using groundedtheory. The methodology used for all research projects in the EMBA programme isgrounded theory. Grounded theory was therefore a compelling choice for this researchproject (suitability to the research question and expertise of using the tool).

It must be noted that this research is happening in parallel with the implementation of six-sigma in AEL. The first six-sigma projects were implemented in 2004. In fact, some of thekey data comes from the people who have implemented six-sigma projects in thecompany. Therefore, the model from this research paper must not only meet theacademic scrutiny but must also meet the qualities of action research. It must haveacademic robustness whilst practicing managers can use it with ease.

It is my view that the resulting model from this research paper will meet Kurt Lewin’sfamous saying, “Nothing is so practical as a good theory”.

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GLOSSARY – D4 DEFINITION OF CONCEPTS

1. Level of leadership / top management commitment

Connotative Definition: The examples are Jack Welch’s commitment to six-sigma, LarryBossidy’s commitment to six-sigma, Mandela’s committment to freedom of South Africa.

Denotative Definition: This is when management show unwavering support, not only withtheir political statements, but actions.

Functional Definition: This commitment would encourage employees to give their best tothe six-sigma initiative.

Operational Definition: The leadership must continuously show positive action and givestatements of support for the initiative.

2. Ability to create a six-sigma agenda

Connotative Definition: Six-sigma must be in every manager’s objectives and goals.

Denotative Definition: Jack Welch sent out a memorandum that nobody was to bepromoted without having been effectively trained in six-sigma.

Functional Definition: In order to increase the understanding, use and effectiveness of six-sigma.

Operational Definition: Six-sigma must be in every meeting agenda of divisions,departments, sections, plants and teams and must form the fabric of interaction.

3. Level of understanding the concept of highest quality producer as lowestcost producer

Connotative Definition: Quality producers do not produce waste that costs money; hencethey save and achieve lower production costs.

Denotative Definition: Mercedes Benz and BMW are able to compete favourably in thesmall size car market although it is regarded as the highest quality in that market.

Functional Definition: In order to achieve lower production costs but better quality.

Operational Definition: Introduce six-sigma in order to have capable processes.

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4. Level of mobilisation of the whole organisation

Connotative Definition: Make everybody in the organisation want to do six-sigma projects.

Denotative Definition: The examples are six-sigma implementation at Motorola andGeneral Electric.

Functional Definition: The initiative will gain momentum, effectiveness and efficiency.

Operational Definition: Mass communication within the organisation, stakeholders andputting effective incentives.

5. Level of six-sigma communication

Connotative Definition: The employees must understand the why, how, when, who andwhere of the six-sigma initiative.

Denotative Definition: Six-sigma communication at Motorola and General Electric.

Functional Definition: In order to make the six-sigma initiative a success.

Operational Definition: Use all forms of effective and efficient communication mediumslike meetings, videos, tools and forums.

6. Level of six-sigma expertise in the organisation

Connotative Definition: There must be technical and process experts of how to get thebest out of six-sigma.

Denotative Definition: Motorola and General Electric developed the expertise before fulldeployment.

Functional Definition: The expertise will keep the process alive, motivate employees, giveemployees confidence and get the required results.

Operational Definition: Train and develop all levels of employees in the understanding anduse of six-sigma.

7. Ability to highlight and eliminate the hidden factory

Connotative Definition: Defect free production processes.

Denotative Definition: Toyota does not have any rework areas or areas to store defects.

Functional Definition: In order to reduce costs associated with rework, storing defectivematerial and cost incurred in producing scrap.

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Operational Definition: Do not allow rework areas or places to store defects.

8. Level of integration of six-sigma with the job

Connotative Definition: The employees must not see six-sigma as an extra task in theirjobs but integral part of their jobs.

Denotative Definition: Six-sigma is part of everybody’s job in General Electric.

Functional Definition: In order to get buy-in from employees and to realise the benefits ofsix-sigma.

Operational Definition: Write-in six-sigma in the objectives and job descriptions ofemployees.

9. Level of performance measurement (People and Process)

Connotative Definition: Must have effective and efficient metrics that impact the bottomline finances of the organisation.

Denotative Definition: The ability to assess the performance of people and the processesin the organisation.

Functional Definition: To improve the bottom line finances of the organisation.

Operational Definition: Introduce key relevant, effective metrics and user-friendly datamanagement processes in the organisation.

10. Level of individual and team recognition

Connotative Definition: Achieve motivation and drive.

Denotative Definition: General Electric gave share options to all black belts.

Functional Definition: To encourage employees to do six-sigma projects.

Operational Definition: Create incentive bonuses and various recognition processes.

11. Ability to match project scope and time frame

Connotative Definition: Alignment of resources and the project.

Denotative Definition: The ability to estimate time frames for projects leads to successfulprojects.

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Functional Definition: In order to achieve the goals of the projects in time.

Operational Definition: Do proper estimation of time frames and resource availabilityassessment before starting the projects.

12. Ability to manage projects across functions

Connotative Definition: Co-ordination and achieving overall system benefits.

Denotative Definition: Most projects cut across the organisation and are part of the largersystem.

Functional Definition: In order to achieve the bottom line financial benefits.

Operational Definition: Create multifunctional teams and hold them accountable as teams,not as individuals.

13. Level of effectiveness and efficiency of implementation plans

Connotative Definition: Clear and understandable plans that instil confidence in allemployees.

Denotative Definition: This is the ability to create credible and stretching plans.

Functional Definition: In order to improve the success of the implementation of six-sigmaprojects.

Operational Definition: Ensure that there is wider consultation across the stakeholdersduring the development of plans.

14. Level of understanding the process

Connotative Definition: Knowing what, how, where, when and who of the productionprocesses.

Denotative Definition: This is the ability to understand how things interact in a system inorder to make effective decisions.

Functional Definition: In order to make effective decisions.

Operational Definition: Ensure that employees can map their production process in orderto make effective and efficient decisions.

15. Level of six-sigma training

Connotative Definition: Expertise, Champions, Black Belts and Green Belts.

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Denotative Definition: All employees must understand what six-sigma is and what theorganisation is trying to achieve by implementing it.

Functional Definition: This will improve motivation and willingness to engage in six-sigmaprojects.

Operational Definition: Develop plans for everybody in the organisation to be trained anddeveloped in the use of six-sigma tools.

16. Number of regular review meetings

Connotative Definition: Information sharing, progress reports, future plans, activities.

Denotative Definition: This is a way of sharing information about six-sigma projects with allstakeholders at all levels of the organisation.

Functional Definition: This helps the organisation to review progress, resolve problems andimprove effectiveness and efficiency of the six-sigma initiative.

Operational Definition: Plan all review meetings in the beginning of the year andeverybody must diarise them, no excuses, no ifs and buts.

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1. IntroductionFormat of dissertation

Problem Overview andFormulation

Research methodology andthe dominant paradigm

Present the framework of thepaper.

2. SituationPresent the research context.

3. ConcernDescribe areas of concern.Show Behaviour Over Timevariables of concern areas.

Present an overarchingconcern.

4. QuestionFraming a question that willguide the research process.

5. AnswerProvide an answer to the

research question.Provide action plans for the

implementation of the answer.

6. RationaleProvide a logical basis forconstructing the situation,concern and the answer.

Literature Review

8. Conclusions andCrititique

Concluding remarks andcritique of the process

ValidityArgue why the rationale

provides a valid argument forthe answer.

UtilityArgue how the answer will

deals with the concern.

RelevanceArgue why the concern isrelevant to the situation

EthicsArgue the ethical implicationsof the answer to the described

situation.

Chapter 1: Introduction

7. EvaluationEvaluate the process for

Relevance, Utility, Validity andEthics.

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1. INTRODUCTION

1.1 The Format of the Dissertation

One of the pillars of The University of Cape Town’s Executive MBA (EMBA) is the conceptof a position paper. The position paper tests the student’s understanding of the theorieslearnt in each module. The prescribed format for a position paper is a SCQAREframework. Ryan (2005a: 5) describes this framework as an approach “that guides theinquiry, the development and articulation of ideas”. The letters in the acronym can bedescribed as follows:

S – the problems situationC – the concernQ – the question that needs to be answered in order to deal with the concernsA – the answer to the questionR – the rationale or reasoning supporting the answerE – the evaluation of the process

This dissertation will follow the above framework. Each chapter will have a roadmapdepicting the above framework. The current chapter will be highlighted with a red outlinein the roadmap. Glover (2004) used the “chapter roadmap” method effectively in adissertation and Hill and Jones (1995) used it in a book.

1.2 Problem Overview

Many companies are faced with increasing competition as the global industrial landscapeis changing. South African companies are also facing the same challenges. AfricanExplosives Limited (AEL), a company that is more than one hundred years old, is alsofacing increasing competition in the commercial explosives market. The entrant of theChinese in the global manufacturing economy has intensified this competition. Luthans(1985) explains the challenges of change and competition succinctly as follows:

“In order to remain competitive and even to survive, organisations must meet thetremendous challenges presented by all the areas of change. Neither private norpublic organisations can compete in today’s marketplace by standing still or goingbackwards”

Luthans (1985:625)

Companies like General Electric were successful because they embraced change. Slater(1999a: 17) notes the words of Jack Welch that “change is a big part of the reality ofbusiness”. No business can prosper without embracing the changing environment.

AEL is faced with two challenges in their products and services. The first one is toimprove quality. The second one is to reduce costs in order to match the price ofcompetition, especially that of the Chinese competition. Good quality and low prices seemto be in contradiction at face value, but that is what the customer is expecting from AEL.There is increasing new evidence that cost leadership and differentiation can coexist by

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employing new manufacturing technologies. Hill and Jones (1995) explain how this bestposition can be achieved as follows:

“Traditionally, differentiation was obtainable only at high cost because the necessityof producing different models for different market segments meant that firms had tohave short production runs, which raised manufacturing costs. In addition, thedifferentiated firm had to bear higher marketing costs than the cost leader becauseit was servicing many market segments. As a result, differentiators had higher coststhan cost leaders that produced large batches of standardised products. However,flexible manufacturing may enable a firm pursuing differentiation to manufacture arange of products at a cost comparable to that of the cost leader.

Hill and Jones (1995: 178)

It is in this regard that AEL is faced with one of the greatest challenges in the next fewyears. The challenge is complicated by the “inherent contradiction” of the customerrequirements (higher quality at lower cost). It is therefore, imperative that AEL develops“new knowledge of higher quality with lower cost” in order to meet this emergentchallenge. This point will be highlighted later in the paper because it will form the core ofAEL’s competitive advantage. This is a concept that must be accepted at normative levelof the organisation. It must then be rolled out to the next levels of the organisation, whereit must take root.

One of the objectives for me to study for an Executive MBA was to be able to meet thechallenges of change in my organisation. The first position paper of the first module,Gamede (2004), made me realise that I have to change my way of thinking in order toeffectively meet the challenges faced by my organisation. One of the important corecompetencies that are developed in the EMBA is the ability to create knowledge in ordersolve problems through the development of theories. Ryan (2004b, 21) says, “Knowledgereflects the ability to turn information and data into effective action”. Ryan (2004b)summarises the context of the EMBA course as follows:

“We are not mere passive recipients of knowledge. We are constructors andproducers of knowledge. The curriculum of our master’s programme is based onthe constructivist view of learning and recognises and includes a range of ‘co-producers of knowledge’”.

Ryan (2004b: 23)

The changing market conditions always trigger a reaction in various socio-economicstructures including companies. Companies usually implement various interventions inorder to cope and survive in the changing environment. This change can be anticipatory,reactive or crisis in nature according to Fry and Killing (2000). The nature of the changewill determine the urgency of an intervention.

One of the key questions to management interventions is whether the intervention is ableto achieve what the leaders intended in the first place. Are there any causal relationshipsbetween the challenges being addressed, the intervention and the expected results? Willthe intervention lead to the desired results?

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We are living in the world of increasing complexity and management in organisations feelsthis impact. This has resulted in managers looking for “simple” solutions to complexproblems. Managers usually look for quick-fix solutions or quick-fix tools in order to solvetheir problems. This has led to the term “fad”, where a proposed solution is viewed as the“flavour of the month”. Kepner and Tregoe (1981) concur with this human tendency tolook for quick-fix solutions as follows:

“When a quick solution to a problem is required, it is too easy to rely on memoriesof what happened in the past, on the solution that was successful once before, oron the remedy that corrected an apparently similar problem. This is the mostcommon approach to problem solving, and problem solving by extrapolation frompast events to current events is a tough habit to break despite its relatively poorpayoff in appropriate, lasting corrective actions”.

Kepner and Tregoe (1981: 35)

Jackson (2003a) also explains this dilemma as follows:

“Faced with increasing complexity, change and diversity, managers have inevitablysought the help of advisers, consultants and academics. So desperate have theybecome for enlightenment that they have elevated a number of these to the statusof management gurus. Too often, however, managers have been paddled panaceain the form of the latest management fad. …….Unfortunately, as so many managershave discovered to the cost of themselves and their organisations, these relativelysimple solutions rarely work in the face of significant complexity, change anddiversity”.

Jackson (2003: viii)

Jackson continues to name the fads, which include interventions like total qualitymanagement (TQM), among others. He offers systems thinking as an alternative. Jacksonargues that the “fads” fail because “they are not holistic or creative enough”. Inherent inthis argument is that systems thinking can be taken as a panacea. This definitely cannotbe the case. The second weakness in Jackson’s argument is that he does not distinguishbetween systems thinking as a philosophy and systems thinking as a practice or as amethodology.

My counter argument is that certain concepts are sound as philosophies but poor asmethodologies. Communism as a philosophy is a very good and a fair social system.However, it fails as a methodology as has been shown by the collapse of the Soviet Union.On the other hand, one can always position such a philosophy in a certain context andtherefore develop a “creative methodology”. An example that illustrates my proposedphenomenon is the co-existence of communism and capitalism in China today. This hasresulted in an unprecedented economic growth in China.

It is therefore my conclusion that many interventions that can be regarded as “fads” can becreatively positioned in certain contexts in order to work. My conclusion is that manyinterventions fail because they miss the context of the situation. Therefore, methodologies

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can be improved and made effective by adapting them to sweep-in the context in theirquest for solutions.

AEL has looked at various interventions in order to meet the demands of the changingenvironment. One such intervention is the implementation of six-sigma in order to improvequality and to reduce waste.

Harry and Shroeder (2000) notes that six-sigma has been hailed as a success in manycompanies like Allied Signal, General Electric, Motorola and others. However, there havebeen many failures that are not documented so well as the “successes”. The challengegoes back to my earlier argument of adapting a methodology to suit a particular context. Itis this challenge that Welch (2001: 330) remarked that six-sigma is the “most ambitiousundertaking the company (General Electric) has ever taken on”.

I am now confident that the knowledge gained during the EMBA studies will enable me toadapt six-sigma in order to meet the quality and waste challenges faced by AEL. I willshow through a well-constructed theory how to meet these challenges posed by changingmarket conditions.

1.3 Problem Formulation

Problem formulation started in modules 5 and 6 respectively. Gamede (2005a) formulatedthe problem up to possible research questions. A causal loop diagram was formulatedusing the results of a quality force field analysis (analysis of enablers and restrainers ofquality). The force field analysis process can be seen in Appendix 1. The E3 error duringthis initial problem formulation stage was avoided by following the process in Appendix 2.

A management practice causal loop diagram template was used in the development of theabove causal loop diagram. This template was given in module 4. This template is in linewith Stafford Beer’s viable System’s Model as detailed in Ryan (2004c). Thismanagement practice causal loop diagram can be seen in Figure 1 below. Please note allcausal loop diagrams in this dissertation will follow this format or modified version.

Figure 1. The Management Practice Causal Loop Diagram Template

Engaging theEnvironment

Influencingthe

Environment

Monitoring

Improving

Planning

Implementing

CraftingStrategy

DevelopingAlignment

LEGITIMACY

EFFECTIVENESS

EFFICIENCY

.

,

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1.3.1 Development of the Problem Formulation CLD

A causal loop diagram was developed in Module 5 in order to characterise the problem. Iwill introduce this causal loop diagram, loop by loop, in order to show how it wasdeveloped. This will also expose the logic behind this causal loop diagram.

The first and foremost challenge that is faced by AEL is growth. Therefore, the first loopstarts with the growth variable. It is important that when a company is growing, it does notlose its current customers. Therefore, as the need for growth increases, the need forkeeping existing customers becomes even more important. Customers always expect anincrease in the quality of the products or services, without paying more. The quality needsfor AEL customers is now higher than before. Senior management of AEL has to becommitted to quality in order to keep the current customers. This completes the first loopof legitimacy in Figure 2 below.

Figure 2. The Legitimacy Loop

The next loop is the effectiveness loop. This begins with the level of understandingcustomer needs. The next thing is to assess whether the existing processes can deliverthe right quality as required by the customer. Process capability will be improved by theunderstanding of customer needs. The level of understanding customer needs willimprove the level of innovation. Innovation is a method of meeting customer needs. Thelevel of innovation will help to improve process capability i.e. process innovation. Theprocess will need to be improved in order to meet or exceed the new customer needs in aninnovative way. We must then innovate appropriately to meet and exceed customerexpectations. This completes the effectiveness loop in Figure 3 below.

Figure 3. The Effectiveness Loop

Committmentof Senior

Managers toQuality

Need forGrowth

Need tokeepcustomers

+

+

+

.

Level ofUnderstanding

CustomerNeeds

Level ofInnovation Process

Capability

++

+.

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There are two loops for efficiency. The first loop starts with improving the level ofunderstanding of the process. There is usually an erosion of process understanding inmany complex-manufacturing processes. Process understanding usually resides with afew individuals and knowledge erosion happens when these people leave theorganisation. The understanding of the process enables the process operator tounderstand the required quality of raw materials. The level of process understanding alsoimproves the efficiency of the supply chain. This is because the supply chain is dependanton knowing exactly what you need for the process and when the product will be produced.This is to ensure that the supply chain of both raw materials and finished products assist inmeeting customer requirements. The first loop of efficiency can be seen in Figure 4 below.

Figure 4. The First Loop of Efficiency

The second loop of efficiency concentrates on the human side. This starts with theunderstanding of quality by first line managers. Understanding of quality by first linemanagers improves the understanding of quality by operators. The first line managershave to transfer this knowledge to operators. The understanding of quality by operators inturn reduces the number of customer complaints because operators will make fewmistakes. The understanding of quality by first line managers also reduces the number ofcustomer complaints by the same token. The second loop of efficiency can be seen inFigure 5 below.

Figure 5. The Second Loop of Efficiency

Quality ofRaw

Materials

Efficiencyof Supply

Chain

Level ofProcess

Understanding

+

+

.

Understandingof Quality byFirst LineMangers

Number ofCustomer

Complaints

Understandingof Quality byOperators

- +

+.

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The above loops were combined using the Management Practice CLD Template that wasprovided in module 4 into a complete causal loop diagram. The complete causal loopdiagram can be seen in Figure 6 below.

Figure 6. A Causal Loop Diagram For Quality in AEL

Gamede (2005b) continued with the formulation of the problem. The problem formulationfrom Gamede (2005a) was viewed through lenses or paradigms adopted from Jackson(2003). The four paradigms are:

Functionalist paradigm (Promoting Goals and Viability) Interpretive paradigm (Stakeholder Purposes) Emancipatory paradigm (Ensuring Fairness) Postmodernism paradigm (Promoting Diversity)

Different conceptual models emerged from the above process. The postmodernistconceptual model incorporated all attributes and concepts found in the other conceptualmodels. This conceptual model can be seen in Figure 7 below.

Commitmentof Senior

Managers toQuality

Need tokeep

customers

Need forGrowth


CustomerNeeds

ProcessCapabilityLevel of

Innovation

Quality ofRaw

Materials

Level ofProcess

Understanding

Efficiencyof Supply

Chain

Understandingof Quality by

First LineManagers

Number ofCustomer

ComplaintsUnderstanding

of Quality byOperators

+

+

+

+

+

+

+

+

+

+

+

+

-

-

++

+

Legitimacy

Effectiveness

Efficiency

+

.

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Figure 7. Conceptual Model of the Postmodernist Paradigm

The process of developing the above conceptual model can be seen in Appendix 3.

I also defined the problem more precisely, parallel to the above process. I used theframework as proposed by Booth, Colomb and Williams (2003) in order to narrow downmy ideas to a specific research problem. Booth, Colomb and Williams (2003) proposesthat there are three reasons why research is done, namely:

I have found something interesting that needs to be explored further. I have found a solution to a practical problem (applied research) I have found an answer to a question (pure research)

My research problem falls in the second category. It is applied research in a practicalindustrial situation.

Identify areas ofpoor quality andhigh waste levels

Agree the abovewith processowners

Implement theagreed projects

Identify and trainchampions

Identify people who canbe freed to handle six-sigma projects

Canvass support fromall relevantstakeholders and createa support structure

Know how six-sigma willaffect day-to-dayoperations efficiency

Deliver therequired qualityimprovement andsavings

Agree projects,process andtime frames

Train Green Beltsand Black Belts

Check effectivenessand take correctiveaction

Ensure that nobody isalienated and/oroppressed by the six-sigma implementation

Harness the diversityof all stakeholders

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The next phase of the process was to turn my practical problem into a research problem.Cook, Deutsch, Jahoda and Selltiz (1969: 31) notes that “the formulation of a topic into aresearch problem is the first step in a scientific inquiry”. This process of translating apractical problem into a research problem is explained in detail in Booth, Colomb andWilliams (2003). For my research area, this translation can be summarised as follows:

Practical Problem: The customer complaints at African Explosives Limited (AEL) areincreasing. The waste levels are also increasing, thus contributing to the increasing costs.The leadership of AEL has decided to implement the six-sigma methodology in order toaddress the above problems. Six-sigma has also created many problems during the initialphases of its implementation. Six-sigma seems to be a problem in itself.

Research Question: How can I adapt and implement six-sigma successfully?

The topic was finally chosen using the four step “formula” as suggested by Booth,Coulomb and Williams (2003) as follows:

Topic: I am studying how to adapt six-sigma for a successful implementation.

Question: because I want to find out how I can adapt and implement six-sigmasuccessfully in African Explosives Limited.

Conceptual Significance: in order to help African Explosives Limited and otherorganisations to understand the six-sigma methodology better and to improve the successof six-sigma implementation.

Potential Practical Application: so that African Explosives Limited and otherorganisations can improve quality and eliminate waste through the six-sigma methodology.

1.4 Research Methodology Approach

This section explains the context of my research process, development and selection ofthe research framework. It shows how the grounded theory methodology flows from theparadigms, analytical approach, school of thought and the foundational philosophy. It alsoexplains how the data was collected. This will give the reader an understanding ofunderlying assumptions. Figure 8 below shows the research context, framework andprocess. The red arrows show the flow of the process that was followed.

1.4.1 Foundational Philosophy (Epistemology vs Ontology)

The Concise Oxford Dictionary (1984) defines epistemology as the theory of the method orgrounds of knowledge. It defines ontology as a branch of metaphysics dealing with thenature of being. Pragmatism is the acceptance of coexistence of the two philosophies andacknowledgement of each philosophy during its application in any social context. Holismor Systems Thinking is a pragmatic school of thought that takes its roots from the above-

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defined pragmatism (epistemology and ontology contexts). It is also a direct outcome ofrealism.

Figure 8. The Research Context, Framework and Process Followed (Red arrowsindicate the line of investigation that was followed)

Idealism

Quantitative

Rationalism

Emancipatory

Natural Paradigms

Reductionism(Analysis)

Empiricism

Holism / SystemsThinking

(Synthesis)

Functionalist

Realism

Grounded Theory

Qualitative

Data Collection

Interpretive

Postmodernist

Ep

iste

mo

log

y

On

tolo

gy

Pragmatism Objects in thereal world exist

independently ofthe mind – theirmeaning existwithin them –

they can only beexplored

quantitativelyand qualitatively

There is noreality

independentof the mindand mental

states. Realityis mental not

material

Reason is theprimary sourceof knowledge

and truth – logic,analysis and

rationality basedon innateconcepts

All knowledgearises from

sensory, realworld experience– not from innate

concepts

Foundational Philosophy

Paradigm

School of Thought

Methodology

Analytical Approach

Paradigm

Questionnaires Interviews Discussions Observations Case Studies

Social Paradigms

Hypothesis Testing /Experimentation

Data CollectionData Collection

Techniques

..

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The extreme ends of epistemology are bound by rationalism and empiricism. Rationalismassumes that reason is the primary source of knowledge and truth. Logic, analysis andrationality are based on innate concepts. It is not based on our senses and real worldexperience. Empiricism assumes that all knowledge arises from sensory, real worldexperience. It does not arise from innate concepts.

The extreme ends of ontology are bound by idealism and realism. Idealism assumes thatreality is dependant on the mind and mental states. Reality is not material. Realismassumes that objects in the world exist independent of the mind. The meaning of objectsexists within them. They can be explored quantitatively and qualitatively.

1.4.2 Reductionism vs Holism / Systems Thinking

Reductionism is machine age thinking when there was a belief that a system can beunderstood better by breaking it down into its smallest components. The operating wordthen was analysis. This school of thought has now been overtaken by systems thinking.Systems thinking approach is that the interaction between parts of a system is moreimportant than just the existence of its parts. This is in line with Gestaldt psychology,which proposes that the whole is greater than the sum of its parts (Luthans: 1985). TheGestaldt School of thinking can be regarded as the foundation of systems thinkingalthough it was founded around 1912.

Luthans (1985) uses the Muller-Lyer illusion in Figure 9 below to illustrate the “interactionof parts in a whole”. The two lines X and Y are exactly the same length. However, line Xlooks longer than line Y if they are viewed simultaneously. However, this does not apply ifthey are viewed separately.

Figure 9. The Müller-Lyer Illusion (Luthans: 1985)

1.4.3 Creative Holism (Jackson’s Four Paradigms or Lenses)

Jackson (2003) has developed four paradigms or lenses in systems thinking that he refersto as creative holism. These paradigms or lenses are tools for looking at a phenomenonor system from multiple perspectives. It is a methodology for sweeping in multipleperspectives. Looking at a phenomenon or system through these lenses provides a veryrich understanding of a phenomenon or system. The solution that develops from thisprocess is more robust than one that emanates from only one perspective.

These paradigms were explained in section 1.3 as follows:

YX

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1.4.4 Grounded Theory

The University of Cape Town EMBA process rests on four pillars as follows:

The Position Paper (Inter-modular period) Action Research Learning Paper/Project (Inter-modular period) Group Research Projects (Fulltime modular period) Course Work (Fulltime modular period)

The grounded theory research methodology is used for The Position paper, ActionResearch Learning Paper/Project and the Group Research Projects. Therefore, groundedtheory is well entrenched and is the preferred research methodology at the University ofCape Town EMBA programme. This dissertation will also use grounded theory as thepreferred research methodology. This section will explain why grounded theory waschosen for this problem.

The fathers of grounded theory are Glaser and Strauss (Goulding: 1998; Ryan: 2005d).They presented grounded theory in 1967 in their book The Discovery of Grounded Theory.Grounded theory has established a niche position in qualitative research. Groundedtheory differs from traditional hypothesis testing in that the theory emerges from data;whilst in hypothesis testing, a theory is stated upfront, and then tested afterwards with datato prove or disprove the hypothesis. Strauss and Corbin in Ryan (2005d) describesgrounded theory as follows:

“A grounded theory is one that is inductively derived from the study of thephenomenon it represents. That is, it is discovered, developed and provisionallyverified through systematic data collection and analysis of data pertaining to thatphenomenon. Thereafter, data collection, analysis and theory stand in reciprocalrelationship with each other. One does not begin with a theory, and then prove it.Rather, one begins with an area of study and what is relevant to that area is allowedto emerge”.

Ryan (2005d: 1)

Ryan (2005d) also describes the methodology of grounded theory in the form of a flowdiagram. See Figure 10 below.

Goulding (1998) defines grounded theory as follows:

“Grounded theory, in contrast to theory obtained by logico-deductive methods istheory which has been systematically obtained through ‘social’ research and isgrounded in data. The development of grounded theory was an attempt to avoid

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highly abstract sociology and was part of an important growth in qualitative analysisin the 1960s and 1970….. Grounded theory is a methodology that has been used togenerate theory where little is already known, or a fresh slant on existingknowledge”.

Goulding (1998: 2)

This theory has it protagonists and antagonists. The protagonists of this theory includeGoulding (1998), Ryan (2005d), Ryan (2005e) and Pandit (1996). The antagonists includeresearchers like Fredericks and Miller (1999). It must also be noted that the fathers ofgrounded theory, Glaser and Strauss have had divergent views in terms of furtherdevelopment of grounded theory. Strauss is viewed by Glaser to have modified theoriginal concept of emergence in grounded theory to a complex codification process. Theargument is that this gives a misconception where grounded theory uses qualitativeresearch to quantify findings. Strauss in Goulding (1998:52) argues that, “the use of codingmatrixes is to conceptualise beyond the immediate field of study”. On the other hand,Glaser in Goulding (1998:52) argues that, “the theory should be true to data and explainthe phenomenon under study”.

Figure 10. Grounded Theory and Connections among Data Generation, Treatmentand Analysis (Ryan: 2005d)

Interviews Field Notes Documents Journals ParticipantObservation

Literature

Data Generation

Data Analysis

Concept FormationLevel I Substantive CodesLevel II CategorisationLevel III Basic Social-Psychological Process Identified

Concept DevelopmentReduction SamplingSelective Review of the LiteratureSelective Sampling of the Data

Core Variable

Grounded Theory

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The traditional hypothesis testing was also explored in order to test whether it would besuitable for this type of research. This methodology starts with a hypothesis orproposition. The hypothesis is usually proved or disproved within the rules of a particulardiscipline. This usually involves codifying data and then using statistical analysis in orderto explore relationships between variables. Statistical tools like correlation, chi-square, etcare used in the analysis of data. Therefore, this process usually requires a large numberof data (respondents) in order to make a meaningful statistical conclusion. Hence, thismethodology is not meaningful for this type of research where we have about 30respondents.

The second problem with hypothesis testing is that a hypothesis must be developed first.Hence, a plausible proposition must be developed. Cook, Deutsch, Jajoda, and Selltiz(1965) argue that a hypothesis can come from a ‘hunch’ or from findings of an earlier studyor from a general theory. The validity of resulting conclusions is very low in a ‘hunch’situation and much more improved in a general theory situation. The six-sigmamethodology is a relatively new methodology and there are very few academic studies atthe moment. The authors offer alternative approaches for new, young research areas likesix-sigma. They offer the following alternatives:

Formulative or Exploratory Studies The Experience Survey The Analysis of “Insight Stimulating” Examples

The common characteristic of the above studies is that they are done in order to establishand develop hypotheses. The above approaches were precursors to grounded theorybefore it was fully developed. Grounded theory is able to reach the theory stage withoutgoing through a hypothesis stage. Using the above approaches would mean that theresearch would be done in two stages. The first study would be to establish thehypothesis. The second study would be to test the hypothesis and then develop a theory.The size of such a research cannot fit the time frame and scope of an EMBA dissertation.

It is common knowledge in research that hypothesis testing is more quantitative in nature.The relationship between variables is viewed from a statistical relationship. The questionraised in this research is requires a qualitative approach. Therefore, the grounded theorywas the most logical choice to deal adequately with the question raised in this dissertation.Grounded theory has been used in this dissertation with all the challenges raised by theabove discussions. The style and approach of grounded theory used is similar to the oneused at The Graduate School of Business, EMBA programme of the University of CapeTown.

1.5 Data Collection

The next phase was to plan the sources of data. There are three sources of data in thisdissertation, namely:

Interviews

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Literature Participant observation

1.5.1 Interviews

The interviews were the primary data source. The first research action was to design thequestionnaire such that it unearths as many views as possible. Jackson’s four paradigmswere used during the design of the questionnaire. Each paradigm had a few questionsassociated with it. The questionnaire design process ensured that all stakeholders weretaken into account.

The first step was to interview the strategic level of management. All members of theExecutive Committee (EXCO) of AEL were interviewed. Some select members of the nextlevel, known as the Business Management Team (BMT) were also interviewed. TheChampions and both the CCI (Six-Sigma) consultants were interviewed. One consultantguided the first round of projects in 2004. The second consultant guided the second roundof projects in 2005.

The next step was to interview people who are in the coalface of the implementation of six-sigma. The six-sigma co-ordinator, the black belts in training, the green belts, the greenbelts in training and the managers to whom the green belts report were also interviewed.

A total of 28 interviews were conducted across the company. The interviewees were rightacross the hierarchy and also across the departments. They included people inoperations, finance and marketing.

The questionnaire design details can be seen in Appendix 4 whilst the questionnaireschedule can be seen in Appendix 5. The output of this process was the concepts thatwere distilled from the questionnaire answers. This can be seen in Appendix 6.

1.5.2 Literature Review

A limited literature survey was conducted in order to gather data. The literature is fromarticles written by six-sigma practitioners and consultants. Most of these articles are fromleading six-sigma websites that collect thousands of articles from six-sigma writers acrossthe globe. A few books were also used in this initial stage of data collection.

Ryan (2005d) supports the notion of limited literature survey at the initial stages as follows:

“Selective sampling of literature is suggested and generally follows or occurssimultaneously with data analysis. The literature review helps researchers becomefamiliar with works published on the concepts under study and fills in the missingpieces in the emerging theory…..As theory begins to develop, researchers conducta literature review to learn what has been published about the emerging concepts”.

Ryan (2005d: 7)

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The idea of full-blown literature survey before the study begins is strongly negated byStern in Ryan (2005d) as follows:

“……attempting a literature search before the study begins is unnecessary andperhaps may be even detrimental to the study. Reviewing the literature may lead toprejudgements and affect premature closure of ideas, the direction may be wrongand available data or material may be inaccurate”.

Ryan (2005d: 7)

It is in this regard that only a limited literature survey was done at this stage. The focuswas on literature that will enhance the implementation of six-sigma and also shed light onwhy six-sigma implementations fail. The articles that enhance six-sigma implementationincluded the following authors: Devane (2005), Chatterjee (2005), Pyzdek (2005), Swinney(2005) and Harry and Shroeder (2003). Carnell (2005) wrote the article that seeks tounderstand why six-sigma implementations fail.

The output of this process was the concepts that can be seen in Appendix 7.

1.5.3 Participant Observation

I was selected as an executive responsible for the implementation of six-sigma when theEXCO decided to implement six-sigma in the organisation. The EXCO went through aprocess of executive training in the beginning of 2004. The BMT was sensitised in variousmeetings about the pending six-sigma implementation. Some of the BMT members weretrained as champions before six-sigma was launched. Six-sigma was finally launched inJune 2004.

I was trained also as a six-sigma champion in 2004. However, I felt this training did notgive me enough knowledge in order to drive the six-sigma initiative effectively. I wanted amore intense form of training. I therefore embarked on six-sigma green belt training inAugust 2005. I then chose a project in operations, which I though I could manage with mybusy schedule and the time allocated. The project charter and other details of this projectcan be seen in Appendix 8.

The participation as a green belt in training gave me more exposure into the process. Iwas able to understand exactly what and how the green belts feel during the process. Ialso faced the same kind of problems they face during a six-sigma project implementation.I also took part during group presentations of six-sigma projects to the EXCO. I also tookpart in group discussions about the progress of six-sigma projects.

It is in this regard that I decided to also use participation as a data source. Ryan (2005d)supports the participation data collection process as follows:

“Investigators bring personal experience to a study to enhance understanding of theproblem…..in the conduct of naturalistic research, investigators do not attempt toremove themselves from the study. Rather, they openly recognise they have a rolein the investigation…...The grounded theory researcher works within a matrix where

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several processes go on at once rather than following a series of linear steps….Theresearcher is an integral part of the investigation and , consequently, mustrecognise the intimate role with the participants and include implications of that rolein the actual investigation and interpretation of data”.

Ryan (2005d: 4)

The output of this process was concepts that can be seen in Appendix 9.

1.6 Selection of the Dominant Paradigm

During the process of problem formulation, the problem was viewed from differentparadigms as described in section 1.3. The paradigms considered were:


The process of six-sigma in itself tries to promote goals and viability. Therefore, on thesurface, this should be the dominant paradigm. However, the objective of this research isnot to study the tool from a reductionism perspective, but from an expansionismperspective. The research is not looking at the mechanics of the six-sigma methodology,trying to understand its individual components, but to explore how it can work better withinan organisation (a social system).

One of the key characteristics of six-sigma is that it is not a standalone methodology ortool. Six-sigma combines a variety of tools or methodologies in order to optimise thesystem as a whole. It must therefore accommodate the existing tools, processes andprocedures in an organisation in some form or another. It must also be able toaccommodate interdepartmental processes in the interest of the whole system. It is clearthat the dominant paradigm should be able to promote diversity whilst achieving theobjectives of the organisation.

Therefore, the dominant paradigm for this dissertation will be the postmodernist (promotingdiversity) paradigm. However, it must be noted that the functionalist paradigm will be“embedded” in the answer. The answer must have all aspects of a viable system in orderto guarantee sustainability of the six-sigma process, hence an “embedded” functionalistparadigm. Therefore, the research process will be postmodernist in nature, whilst theanswer will assume a viable systems model format. The “what” of the answer isfunctionalist in nature, whilst the “how” part of the answer is postmodernist in nature.

This may sound contradictory, Ryan (2005f) recognises the process of building a theoryfrom multiple paradigms and how paradigms can be complimentary. This is recognisedunder metaparadigm theory building. Ryan (2005d) views this process as follows:

“….in metaparadigm theory building, theorists strive to juxtapose and link conflictingparadigm insights (X and Y) within a novel understanding (Z).

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Ryan (2005f: 2)Ryan (2005f) continues to explore this process as follows:

“The third multiparadigm approach helps theorists manage their bounded rationalityand, thereby, accommodate opposing views within a metaparadigm perspective.Metaparadigm denotes a higher level of abstraction, from which ‘accommodation’does not imply unification or synthesis but, instead, the ability to comprehendparadigmatic differences, similarities, and interrelationships”.

Ryan (2005f: 3)

1.7 Outline of the Dissertation

Chapter 1 starts with explaining the format of the dissertation. The next section gives theproblem overview. It starts by exploring the change process and its challenges. Itemphasizes how the organisation must change with the changing environment.

The next process is problem formulation. It explains the process that was followed and theoutputs that were realised from the process. The change process of six-sigma is thenintroduced for the first time. The six-sigma methodology implementation will form the coreof this research process.

This is followed by the research methodology. A proposal is made to use grounded theoryfor this research. The grounded theory methodology is then explained. The researchprocess is also explained in detail. The next process is the selection of the dominantparadigm and how it will interact with other paradigms.

Chapter 2 describes the contexts of the problem and the research process. It describesAfrican Explosives Limited (AEL), its internal processes, and its performance over theyears and its interaction with the environment. The interaction of AEL and all itsstakeholders is explained in detail. Russell Ackoff’s process of Formulating the Mess(Situational Analysis) from his Interactive Planning and Idealised Design methodology wasused to describe the context of AEL.

Chapter 3 formulates the concern. This chapter explains the dissatisfaction with thecurrent process of solving quality and waste problems in AEL. The parameters thatconstitute the concern are highlighted and the Behaviour Over Time (BOT) is indicated bythe relevant 5-year graphs. Reasons are put forward for possible adverse effects if theconcern is not addressed.

Chapter 4 deals with the development of the question that will help do deal with theconcern. A few questions are raised and narrowed down to one question, whose answerwill deal with the concern.

Chapter 5 provides the answer to the question and thus addresses the concern. Theanswer is given in the form of a causal loop diagram. The answer is developed from the

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interviews, literature survey and personal observation. Therefore, the answer is viewedfrom three different perspectives. This is a form of triangulation.

Chapter 6 provides the rationale for the construction of the situation, the concern, thequestion and the answer. This also details the process of how the answer was reached.All the assumptions are clearly spelled out and the interpretation of evidence is given. Thesix-sigma theory and methodology is also explored in more detail. This chapter also dealswith broad research review of quality management programmes. It also develops atheoretical framework of quality management programmes.

Chapter 7 evaluates the research process. It looks at the arguments for relevance, utility,validity and ethics.

Chapter 8 is conclusions and critique of the process and research results. This looks atthe limitations of the research. It also looks at possible future research that may resultfrom this research. There is also a critique of six-sigma.

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1.IntroductionFormat of dissertation


Research methodology and thedominant paradigm










Literature Review









situation.

Chapter 2: Situation



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2. SITUATION

The first section of the situation gives a detailed analysis of African Explosives Limited(AEL) and its operating environment. This section is in line with the action research-learning project done in the EMBA 6 programme, ARL 6.5, Gamede (2005). The situationwas constructed using Ackoff’s Interaction Planning as suggested in Ryan (2005g). It wasmodified and enhanced to include the suggestions that arose from the assessment of ARL6.5 by Prof. T Ryan of the Graduate of School of Business. The second section of thesituation gives a conceptual analysis of the six-sigma methodology.

2.1 African Explosives Limited

Background: African Explosives Limited (AEL) is the oldest manufacturer of explosivesand initiating systems in South Africa, originally known as AECI. The company wasfounded during the discovery of gold and diamonds in the Witwatersrand in the late 1800s.The company later became a chemical giant. It enjoyed many years of monopoly whenthe largest shareholder was the Chamber of Mines and later Anglo American. Thecompany was then taken over by international companies on two occasions, with AngloAmerican still a shareholder. The international companies later sold their stake back toAECI.

Anglo American also sold its stake back to AECI. This was the end of monopoly and thecompany suffered major losses, with its share falling from R35 to R7. The Company wasripe for a takeover and Sasol launched a hostile bid. The management of AECI,shareholders and the unions (led by South African Chemical Workers Union) successfullyfought off the hostile bid by Sasol. This was a clear indication that the Company could notcontinue in its current form, structure and strategy.

AECI then restructured into three main subsidiaries. The main subsidiaries are, AfricanExplosives Limited (AEL), Chemical Services (ChemServe) and South African NylonSpinners (SANS). The two non-core businesses are Dulux Paints and HeartlandProperties. Dulux Paints was on the list of disposals, but turned around before it wasdisposed, hence was retained. AECI acquired vast amounts of land and properties insince it was founded. Heartland Properties is a wholly owned subsidiary of AECI, which isdisposing of unutilised land and properties. It is a property management company onbehalf of AECI.

AECI share started climbing after the restructuring. The share climbed rapidly and sloweddown when the dollar/rand exchange rate went below the R7 mark. SANS, one of theAECI’s subsidiaries exports about 70% of its products to the US markets. Therefore, itsprofitability suffered significantly when the dollar/rand exchange rate broke the R7 mark.This was mitigated by the steady performance of AEL and a brilliant performance byHeartland Properties due to a buoyant property market. The share is now trading abovethe R50 mark.

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AEL had a challenge of growing in a rapidly declining market in 1995. They crafted astrategy of growth in the African market. The growth plan can be seen in Figure 1 below.The blue is the sales revenue from the African market. The red is the sales revenue fromthe electronic detonators, a state of the art product of AEL/AECI. This strategy paid outbecause a third of the current sales revenue of AEL comes from the African operations.

One of the factors that helped this strategy was the weakness of the rand against thedollar before 2004. The commodity prices also enjoyed relatively high prices. However,the competition from international players and also the Chinese explosives manufacturersintensified in 2004. The rand also strengthened dramatically. The commodity pricesweakened. The gold and the platinum mining industries were negatively affected by theseeconomic conditions. The testimony to this is the closure of many shafts and theretrenchment of thousands of mine workers.

The strong rand did not dramatically affect the performance of AEL because of the mix ofincome. One third of the income from the African market is in dollars and the rest is inrands.

AEL has not managed to achieve the 10-year plan to date. This can be seen in AELhistoric performance in Figure 11 and 12 below. However, the market conditions are suchthat there is a rapid decline in the South African mining industry, which has a direct effecton the sales revenue of AEL. The units of initiating systems sold are the best indicators ofmining activity in SA. These historical volumes can be seen in Figure 13.

Figure 11. The 10-Year Growth Plan of AEL

1990 1995 2000 2005

Sal

es

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Figure 12. AEL Historic Performance

Figure 13. AEL Initiating Systems Volumes

767 859

1,078 1,1421,225 1,255

1,474

1,9032,076 2,140

120115

150

179189

111

142

176

241

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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

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Sales

Tading profit

AEL Initiating Systems Volumes

100,000,000

110,000,000

120,000,000

130,000,000

140,000,000

150,000,000

160,000,000

170,000,000

180,000,000

190,000,000

200,000,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Vo

lum

es

Capped Fuse Shock Tube EDD

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AEL is now faced with the same problem as in 1995. However, the competition is muchintense in this period.

The graph above shows that the mining activity in South Africa at the end of 2004 wasalmost the same as in 1998. It is evident that a deeper level of thinking is required fromAEL to achieve profitable growth that would be acceptable to shareholders.

Local, national and regional Environment: The South African mining industry isstruggling in the face of a stronger rand. The surface mining is doing better than narrowreef or deep level underground mining. Narrow mining is highly labour intensive and thecost of labour has risen dramatically in South Africa over the last past 10 years. Theinfrastructure in narrow reef mining is very high on maintenance. Therefore, the operatingcosts of narrow reef mining are slowly making this practice uneconomical. This is in linewith European narrow reef mining, which is virtually non-existent because of highoperating costs. The costs of explosives and initiating systems are less than 5% of themining costs in most mines. However, the mines are putting pressure on all suppliers inorder to reduce costs.

Narrow reef mines use more initiating systems than explosives. The initiating systemshave more margin than explosives. The surface and massive mines use more explosivesthan initiating systems. Explosives have lower margins in South Africa. AEL has a highermarket share in initiating systems, around 65%. The market share in explosives is about40%.

Figure 14. AEL Estimated Market Share in Africa-2004

05

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Market AEL

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Figure 15. AEL Presence in Africa

AEL has done relatively well in the African Market. AEL derives a third of its revenue fromthe African market. See figures 14 and 15 for activities of AEL in the African market.

International Environment: AEL has done very little trading outside Africa. Someinitiating systems have been traded in South America. One of the AECI subsidiaries,Detnet, has partnered with an international company, DYNO NOBEL, in order to penetratethe North American market. The partnership is now over a year, but it is moving veryslowly. The European market is also very hard to penetrate because of very stringent lawsregarding explosives.

AEL is currently looking at partnerships with Eastern European countries in order to growits market and also penetrate the European market. It is important to note that theinternational market is very unforgiving on product quality and safety.

There has been some shortage of explosives in the international market. AEL hasexported explosives to Australia in the past and it currently has an order of about one year.The transportation of bulk explosives is becoming very difficult in the light of internationalterrorism. The shipping companies are charging a high premium on explosives, whichmakes bulk exports of explosives unattractive. Whilst the international margin on bulkexplosives is attractive, most of it is eroded by logistics.

See figures 16 and 17 for the activities in the explosives international markets.

Legadembi

Geita

JwanengOrapa

Modderfontein

Rietspruit

Mufulira

Bogosu

Morila

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Figure 16. Global Explosives Market (USD 5.2 bn) Source Dyno Nobel

Figure 17. Markets Targeted by AEL for Growth

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Explosives Market Values

Eastern EuropeUSD120m

KazakhstanUSD100m

North AfricaUSD30m

INDIAUSD160m

CHINAUSD450m

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Political Environment: South Africa is currently exploring free trade agreements withvarious countries. These countries include China (high on the agenda), India and Brazil.The free trade agreement negotiations will put pressure on the South Africanmanufacturers to be more competitive. The South African manufacturers will have to bemore competitive, even if the playing fields are not equal. This is the experience with theChinese products, which are flooding the international markets, South Africa included.The South African government is very reluctant to protect its local manufacturers againstChinese imports. Many countries have protected their countries against Chinese importsthrough various measures, including tariff protection.

The South African textile industry has been greatly hurt by the Chinese imports. The shoeindustry has suffered the same fate. Other manufacturers are also struggling underdeluge of cheap Chinese imports. It is therefore unlikely that the government will protectAEL against Chinese imports due to its intended long-term relationship with China.However, AEL has lodged a dumping complaint with ITAC. ITAC has accepted thecomplaint and gazetted the complaint. They are now proceeding with the investigation.This is a very short-term measure, whether AEL wins or lose its case. AEL has to lowerthe costs and differentiate itself from the Chinese explosives and initiating systems. Oneof the powerful differentiators is quality. The quality of Chinese products was very bad inthe past but has now caught up with AEL products.

The South African government has very stable politics. It also has very good relations withits neighbours and most international countries. It is also very active in the development ofAfrica through the NEPAD initiative. It is also actively involved in promoting peace in manyconflict regions in Africa.

The Chinese are targeting Africa as its future source of raw materials. It is envisaged thatraw materials in China will dry up in 20 to 30 years if the current Chinese growth issustained. They are currently offering African government various aid in return for miningassets and trading. The Chinese are very strong in the Zambian mining industry althoughthey have suffered some setback with the explosion of their explosives factory in Zambia.They are also buying uneconomical mines as part of their long-term strategy toaccumulate resources when theirs come to the end of their lifespan. Zimbabwe is alsolooking at China for help with its ailing economy.

Economic Environment: The South African economy is doing very well at the moment.However, the strong rand hampers the mining industry and the general manufacturingindustry. The South African government has improved its relations with many nations andhence trading has been facilitated.

The economy has been growing at round about 3%, but the government has a bullishoutlook and projection. The government is expecting economic growth of about 6% in thenear future.

Environment: South Africa is a signatory to the Kyoto Protocol and it has developedsubstantial environmental legislation. The key criticism with South Africa’s environmental

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legislation is co-ordination between various bodies. Environment legislation resides invarious bodies, which include national government and its agencies, provincialgovernment and its agencies, local government and its agencies, and the Department ofWater Affairs and Forestry.

AEL is part of the general chemical industry. Some of the process impact on theenvironment and are subject to strict regulation. Some processes were designed whenenvironment legislation was not robust; hence vast sums of money need to be spent inorder to meet the current environmental obligations. However, the money is not availableunder the tight trading conditions.

Social Environment: Unemployment is very high in South Africa. Figures of up to 40%are usually quoted. The HIV pandemic is having a marked impact on the society as awhole. Mushrooming informal settlements indicate a shortage of housing, which thegovernment says it has delivered well.

The above social environment indicates that the government cannot resolve some of theproblems alone. The private sector must partner with the government in resolving some ofthe problems. The globalisation challenges are making it difficult for the companies tohave enough cash for social issues whilst required to compete effectively in the globalmarket.

Technical Environment: The education system is not delivering the required skills to theeconomy. The new SETA system is not delivering enough skills at the lower technicallevels (artisans). This is going to be the Achilles’ hill of the South African industry. Thegeneral industry is not engaging in long-term strategies of skills development. Everybodywants ready made skills from the market. Nobody bothers where these skills should comefrom or who should develop them.

The development of machines in South Africa is very limited due to the viability of themarket. Most companies still import machines from abroad. Automation in South Africa isgoing to be important, especially with the increasing cost of labour.

2.1.1 Defining the Business or Function

AEL is a supplier of explosives and initiating systems to the mining industry. Eachcategory of product has a range of products suitable to particular applications.

Structural Characteristics: AEL provides both explosives and initiating systems whilstsome competitors provide explosives only. AEL is dominant in initiating systems andtherefore has a higher market share in narrow reef mining that use more initiating systems.

Process Characteristic: AEL manufactures all the above products from first principles inSouth Africa. However, the AEL subsidiaries in Africa sometimes buy components fromvarious suppliers in order to make various products. AEL in South Africa sometimessupply competitors with certain products, like initiating systems. They also co-operate with

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competitors in case of process disruptions. Sasol would for example use our ammoniumnitrate if they have a shortage and we have a surplus.

Functional Characteristics: There are three sub-categories of initiating systems. Theseare capped fuse, shock tube and electronics. Capped fuse is the traditional initiatingsystem or “light and run” as it was known in the old mining era. The shock tube is animproved system with better timing capabilities than capped fuse. The electronics haveexact timing and are state of the art initiating systems. They are still under developmentinternationally although they are currently used in real mining applications. AEL is thepioneer in this field.

There are three type of explosives supplied by AEL. The first one is the ammonium nitratefuel oil (ANFO) explosive. This is ammonium nitrate mixed with 6% diesel. The nextrange of explosives is cartridge explosive. This is a sensitised emulsion or gel explosive ina cartridge. This is a ready to use explosive. The last range of explosives is emulsion.This is a non-sensitised explosive that is only sensitised at the point of use.

The Market: AEL serves mainly the South African mining industry. This accounts for twothirds of the revenue. The rest of the products are sold to the rest of Africa. This accountsfor a third of the revenue. It must be noted that a negligible amount of initiating systemsare sold in South America. A negligible amount of explosives are exported to Australia.

2.1.2 Stakeholders

The South African explosives industry is characterised by the following stakeholders:

Shareholders: AECI (75%) and the Tiso Group (25%) jointly own AEL. AECI is a listedentity with mainly institutional investors.

The Tiso Group (Black Empowerment partner) is hoping to pay back the loan used to buy25% of AEL in about seven years. Therefore, they have a good outlook on theperformance of AEL to make such a long-term commitment. They see AEL a good cashgenerator.

The institutional investors in AECI are very cautious about the performance of AEL andSANS. They are closely watching the effects of the mining downturn on AEL. They arealso watching the effects of the strong rand on SANS. The institutional investors are so farhaving confidence in the AECI management and its subsidiaries to manage the challengesthey face. However, any negative performance would erode this confidence.

Customers: Our main customers are the mines. We also supply some of our competitorswith explosives and initiating systems. We also export negligible amounts of initiatingsystems to South America and explosives to Australia. We also supply our subsidiaries inthe rest of Africa.The South African mines see AEL as a very expensive supplier of explosives. This view isalso shared by one of our biggest customer, Anglo American. Our customers are currently

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comparing our prices with that of Chinese explosives manufacturers, whose prices areabout half of our prices. All our customers outside South Africa see AEL as a globalcompetitive player. We compete favourably with well established international explosivesmanufacturers in these markets.

Government: Explosives are controlled by the Explosives Department of the SouthAfrican Police Service through a directorate known as the Chief Inspector of Explosives(CIE). They are represented in all provinces. The Army in some countries controlsexplosives.

We also interact with the following government departments:

Department of Water Affairs and Forestry (DWAF). They approve the effluentpermit or licence.

Department of Environment Affairs and Tourism. They monitor variousenvironmental issues.

Gauteng Department of Conservation and Environment. They approveEnvironmental Impact Assessments (EIA).

Local Government. They monitor various environmental compliance issues. Regional Air Pollution Control Office (RAPCO). They monitor air emissions. Other government departments that deal with general business issues e.g. SARS,

DTI, etc.

The Chief Inspector of Explosives (CIE) has great respect of AEL. We comply with all therules and regulations set out by this department. AEL has been exemplary over the years.

AEL relates very well with environmental agencies. We follow all the rules and regulationsas prescribed by all environmental agencies. We are currently implementing projects toreduce NOx gases. This is part of the carbon trading as spearheaded by the KyotoProtocol.

Communities: Most of our employees stay in Tembisa (80%). Some come from thesurrounding areas of Johannesburg, East Rand and Pretoria. We currently have a socialresponsibility project in Tembisa focussing on AIDS/HIV and science/mathematicseducation. We sponsor The Ark, an organisation that caters for AIDS orphans. We alsosponsor 3 schools for the advancement of mathematics and science education.

The surrounding communities are very appreciative of AEL social responsibilityprogrammes. They would like AEL to be successful in order to continue with socialresponsibility programmes.

Suppliers: There are variety of suppliers of raw materials and services to our company.Most powders for explosives are imported. The jute material for one of our products isimported from India. The TNT used for boosters is imported from China. Other materialsand services are locally available.

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AEL buys more than a hundred raw materials from different suppliers. AEL is a smallconsumer of raw materials from each supplier. Therefore, AEL has small buying power toinfluence the prices of raw materials. Hence many suppliers can do without AEL as acustomer.

Unions: The Company is organised by three major unions. These are South AfricanChemical Union (SACU), General Industries Workers Union of South Africa (GIWUSA) andSouth African Pulp, Paper and Allied Workers Union (SAPPAWU). SACU is the majorityunion and the other two are almost of the same size.

The unions see AEL as a very wealthy company who can afford to pay highersalaries/wages. They are currently pushing for higher salaries/wages and benefits. Thisdesire of the unions is only limited by the bargaining structure, which is a centralbargaining forum. The smaller companies tend to resist higher salaries vehemently.

Employees: The majority of our workers are shop floor workers. We also have highlyskilled employees like scientists, explosives engineers, mining engineers, other engineers,etc.

The higher-level employees understand the competition difficulties faced by AEL.However, they want AEL to take competitors head on. They do not take into considerationcasualties that may arise out of this fierce battle.

2.1.3 Regulation and Laws

The emerging laws are mainly in the environment regulation. This sector needs toconsolidate because there is poor co-ordination of environmental agencies. We have anew Explosives Act that seeks to regulate explosives in the backdrop of internationalterrorism concerns. There is also an act that prohibits weapons of mass destruction. Thetraceability of explosives and initiating systems will become a major challenge in the newworld order.

2.1.4 Competition and Laws

The Competition Commission regulates many of our dealings. The permission to sell the25% stake to a black empowerment consortium, the Tiso Group was cleared by theCompetition Commission.

2.1.5 Competitors and Suppliers

The main competitors are Sasol Nitro, EBSA (A joint venture between Sasol and EB ofSpain), Dyno Nobel and OMNIA. Sasol competes with AEL in both initiating systems andexplosives. Their main expertise is in explosives. They toll manufacture cartridgeexplosives for AEL. EBSA competes with AEL in a specific initiating system called shocktube. Dyno competes with AEL in both explosives and initiating systems. OMNIA buysinitiating systems from AEL and compete directly with AEL in explosives.

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AEL has majority market share in South Africa of about 60%.

2.1.6 Past and Present Performance

The past and present performance of the organisation was detailed in the background.

2.1.7 The Organisation’s Structure and Management System

Figure 18. The AEL Executive Committee Team

The leadership of AEL rests with the above executive team. The managing director,operations director, executive director and the executive director strategic projects are alsothe members of the board. The financial controller is the secretary of the board.

The roles of various directors are as follows:

Managing Director: The main function of the MD is to give leadership to the wholeorganisation. He ensures that the organisation is adequately resourced to meet theexpectations of all stakeholders. He is also a key liaison person between AEL and theAECI group.

The managing director is of the view that AEL needs to grow internationally in order todeliver more shareholder value.

The team

Executive committee streamlined tomeet the challenges of theimmediate future and to ensureoptimal delivery

1. Graham Edwards managing director

2. Cyril Gamede operations director

3. Piet Halliday director products and R&T

4. Gys Landman executive director markets

5. Danie Richards financial controller

6. Colin Rilley executive director strategic

projects

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Operations Director: The main function of the operations director is to procure rawmaterials and services, convert them to goods and services through the manufacturingprocess and distribute them to customers. He also manages all support services like IT,Company Engineering and Services, Company Human Resources, Company Health andSafety and Company Environment.

The operations director is of the view that labour costs make AEL uncompetitive whencompared to international competitors. More automation and outsourcing of certainmanufacturing activities may improve competitiveness.

Director of Products and R&T: The main function of this director is to develop productand processes, new and old. He keeps the organisation at the forefront of explosivetechnology.

The director of products and R&T is of the opinion that AEL needs to innovate more inorder to be competitive. The latest market research has shown that we are seen as theslowest innovators among our competitors.

Executive Director Markets: This director is responsible for the sales and marketing ofAEL products and services. He ensures that customer requirements are met on time andin full.

The executive director of markets feels that our customers are very harsh in terms ofpricing. We ensure 100% supply of products all the time, we guarantee quality that ishigher than that of the Chinese products, we are also flexible to modify products to meetspecial customer requirements and we also support our products with highly skilled miningengineers. It is therefore unfair to treat our products as commodities like Chineseproducts.

Executive Director Strategic Projects: This director is responsible for planning andimplementing growth and profitability strategies. Scenario planning also lies with thisdirector.

The executive director of strategic projects feels that we should compete as the marketdictates. He suggests that we should spend enough capital in order to meet thischallenge.

Financial Controller: This director is responsible for corporate governance and soundfinancial management of the company. He is also responsible for the preparation offinancial reporting and consolidation of subsidiaries. This also includes reporting to theAECI group.

The financial controller is of the view that some of our African investments are notprofitable. He feels that we must sell off all unprofitable ventures and invest in profitableones. He is also of the view that our labour costs are uncompetitive. Labour costsaccount for about 60% of our production costs.

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2.1.8 Operations

The operations business unit can be summarised by what was prepared as an insert of theinformation brochure of AEL. This summary can be seen below.

Overview: The Operations Business Unit has 8 departments to serve the customer. It iscomposed of the following departments:

Manufacturing Nitrates Logistics and IT Company Human Resources Company Health and Safety Company Engineering and Projects Company Environment Operations Finance

Manufacturing: The manufacturing plant is located in Modderfontein. Manufacturing isresponsible for the manufacturing of all initiating systems. It manufactures the three rangeof initiating systems; capped fuse and ignitor cord, shock tube and electronic detonators.This department also manufactures other ancillary products like boosters, detonating cord,electrics, etc. This department is also responsible for manufacturing some basic explosiveingredients like lead azide, PETN, time delay powders and various other powders.

Some manufacturing is done in various African countries where our subsidiaries arelocated. The Modderfontein manufacturing plant always shares its expertise and bestpractice with these remote sites.

The manufacturing plant is ISO 9001 accredited. Various initiatives ensure that theproducts are of highest quality. Initiatives include Six Sigma, Lean Manufacturing, WorldClass, 21 Keys and the Theory of Constraints. The philosophy of Care and Growth isfundamental to all operations in AEL. It is a philosophy that advocates that maximumoutput can only be achieved when a company takes care of its people and ensures thatthey grow in their jobs and as individuals.

Nitrates: The Nitrates department manufactures the basic explosive ingredients fromammonia. The main products from this facility are Nitric Acid, Ammonium Nitrate Solutionand the Ammonium Nitrate Porous Prill. Concentrated nitric acid is used in manufacturingto make PETN, which is the main ingredient for detonators, boosters and detonating cord.The ammonium nitrate solution is used to make Ammonium Nitrate Porous Prill, emulsionexplosives and the balance is sold to the fertiliser industry.

This department also manufactures ANFEX, emulsion. It also operates its own distributionnetwork, rail operations for bulk exports, ancillary services and bulk storage facilities forammonia.

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Logistics and IT: The logistics department is responsible for the strategic storage anddistribution of our products. The OTIF (On Time and In Full) delivery of products is acrucial measure of this department. The shaft deliveries are done Jut in Time; hence thereis no room for error. The export deliveries are very crucial for our subsidiary companiesand international customers. The department manages strategic distribution points aroundthe country. The transport is outsourced to a reputable operator in order to achieveefficiency and lower distribution costs. This department also manages our informationtechnology to facilitate a smooth value adding chain.

Company Human Resources: This ensures that the company has the best talent todeliver customer requirements. It also ensures long-term availability of talent andmanages sound industrial relations within the company.

Company Health and Safety: Health and Safety is a licence to operate in the explosivesindustry. This department ensures that the best safety standards are maintained in thecompany and subsidiaries.

Company Engineering and Projects: This department ensures the highest engineeringstandards for the company and subsidiaries. They also undertake strategic andimprovement projects in order to improve customer value.

Company Environment: The compliance with all environment legislation and regulationsis also a licence to operate in our industry. This department ensures all environmentalcompliance for all operations in the company and subsidiaries. It also ensures that we livethe environment in a better condition than we fount it when we cease certain operations.

Operations Finance: This department ensures that management accounts are doneproperly in order for the customer to pay for the right value. The department also help thebusiness unit to instil good and frugal financial management.

2.1.9 Rules of the Game

The following rules of the game apply in the organisation:

The executive director appointments are usually internal. Managers are given means and ability to do the job and then held accountable. Risk taking is not encouraged by the AECI group. The company remunerates at the median but have incentive bonuses. AEL has a cooperative approach with the unions. The organisation is quite frugal e.g. everybody flies economy class (local and

international), tea and coffee provided by the vending machines, no food providedfor meetings straddling lunchtime etc.

Company has a conservative approach to development of new products andservices.

Technical expertise highly valued.

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2.1.10 Management Style

AEL is quite an informal organisation where hierarchy plays a very little role. Instructionscan be given at various levels, not necessarily following the line of command. It is up tothe manager to inform his/her boss. Whilst the practice is inherently full of potentialconflict, it works very well. The dress code is also informal, no ties, except when seeingcustomers. Friday is a casual day where most people wear jeans.

The informal nature of the organisation is also reflected in meetings. The minutes are onlytaken in board and executive meetings. Other meetings end up without any minutes at alland this is sometimes problematic because decisions are usually not clear when a disputearises.

The company employees hate “bureaucracy”. Records and minutes are not kept properly;hence there is some corporate memory loss.

2.2 Obstruction Analysis2.2.1 Internal Discrepancies

The organisation and group seem to be committed to certain tools in order to reduce costsand waste. Other tools are for enhancing customer satisfaction through productavailability at all times. These tools include:

Theory of constraints Six Sigma Safety Environment

However, the commitment is sometimes questionable at various levels.

Table 1: Examples of Discrepancies in AEL

BELIEF PREACHED REAL PRACTICEEnds Be a good corporate citizen

Employment EquityMinimum community contributionPockets of resistance in employmentof equity candidates

Means Care about employeesInnovationNew technology

Minimise employeesMinor variations of the same productsGod father constrained thinking

Resources Plants efficient and state ofthe art

Plants not reliable and not modern

Quality Quality is importantSix Sigma improves quality

Tolerate “consignment” stockSix Sigma is extra pain

Safety Safety is not negotiable Managers overlook safety violation infavour of production volumes

Environment Environment is important Not enough money to comply with theenvironment

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2.2.2 Internal Conflicts

The following internal conflicts exist in the organisation:

a) Conflict exists between AEL and the landlord that manages land and buildings onbehalf of the group, Heartland. Heartland has an objective to maximise profit fromits customers whilst AEL has an objective of minimising rental costs.

b) Conflict between research and development. They want to experiment in the plantswhilst production sees this as an obstruction to production. Research anddevelopment usually want to hand over a process as soon as possible whilstproduction want to take over the process when it is working to expected capacityand quality.

c) Marketing want many variations of the same products for different customers whilstproduction want fewer products in order to improve efficiencies.

d) Marketing and sales commit to customers before confirming ability to produceproduct whilst production wants a “reasonable” lead-time.

e) Creditors department is part of Operations and they want to collect outstanding debtaccording to the terms of sale whilst marketing do not want the customers to beupset by aggressive collection of debt.

f) Finance want to cut costs as much as possible during a cost cutting exercise whilstmanufacturing cut cost but do not want to put the plant at risk of being unreliable.

2.3 Reference Projection

Figure 19. A Four-Quadrant Reference Projection of AEL

Sales

Market

PolicyTurnover Ratio

Historical

Past Past

Assets TimePast Past

Historical PolicyPolicy

Historical

Earnings

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2.4 Reference Scenario

a) Performance of AEL was analysed from a 10 year past history. Therefore, thefuture scenario will be projected from a 10-year future horizon.

b) The main performance indicators if AEL are the following: Sales Earnings Assets Cash Customers

c) The current trends are as follows: Required resources will always be available, hence will not have any effect Competitor behaviour will intensify Consumption will drop due to the poor local demand and stagnant African

trading Government behaviour will not affect any trend

d) The following table summarises the trends and the performance indicators:

Trend Sales Earnings Assets Cash CustomersRequiredResourcesCompetitorBehaviour

- - - - -

Consumption - - - - -GovernmentBehaviour

Table 2. Summary of Trends and Performance Indicators

e) The main challenge of the organisation is growth. There was a decline in the localmarket and the company was only saved by sales in the rest of Africa. The Africanmarket is now stagnating and therefore AEL needs to get business fromsomewhere else. That is why AEL is eyeing Eastern Europe, China and India.Those are potential growth areas. However, this is a very competitive market.Therefore, differentiation will definitely put any company in a market commandingposition. One of the most priced differentiators in the explosives market is quality.Therefore, it is important that AEL brands itself as a quality product manufacturer.

It can be seen in Table 2 that all trends are negative. Therefore, a different way of thinkingis required to change the situation.

The following rich picture captures my research context. See Figure 20.

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Figure 20. The rich picture of AEL

2.5 The Quality versus Cost Challenge

BUSINESS LABOUR

CIVIL SOCIETY COMPETITION GOVERNMENT

AEL

MINESREST OFTHE WORLD

MINESANDAGENTS

SA, AFRICA ANDREST OF THEWORLDSASOL

PACKAGEDEXPLOSIVETOLL AGENTS

ANDDISTRIBUTERS

DANTEXPACKAGEDEXPLOSIVETOLL

DETNETTOLL MNFRNGAGREEMENT

MINESAFRICA MINES

SA

GROWTH: MUST FIND NEW MARKETS

CUSTOMERS:MEET CUSTOMER NEEDS

MARGIN:LOWER COSTSHIGH VOLUMES

CASH:COLLECT IN 30 DAYSPAY IN 120 DAYSLOW INVENTORY

VELOCITY:JIT DELIVERIESPROCESS IMPROVEMENTS

CHINESE: GOODPROFITS

LOCAL: NOPROFITSNO GROWTH

MINES AND CHEMINDUSTRY POLLUTE

FTAsCUTTINGJOBS

FTA: CHINA, INDIA,ARGENTINABEEMINING ROYALTIESAEL HELP!

RISK: BEE, CRIME

STRONG

RAND

HIGH

CRUDE

Can AEL meetour qualityneeds?

Can AELmatch theprice of othercompetitors?

Create EnterpriseValue

Identifying andExploiting MarketOpportunities

EnhancingEnterprise Value

Globalisation Marketing Entrepreneurship

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AEL finds itself in a difficult position in the local market. The Chinese imports are about50% cheaper than the products locally produced by AEL. AEL is part of the Proudly SouthAfrican movement and this has not shown any signs of providing any protection againstthe Chinese cheap imports. The mines are using the threat of importing Chinese productsin order to suppress the year-on-year price increases on AEL products. The mines gavean effective 2% increase across the board on AEL products in 2005.

The quality of the Chinese products is now similar and in some cases it might be betterthan AEL products. Those mines that test and decide to use the Chinese productssupport the above statement. It must be noted that the use of Chinese products may be atemporary phenomenon in some cases, because some mines decide to go back to AELproducts at a later stage. However, the reasons for going back to AEL products may notonly be due to quality problems only. The long logistics supply lines from China may alsoaffect consistent supply of products to the mines. The quality of AEL products is not stableand consistent. The quality has slightly deteriorated over the years. The quality in AEL ismeasured in terms of customer complaints. There is also an internal measure of qualitythrough internal failure rate. The products are destructively tested internally and failuresper thousand units are recorded.

One of the challenges that AEL faces is the rising amount of waste. This waste is storedin various magazines throughout the country. The storage and destruction of waste is avery costly exercise. This waste also becomes a safety hazard when the explosives arepast their recommended shelf life.

2.6 The Response to Quality and Cost Challenges

The AEL executive committee decided to embark on certain strategies in order to combatquality and cost challenges of AEL products. One approach was to produce a niche, fit-for-purpose product that would match the Chinese products where they entered themarket. However, this product is in a low-volume product range in comparison with thetotal products sold by AEL. Therefore, the impact of this intervention does not havesignificant impact on the bottom line. However, it has indicated to the competitors thatAEL can reduce its costs in the long run in order to match their prices.

The other intervention taken by the executive committee was the introduction of six-sigma.This intervention is envisaged to improve quality and to reduce waste. The decision toimplement six-sigma was taken in the beginning of 1994. The first six-sigma projects wereimplemented in 2004.

2.7 The Decision Process to Implement Six-Sigma

The six-sigma intervention was intimated in an executive committee meeting in the middleof 2003. There was an agreement in principle from the executives that the interventionwas necessary. A consultant was engaged to evaluate the six-sigma readiness of ourorganisation. The schedule for the assessment of six-sigma readiness can be seen in

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Appendix 10. The report indicated that AEL was ready to implement six-sigma. Anabridged readiness report of this intervention can be seen in Appendix 11.

The next phase was to give a more detailed presentation of the six-sigma process to theexecutive team. This presentation was given to the executive team in January 2004. Theexecutive team was unanimous about the implementation of six-sigma in AEL. I was thenchosen as the executive director responsible for six-sigma. The six-sigma training of theexecutive committee was completed in January 2004. Therefore, the decision to employthe six-sigma methodology in order to improve quality and eliminate waste in AEL was fullyembraced.

The next level of training was that of champions. The champions are responsible for thesuccessful implementation of six-sigma projects in their areas. The main function of thechampion is to remove all obstacles encountered by the green belt during theimplementation of a six-sigma project. The next level of training was that of green belts. Agreen belt is responsible for the day-to-day implementation of a six-sigma project. A blackbelt usually supports the green belt. The consultant supported all AEL green beltsbecause there was not yet an internally trained black belt in AEL.

The first round of six-sigma projects was implemented from June 2004 to January 2005. Asummary report for the closeout of the first round of projects can be seen in Appendix 12.The next round of six-sigma projects was implemented from August 2005 to February2006.

Chapter 3: Concern1.Introduction

Format of dissertationProblem Overview and

FormulationResearch methodology and the

dominant paradigmPresent the framework of the

paper.

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3. CONCERN









Literature Review









situation.



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It can be seen from the situation that growth and profitability of AEL is under threat. Thelocal market is shrinking due to lower gold output that now requires fewer products fromAEL. The platinum production has not grown, as predicted. Hence, platinum growth hasnot offset the decline in gold as was expected. Therefore, the overall domestic market ofAEL is shrinking. There is also fierce competition looming from the Chinese competitorsand with certain local companies threatening to team up with the Chinese manufacturers.

AEL has performed well in the African market. However, this market is now under fierceglobal competition. AEL has to improve its quality, availability of products and prices inorder to retain its market share.

AEL has to look outside the African market for growth. We have seen in the situation thatAEL is looking at various international opportunities for growth. However, these marketsare very discerning when it comes to quality, price and availability of products.

Quality and product costs are the key attributes that will enable AEL to retain or even gainmarket share in the domestic and African markets. This is also a prerequisite for entry intothe international markets. The executive team of AEL took a decision to improve qualityand reduce costs (waste reduction), through the implementation of six-sigma. The trendsof these two variables (customer complaints and waste) over the last five years have beendisappointing. The detailed reports of quality and waste in AEL are shocking, to put itmildly. See appendices 13 and 14 respectively.

The number of customer complaints is one of the key measures of quality in AEL. Thenumber of customer complaints has increased to the unacceptable 2003 levels this year.The waste levels are increasing such that we cannot keep up with waste destruction. SeeAppendix 14 for details. The trend of customer complaints in the last five years can beseen in Figure 15 below. The full quality report can be seen in Appendix 15. This reportresulted from the request for me as an Operations Executive to solve the quality problem.This report must be seen as a starting point for a permanent solution. This reports spellsdisaster for AEL if no significant changes are made. This report can be taken as evidencefor the quality concerns that are raised in this paper. It also shows that this is a practicalproblem that needs to be solved. The following details are highlighted by this report:

The overall BOT of quality in AEL The BOT of quality of various product lines The BOT of quality along the supply chain Analysis and interventions from 2001 to solve the quality problems (The problem has

not gone away!)

Quality problems can lead to customers changing their allegiance. The biggest futurecost of quality is losing big accounts to our competitors. The Chinese products are comingin at very low prices and their quality is now comparable to the quality of South Africanmade products. The customers are asking us why should they buy our products if theChinese products are cheaper and the quality is comparable. Unless AEL improves the

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quality to a higher level than our competitors (including the Chinese competitors), thecustomer will only buy products based on price differential only (since quality will be thesame).

The other serious problem is the level of waste. Most of the waste is in the form ofobsolete initiating systems. Here are two sources of this waste. These are:

Production waste. Made to order products requested by marketing (customers) which they fail to sell

(buy). Traded products imported for customers by marketing which they fail to sell.

There are few problems associated with the levels of waste. These include the following:

Figure 21. BOT of Customer Complaints in AEL – A 5-Year Horizon

There are costs of carrying waste products. The waste occupy magazine space for finished products and magazine space is

now very limited. The cost of destroying waste is high e.g. it costs 35 cents to make a detonator but it

costs 95 cents to destroy it. The longer the explosive product is stored in the magazines, the unstable it

becomes and hence poses a safety risk. There are no more open ranges where AEL can destroy explosive waste.

AfricanExplosivesLimitedComplaints(ISandExplosivesincludingDetnet)

051015202530354045505560

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Num

ber

2000Total 2001Total 2002Total2003Total 2004Total 2004Totalexcl.Detnet2005JuneYTDTotal

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It was indicated in the situation that AEL has decided to implement six-sigma in order toimprove quality and reduce waste. Six-sigma is a well-known quality and waste reductionmethodology. Companies like General Electric, Allied Signal, Motorola have claimed hugesuccesses through the implementation of six-sigma. However, history has shown that thejourney was not smooth. The amount of effort and time needed to implement six-sigmacan be noticed in Jack Welch’s words, Welch (2001):

“We can wait no longer. Everyone in this room must lead the quality charge. Therecan be no spectators on this. What took Motorola ten years, we must do in five –not through shortcuts, but in learning from others”

Welch (2001: 330)

One of the concerns is whether AEL has the five or ten years to implement six-sigmabefore it is overcome by competition. How will AEL deal with spectators? How can AELmodify and adapt six-sigma for effective and efficient implementation? Does AEL have theright calibre of people for such a huge undertaking? Is six-sigma the best tool to improvequality and to reduce waste? How can six-sigma integrate with other tools already in usein the organisation?

It is clear from the quoted past successes that six-sigma is a tool that is effective andefficient depending on the ability of the user. Therefore, its success depends on the skilland insight of the user during implementation. It is also clear that six-sigma is a generalmethodology that needs to be modified or adapted to suit a particular organisation andcircumstances. Having looked at the various concerns that are raised by the situation,characteristics of six-sigma and problem formulation in Chapter 1, this leads us to aserious concern about this problem. This serious concern is whether AEL has thecapability of adapting six-sigma to its needs and circumstances in order to implement itsuccessfully.

The successful implementation must have a direct impact in improving quality andreducing waste. The report on quality in Appendix 15 clearly shows that quality in AEL isnot consistent over the years and even over the months! This lack of consistency meansthat AEL does not have a handle on quality. Currently, the quality achievement is basedon luck or a combination of unknown (to AEL) causal factors. This is of great concernsince no current tool or methodology in AEL has managed to achieve quality consistency.There is a concern whether six-sigma will be able to achieve this consistency. This in turnis dependant on the successful implementation of six-sigma. Which is also dependant onthe capability of AEL to adapt six-sigma for a successful implementation.

The report on waste levels in Appendix 13 is a consequence of poor quality. I wascommissioned by the MD of AEL and the EXCO to solve the waste problem that haspersisted for a number of years. I then commissioned the Technical Services Manager tocompile this report. This report was the first step towards solving the problem of waste inAEL. The report is included as an appendix in order to show the nature and extent of theproblem of waste. The report is also evidence of a practical problem that needs to besolved. It captures the following key issues in detail:

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The origins of waste Safety problems associated with explosives waste Commercial problems associated with warehousing and destroying waste Sources of waste (The problem is not limited to one product line) Limited nature of the proposed solution; building more destruction facilities (It does not

deal with the root causes at sources of waste)

Figure 22. BOT of Waste in AEL – A 5-Year Horizon

Waste in AEL is as inconsistent as the quality levels. However, solving the qualityproblem will go a long way to solving the waste problem. It must be noted that six-sigmaoffers a dual solution to quality and waste. The success of waste reduction is alsodependant on the ability of AEL to adapt six-sigma for a successful implementation.

Therefore, the overarching concern is whether AEL will be able to adapt andimplement the six-sigma methodology successfully in order to improve quality andreduce waste. The success of implementation will be measured by improvement inquality and reduction of waste. This concern can be seen as erratic quality and waste ofvarious AEL products in the Behaviour Over Time (BOT) in Figure 21 and 22 respectively.

Chapter 4: Question1.Introduction

Format of dissertationProblem Overview and

FormulationResearch methodology and the

dominant paradigmPresent the framework of the

paper.

HISTORICAL DETONATORS DESTROYED IN CASES

0

2000

4000

6000

8000

10000

12000

1999 2000 2001 2002 2003 2004

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4. QUESTION









Literature Review









situation.



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The main concern is whether AEL has the capability of adapting six-sigma to its needs andcircumstances in order to implement it successfully (improvement in quality and reductionof waste). This concern raises a few questions as follows:

Do AEL leadership, management and employees understand the six-sigmamethodology properly?

Do AEL leadership, management and employees understand exactly what they wantsix-sigma to deliver for them?

Does AEL have the right calibre of people and other resources to undertake such anintervention?

Does AEL understand the obstacles of implementing six-sigma? Does AEL understand the impact and interaction resulting from the implementation of

six-sigma? Six-sigma implementation is a culture change for the organisation, how does AEL lead

and entrench this culture change? Is six-sigma sustainable? How do we distinguish six-sigma from “fads”?

These are just a few questions that flow directly from the concern above. The abovequestions are “brainstormed” from the concern. Different individuals, from within thecompany, have asked these questions during the early implementation of six-sigma inAEL. Some quarters have labelled the people who ask these questions as disloyal orobstructionists. However, it is important to take into account all views in order to make six-sigma implementation a success.

It is also important to expand and raise the level of questions that arise from the concern.Mitroff’s problem structuring approach helps us to achieve this objective (Ryan, 2004h).This methodology helps us to look at the problem from different perspectives in order toavoid solving the wrong problem. It is a process that enables us to ask the right questionin order to solve the right problem. This forms a very important part of problemformulation. Mitroff in Ryan (2004h: 14) suggests that “all serious errors of managementcan be traced to one fundamental flaw, solving the wrong problem precisely”.

Mitroff continues to suggest ways of avoiding this flaw, which he calls the Error of the ThirdKind (E3 Error). He suggests five steps as follows:

Pick the right stakeholders Expand your options Phrase the problem correctly Expand the problem boundaries Be prepared to manage the paradox

The above steps were followed in this paper in order to avoid the E3 Error. This process isbriefly discussed in the following paragraphs.

4.1 Picking the right stakeholders

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The six-sigma implementation was sold and adopted by the EXCO and the BusinessManagement Team (BMT). This was also communicated and debated at the lower levelsof management. The gaps that still need to be closed are communication and debating atworker level. This is envisaged to be part of an action plan that will emerge from thisprocess.

4.2 Expanding the Options

This is a process of looking at a problem from four different perspectives. This processenabled me to raise a few questions under each perspective and also critique thequestions. The questions were then synthesized in order to come up with one researchquestion, which this paper is trying to resolve. The next paragraphs describe the processof expanding the options.

It is important to note that there are claims or views that are raised by various stakeholdersin the following discussion. Most of these views were gleaned from interviews andinteraction with various employees in the company. It is important to note them as views,not fact. It is however, important to take these views into account as views “are fact” to theperceiver. These views or claims from all stakeholders will affect negatively or positivelyany intervention that may be implemented in an organisation, including our currentintervention, six-sigma.

4.2.1 Scientific / Technical Perspective

This is an impersonal manner of looking at problems. It is concerned with why and howthings are. The following questions arise from this perspective:

1. How can six-sigma improve quality through process capability? This questionarises because most of the processes in manufacturing are not capable ofmeeting the specifications that are set within the company. However,management expect the process to produce products that are within the setspecifications. The only problem with this question is that it does not take intoaccount other variables like raw materials and skills of operating the processes.

2. How can six-sigma improve quality through better process understanding? Thisquestion arises because of the technical complexity of the manufacturingprocess in AEL. There are process and unit production plants, each with its owncomplexity. Many processes use explosive powders, which sometimes giveunpredictable results. The organisation is reliant on a handful “experts” whosometimes cannot explain exactly how they have solved a problem. Workingwith explosive powders is usually referred to as “black magic” in theorganisation. This question does not take into account the right level oftechnical education at all levels that would help to improve the understanding ofthe processes.

3. How can six-sigma improve quality through innovation? This question arisesbecause there is a lack of innovation in the organisation. This has been shown

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by various yearly surveys that have been conducted over the years. There is alack of innovation to improve products and the production processes. One ofthe limiting factors is the bureaucracy involved when working with explosives.This question does not necessarily deal with the issues of safety duringinnovation.

4.2.2 Interpersonal / Social Perspective

This perspective takes into account the human aspects of a problem. It includes how werelate to one another as well with other stakeholders. The other stakeholders may includefamilies, institutions, other organisations and all human kind that will be affected, directly orindirectly by our actions. The following questions arise from this perspective:

1. How can six-sigma improve quality through improving the commitment of seniormanagement to the notion of quality? There are some views at lower levels ofmanagement that senior managers are not committed to quality. Someaccusations are that senior management do not approve of capital expenditureto solve quality problems. This view is limited because it only comes from onesector of the employees (employees requesting capital). This view does notexplore whether the proposed solutions will resolve the problems permanently.

2. How can six-sigma improve quality through increasing the understanding ofquality by first line managers? There is a view from senior and middlemanagement that first line managers do not understand the notion of qualityproperly. One problem that is usually cited includes the low level of education ofsome first line managers. The other one is more amorphous as it accuses firstline managers of lacking commitment to quality. There is a need of improvingquality in the first line management ranks. There is some acknowledgementfrom the more educated first line managers that poor education contributes tothe quality problems.

3. How can six-sigma improve quality through increasing the understanding ofquality by operators? The first line managers also lay the blame of poor qualityto operators who do not understand the notion of quality properly. They also citepoor education of operators.

4.2.3 Existential Perspective

This is concerned with the most basic reason of existence of an entity or organisation.The questions include: Why does the organisation exist? What is the purpose of theorganisation? What can the organisation do to improve its purpose? The followingquestions arise from this perspective:

1. How can six-sigma improve quality through better understanding of customerneeds? One view is that an organisation exists to serves its customers. The

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organisation cannot exist without the ability to serve its customers. The qualitymust be what the customer wants, no less not more. The organisation mustprovide the quality that the customer is willing to pay for. This view ignoresother stakeholders like shareholders and employees. Shareholders may bemore concerned about profitability and growth. Employees may be concernedwith their salaries and job security.

2. How can six-sigma improve shareholder value through better quality andreduction of waste? This view takes a position that an organisation exists toserve its shareholders. Poor quality and waste can lead to erosion ofshareholder value through loss of customers and the inability to secure newcustomers. Waste leads to higher costs that the customer is not willing to payfor. This view does not take into account other stakeholders like employees andcompetition.

3. How can six-sigma improve quality and reduce waste through the involvement ofits employees? This view takes a position that an organisation cannot achieveits objectives without involving its employees. This view tends to ignorecustomers and shareholders, but not completely. The shareholders andcustomers are indirectly considered if the employees are supposed to bedelivering company objectives.

4.2.4 Systemic Perspective

This perspective deals with the existence of systems within the broader context of theuniverse. It recognises that any system is part of another system. It asks whether theactivities in the smaller system are congruent with the activities in the larger system.

1. How can six-sigma help AEL in its objectives for growth? One of the strategicthrusts of AEL is to grow the business internationally. However, the internationalquality requirements are very onerous. Currently, AEL quality does not meet allthe international standards. We buy some products from internationalcompanies in some of our subsidiaries in Africa, because the customers do notaccept the quality our products.

2. How can six-sigma help AEL to keep its customers who are looking foralternative suppliers? Some customers do not see the difference between ourquality and the new Chinese suppliers. They argue that the price differentialthey pay for AEL products is not justified by the quality that is offered. Thisperspective does not deal with whether the customers will be willing to pay thesame price if the quality is improved.

3. How can six-sigma improve the supply chain through better quality? The qualityproblems affect the supply chain. Rework does not only add to the costs but

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can lead to delays because production is taking longer. The waste product inwarehouses occupies the space that is allocated for good, finished products. Itis important to note that quality and waste are not the only contributors to anefficient and effective supply chain.

4.2.5 Synthesis of Perspectives

It is important to synthesise the above questions into one research question. It is importantto note that the essence of the above questions is about improving quality and reducingwaste. The second most important point to note is that a normative decision has beentaken to implement the six-sigma methodology in order to improve quality and reducewaste. Six-sigma is a process of improving quality and reducing waste. It combines thetechnical aspects, people issues and the broader business objectives into one holisticmethodology. It is an integrative process because it combines various tools. The conceptof six-sigma will be discussed in more detail later in this paper.

Six-sigma is sold as a methodology that can answer all the above questions. The proof ofsix-sigma successes and failures is cited in many publications. This will be discussed inmore detail in the literature review section in the later chapters. The success or failure ofsix-sigma is in the process rather than content. The six-sigma methodology uses knownquality and problem solving tools. The most difficulty lies in the process of implementationand the integration of all these tools within a particular context. The challenge is tounderstand and integrate six-sigma in the context of a particular organisation. Hence, thequestion is more about adaptation of the six-sigma methodology to an organisation ratherthan the content of the tools used in the methodology.

The analogy that comes close to the above situation is the EMBA process at UCT. It is anaction research process between the EMBA programme, the individual and the company.The success of the programme depends on the robustness of the implementation process.All individuals in the EMBA get the same content but the effectiveness of the programmein improving an individual and the organisation depends on the implementation of theaction research process in a particular context. Therefore, success of the programmedepends on the interaction of the parts rather than the existence of individual parts.

Different questions were also raised about six-sigma from different perspectives. Thequestions from these perspectives already incorporate questions and concerns that wereraised during interviews. These questions were synthesised into an Interrelation Diagraphin order to understand the key drivers and key outcomes. This process would also explorewhether there is a dominant driving question. The Interrelation Diagraph would alsoestablish the extent of dominance.

The following Interrelation Diagraph in Figure 23 synthesises all the questions that wereraised from the different perspectives.

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Figure 23. Synthesis of Questions from Different Perspectives

The following key drivers and key outcomes arise from the Interrelationship Diagraph:

Key Drivers

1. How can six-sigma improve quality through the commitment of seniormanagement? (11 arrows out)

2. How can six-sigma improve quality through increasing the understanding of qualityby first-line managers? (5 arrows out)

3. How can six-sigma improve quality through increasing the understanding of qualityby operators? (5 arrows out)

Key Outputs

1. How can six-sigma improve quality through process capability? (6 arrows in)2. How can six-sigma improve the supply chain through better quality? (6 arrows in)3. How can six-sigma improve shareholder value through better quality and reduction

of waste? (6 arrows in)

It can be noticed that the commitment from senior management is by far the dominantquestion. The secondary drivers are the understanding of quality by first line managersand operators. The secondary drivers (understanding of quality by operators and first linemanagers) are dependant on the primary drivers (commitment of senior managers). It isonly commitment from senior management that would allow investment to be made at

How can six-sigmaimprove qualitythrough process

capability?

How can six-sigmaimprove qualitythrough processunderstanding?

How cansix-sigma

improve qualitythrough

innovation?

How can six-sigmaimprove quality

through thecommitment of

senior management?

How can six-sigmaimprove quality

through increasingthe understanding ofquality by first line

managers?

How cansix-sigma

improve qualitythrough

increasing theunderstandingof quality byoperators/

How cansix-sigma improve

quality throughbetter

understanding ofcustomer needs?

How can six-sigmaimprove shareholdervalue through betterquality and reduction

of waste?

How can six-sigmaimprove quality and

reduce wastethrough the

involvement ofemployees?

How cansix-sigma help

AEL in itsobjective for

growth?

How can six-sigmahelp AEL to keep itscustomers who are

looking foralternativesuppliers?

How cansix-sigma improvethe supply chainthrough better

quality?

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lower levels to understand quality. Therefore, senior management is the enabler, who hasthe power to empower the lower levels. This empowerment means the ability of seniormanagers to adapt an intervention to suit the context of the organisation. This is similar toa well-administered diet that suits the lifestyle of an overweight person. “Fads” are likecrash dieting that only last for a few months.

Crosby (1984) says that managers deny that they are usually the cause of poor quality andwaste. They also fail to implement interventions to correct the problems. They usuallyblame the failure of interventions to lower levels of the organisation. This is also a verycommon practice in the South African industry from my corporate experience. He furtherargues that key ingredients to a successful intervention are determination, education andimplementation. Determination and education in this context means that the intervention isunderstood in the context of the “citizens” of the organisation.

The key word from the above discussion and argument is about adaptation of a changemanagement process to the context of an institution. The chosen management process issix-sigma in the context of AEL. The aim of this intervention is to improve quality and toreduce waste.

Therefore, the following synthesised question arises:

How can African Explosives Limited adapt and implement six-sigmasuccessfully in order to improve quality and reduce waste?

4.3 Phrasing the Problem Correctly

The question is phrased such that it highlights the dependence of the process on otherstakeholders. Hence, the word “adapt” is used to surface the stakeholder dependence ofthe process (interpretive paradigm). The question has a diversity component as itrecognises that the six-sigma process can be “interpreted” differently by differentorganisation; yet achieve the same goal (post modernist paradigm). The question alsohighlights the end goal of the process, which is achieving better quality and reducing waste(functionalist paradigm).

The phrasing is rich in that it encompasses three paradigms as proposed by Jackson(2003). These paradigms include the functionalist paradigm (promoting goals andviability), interpretive paradigm (stakeholder purposes) and the postmodernist paradigm(promoting diversity). The emancipatory paradigm (ensuring fairness) is implied in thequestion. The very process of six-sigma ensures that improvement in quality andreduction of waste benefit the customer, the company and the employees. Six-sigmarecognises that an improvement would not be sustainable if there is no fairness betweenthese three stakeholders.

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4.4 Expanding the Boundaries of the Problem

The problem has been explored from different perspectives. The question alsoencompasses all the paradigms. The problem question is not only framed in purelyeconomic, goal-oriented terms. It recognises the interaction of stakeholders and theirunpredictable nature. This has helped to expand the boundaries of the problem.

4.5 Managing the Paradoxes

The implementation of six-sigma has created a lot of paradoxes in the organisation. Thefirst and foremost problem is that six-sigma needs a huge amount of resources. Mostemployees complained about the availability of time during the interviews. They feel thatcertain people should be removed from their jobs in order to concentrate on six-sigmaprojects. They are finding it difficult in doing their normal day-to-day jobs and then fit insix-sigma projects at the same time.

Companies who implemented six-sigma successfully were able to release their best talentto six-sigma projects. The managers are reluctant to release their best employees, asthey need them in “hot spots”. The other paradox is that many organisations would like toachieve better quality without investing any resources. Hence, there is a notion that six-sigma or any quality improvement programme is too expensive.

The success of six-sigma will be dependant on the ability of the organisation to managethese paradoxes. The management of paradox will be part of adaptation of the six-sigmamethodology into the AEL context.Copyright UCT

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Literature Review









situation.

Chapter 5: Answer







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5. ANSWER5.1 Development of the Answer

Two causal loop diagrams or models were developed for this research. Both causal loopdiagrams were developed from three sources of data: interviews, literature review andparticipant observation. The two causal loop diagrams provide the answer to the researchquestion at two different levels of abstraction.

The first causal loop diagram provides the answer at a higher level of abstraction. Thiscausal loop diagram provides an answer to the research question that is more readilytransferable to other organisations. The relationship between variables is arguedrigorously in order to ensure transferability, validity and robustness of the causal loopdiagram.

The second causal loop diagram is the “extension” of the first causal loop diagram. It issimilar to the first causal loop diagram but it is at a lower level of abstraction. The secondcausal loop diagram is a “flashed out” version of the first causal loop diagram. Morevariables are introduced in order to improve the utility of the first causal loop diagram andalso to “customise” it for practical use within AEL. This causal loop diagram is the firstlevel of “actioning” this research process.

A management practice causal loop diagram template was introduced in module 4 of theEMBA programme. This management practice causal loop diagram template has theformat of a viable systems model imbedded in it. It therefore introduces an element ofviability in systems dynamics i.e. causal loop diagram as a theory development tool. Ihave used this format in all my papers since it was introduced.

I intend to keep the concept of viability (sustainability) in my answer. Therefore, I willcontinue to use a format that would enable me to retain the viability concept in my models.It is of paramount importance that six-sigma is sustainable; otherwise it will fall under thecategory of “fads”. The management practice causal loop diagram can be seen in Figure1 in the Problem Formulation problem section.

I have taken liberty to modify the management practice causal loop diagram template intowhat I think is even closer to the viable systems model. This proposed causal loopdiagram template can be seen in Figure 24 below. This proposed template is still inagreement with the viable systems model as proposed in Ryan (2004c). This template willbe used in the development of the causal loop diagram for this dissertation.

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Figure 24. The Modified Management Practice Causal Loop Diagram

The answer to the research question, causal loop diagram, will be presented loop by loopin order to enhance understanding of how it was constructed. This answer constitutes atheory to this research question. Therefore, it must have all the characteristics of a goodtheory. Ryan (2005i) views bad theories as follows:

“Bad theories often just give a name to the cause of something, without actuallyexplaining anything. We are often fooled into accepting these theories because it’sbeen given a name, which make it seem real or credible”.

Ryan (2005i: 2)

He continues to say that good theories must have the characteristics of mechanism orprocess, generality, truth, falsifiability, simplicity, fertility and surprise. Whetten (1989)comes up with a different set of characteristics for a good theory. He argues that a goodtheory must contain four essential elements, which are: What, How, Why and Who,Where, When. Van de Ven (1989) also approves these characteristics in his approach.Weick (1989) emphasises the characteristics of verification, validation and plausibility.Weick (1989: 516) continues to say “theorising consists of disciplined imagination thatunfolds in a manner analogous to artificial selection”.

I will ensure that all the characteristics of a good theory are highlighted in the process ofintroducing my theory for this research process. The complete causal loop diagramconsists of “sub-causal loop diagrams” for normative (legitimacy) management, strategicmanagement and implementation management.

The first higher level of abstraction causal loop diagram was developed from the keydrivers and key outcomes that resulted from an interrelation diagraph in Figure 45, in theRationale chapter. This causal loop diagram consists of seven variables.

The first sub loop of this model is the normative or legitimacy loop. This is a loop thatcreates the legitimacy of the proposed solution. This sub-loop can be seen in Figure 25below.

NormativeManagement

StrategicManagement

Control andCo-ordinatingManagement

PrimaryImplementationManagement

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Figure 25. The Legitimacy Loop

The role of top management in an organisation is to create an enabling environment inorder to achieve organisational goals. Failure to create such an environment leads to adysfunctional organisation. Top management must always live the values they expectother people to live in the organisation. The role of top management is to createlegitimacy for an organisation or an initiative. This ensures that both internal and externalstakeholders accept the initiative.

The lower levels of the organisation always take the cue from top management.Therefore, the first thing to happen in any initiative is that top management must have andshow unwavering commitment to an initiative. Interviewees regarded this commitment, asan absolute must for six-sigma to succeed in AEL.

Top management implement initiatives by setting an agenda in an organisation. Theyensure that the initiative is part of the agenda of lower levels of management. Therefore,something cannot be an agenda in an organisation unless top management is fullycommitted to it. It therefore, follows that an improvement in commitment leads to animprovement in creating an agenda.

Once the agenda has been created, the organisation needs to be mobilised in order tothings to happen on the ground. This is very similar to a political process where anagenda is achieved through mobilisation of the people around an issue. Typically, theagenda of the liberation movements in South Africa were mobilised around the illegitimacyof apartheid. Mobilisation does not happen without a clear agenda from leadership.Therefore, the ability to create an agenda improves the ability to mobilise on the ground.The next loop is the combination of the legitimacy loop and the strategic variable, Level ofSix-sigma expertise in the organisation. This loop can be seen in Figure 26 below.

Figure 26. The Legitimacy Strategic Loop

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It is very important for an organisation to understand an initiative at a strategic level. Noinitiative can succeed without proper understanding within an organisation. Employeesmust know what it means and what it is trying to achieve.

Therefore, senior to middle managers must have good expertise in the initiative. First linemanagers always lose hope if they do not get good explanation about something fromsenior and middle managers (from personal observation over the years). This level ofexpertise will depend on how much top management is will to “sponsor” the educationprocess to an initiative. Therefore, the level of mobilisation from top management willdetermine how much expertise is created in the next levels of management.

Once there is expertise in the lower levels of management, the whole organisation will buyinto the initiative. Most interviewees emphasised the process of buy-in. This will furtherenable senior management to create and consolidate the agenda of the initiative. Topmanagement cannot continue to create an agenda of an initiative if there is not buy in fromthe lower levels of management. Therefore, the level of Six-sigma expertise will improvethe ability of top management to further create and consolidate the agenda of six-sigma inthe organisation.

The next loop is the Fist Normative Strategic Implementation loop. This can be seen inFigure 27 below.

Figure 27. The First Legitimacy Strategic Implementation Loop

The two new variables that are introduced in this loop are the Level of Understanding theprocess and the Level of Performance measurement (people and process). Six-sigmaitself is a methodology that is based on measurement, nothing is assumed. The initialstate of a process is measure before the intervention and then measured after theintervention in order to understand the level of change. It is through this characteristic thatthe expertise of six-sigma in the organisation will increase the level of performancemeasurement in the organisation.

Measurement of the process and people needs a person to be as close as possible to theprocess. The person measuring the process must understand finer details and






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interactions of the process he/she is measuring. Therefore, the process of measurementincreases the understanding of the process.

The process of six-sigma begins with the value stream of the process under investigation.The value stream is what is happening in the process. Therefore, if people have a higherunderstanding of the process, this will in turn enable them to create more meaningful valuestreams. Hence, understanding the process better leads to further improvement in theexpertise of six-sigma in the organisation.

The next loop is another legitimacy strategic implementation loop. This can be seen inFigure 28 below.

Figure 28. The Second Legitimacy Strategic Implementation Loop

This loop does not introduce any new variable. It only links two variables, Level ofUnderstanding the process and the Ability to Create a six-sigma agenda in theorganisation. It is again very important to highlight that top management do not act in avacuum. More often than not, their behaviour is shaped by what is happening on theground. Therefore, if an initiative is showing positive results on the ground, this reinforcestheir ability to support the initiative even further. An improved level of understanding theprocess would further enable top management to create and consolidate the six-sigmaagenda in the organisation.

The next variable to be introduced is the Level of Effectiveness and efficiency of theimplementation plan. This completes the causal loop diagram or model. The completehigher level of abstraction causal loop diagram can be seen in Figure 29 below.






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Figure 29. The Six-sigma Implementation Model (Higher Abstraction)

A well-defined implementation plan is an important tool for putting a theory or concept intopractice. A plan is always dependant on how much a situation, including the interaction ofits parts, is understood. If a situation is understood very well, there is a greater possibilityof coming up with a well-defined and workable plan. Therefore, the level of understandingthe process improves the level of effectiveness and efficiency of the plan.

A good plan must always have milestones and achievement targets in order to determinesuccess or failure. The milestones and targets enable corrective action to be taken duringimplementation should things not go the way they were originally planned. Therefore,inherent in a good plan is performance measurement. It then follows that a good planimproves performance measurement. Hence, the level of effectiveness and efficiency ofthe implementation plan will improve the level of performance measurement of people andthe process.

5.2 Key Elements of the Research Answer

It is important to summarise the key elements of the research answer and show how thesewill deal with the concern that was raised earlier in this paper. This is the 20% of theanswer that will deal with the 80% of the concern. The following is the summary of the keyelements and how they deal with the concern:






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5.2.1 The leadership / top management must be fully committed to qualityimprovement, waste reduction and the implementation of six-sigma

It is important that the leadership is fully committed to quality improvement, wastereduction and the implementation of the six-sigma methodology. More often than not,interventions are instituted in organisations without full commitment from the leadership.These interventions always fail if there is a lack of commitment from the leadership. Thelower levels of the organisation always take the cue from the leadership. If the leadershipis paying lip service to an intervention, the lower levels of the organisation also learn veryquickly to do so, even with better expertise.

Commitment from the leadership will create the right support and framework forimplementing the six-sigma methodology successfully. The leadership has the power tocommit resources where they are needed. They are also able to remove obstacles thatcan work against the implementation of six-sigma.

5.2.2 The Six-Sigma culture must be created, launched, supported and nurtured bythe leadership / top management

The lower levels of the organisation usually gauge the seriousness of an event by theparticipation and behaviour of the leadership. If an event has full participation andattention of leadership, the lower levels regard this as a serious event. The lower levels ofthe organisation are likely to buy into a process when they notice serious participation ofthe leadership.

It is therefore important to launch six-sigma from the leadership level. This will give six-sigma the stature and momentum it deserves in order to self-propel and sustain itself.This is a condition to make the implementation of six-sigma a viable system.

5.2.3 The leadership / top management must be able to deal with paradoxes

One of the main paradoxes of quality is that many organisations want better quality withoutinvesting anything. Everyone blames the person below him. However, this is a violation ofthe basic rules of the universe. An output must have some inputs. The six-sigma processrequires full resources in order to be successful. The only difference is that the results areonly seen in four to six month’s time. Many managers would rather fight fires thaninvesting in longer-term projects, although fighting fires have never paid off. Mostmanagers would rather put “weaker” people in longer-term projects because they need the“good” people in “hot spots” or fire fighting. This is the paradox of resource allocation thatthe leadership must understand and be able to deal with decisively. Six-sigma is likely tosucceed if it is resourced properly and the inverse is true.

The most important paradox to deal with is the concept of highest quality producer as alowest cost producer. The common belief is that costs are very high if you have thehighest quality. However, modern automated processes combined, with good customerunderstanding, can lead to higher quality and lower costs. The understanding of this

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paradox would improve commitment of the leadership and hence the success of six-sigmaimplementation.

5.2.4 Six-Sigma expertise must be developed at all levels of the organisation

Six-sigma is a discipline. The tools and various processes need to be studied rigorouslylike any other discipline. There must be both theoretical understanding and practicalimplementation of six-sigma tools and processes. This is the only way that will enhancethe understanding and expertise of six-sigma in an organisation.

Six-sigma implementation cannot succeed if there is no expertise of six-sigma in anorganisation. Employees cannot achieve desired results by implementing something theydo not understand. Poor expertise is a sure path to failure of six-sigma implementation.

5.2.5 The right projects must be selected and the right people allocated to theseprojects

One of the cornerstones of six-sigma success is to select the right projects. Most six-sigma projects are estimated to take between three to six-months. Therefore, the scopeand size of the projects must be able to fit this estimated time frame. It is also important tochoose projects that have a direct impact on the bottom line. In other words, the bottomline impact can be quantified properly. Failure to achieve this creates an impression,especially to sceptics, that six-sigma is an exercise that does not achieve any tangibleresults. Reinforcing this kind of attitude would further impair the implementation of six-sigma.

Once the right six-sigma projects have been selected, it is important to select the rightpeople for the projects. People with the right attitude and skills must be selected. It theselected person has only one of these attributes; he or she will find it difficult to completethe projects at the required time frames. This in turn affects the whole six-sigmaimplementation programme. The right people are able to adapt an intervention like six-sigma to the context of their work environment. This in turn leads to the success of six-sigma implementation.

5.2.6 Six-Sigma must be communicated effectively and efficiently throughout theorganisation as part of mobilisation

Employees usually interpret the objectives of an intervention in their own way if this is notcommunicated properly throughout the organisation. Therefore, a well-meaningintervention might be interpreted wrongly if it is not communicated properly. There mightbe resistance against the intervention if it is interpreted negatively. Hence, six-sigma mustbe communicated properly throughout the organisation in order to prevent negativeperceptions. Many employees, especially at the lower levels, interpret interventions likesix-sigma as a tool for reducing the number of jobs. This happens because the keyobjective of six-sigma is usually communicated as cost cutting or bottom line savingsthrough quality improvement and waste reduction.

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5.2.7 There must be objective performance management processes of people andprocesses

One of the key attributes of six-sigma is that everything is measured. Therefore,everything can be tracked and assessed whether it is achieving the original objectives ornot. Many a times projects are implemented and they cannot deliver the intendedobjectives. These projects are then accepted by production that is expected to deliverwhat the project is incapable of delivering. This is a result of poor performancemanagement processes during project implementation, commissioning and acceptancestages. The performance of processes must be measured clearly in order to assesswhether the six-sigma implementation is making a difference or not.

The six-sigma projects must form part of the performance objectives of the all employeeswho are involved with six-sigma. It must be measured like any other key performancearea.

5.2.8 Six-Sigma must be integrated with the current organisation processes inorder to improve the understanding of the process

Any intervention that encourages discarding everything that has been done before isdoomed to failure. The employees end up saying that the next intervention will declare allcurrent processes null and void, and they become reluctant to put any effort in the currentprocesses. This creates a lot of apathy in an organisation and employees viewinterventions as “fads”. An intervention will not succeed if it is regarded as a fad.

A new initiative that integrates with and enhances current processes is always received ina positive manner. Six-sigma must be adapted to fit with the current organisationalcontext. Therefore, this integration will encourage systematically desirable and culturallyfeasible small wins. This in turn will increasingly adapt the six-sigma methodology to theorganisational needs.

5.3 Creating Actionable Knowledge from the Research Answer

The purpose of management theories is to create actionable models (generalisations) thatcan be used in everyday life, Argyris (1996). Argyris (1996) further argues that the creatorof the model must also ‘create opportunities for robust tests of their validity’. Therefore,there should be a balance between complication and simplicity of the model. This balanceis one of the most challenging features of actionable knowledge.Argyris (1996) continues to make a distinction between natural theories and managementtheories. He argues that management theories are normative in that they are created andchosen by men. There are three things that he puts forwards as difference betweennatural science and management theories:

1. The generalisations should inform the users what is likely to happen under specificconditions and how to create those conditions.

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2. The generalisations should lead to predicted consequences, not unintendedconsequences.

3. The generalisations should be usable over time and under different conditions,including individual cases.

The EMBA process has been able to teach and develop the concept of actionableknowledge through the concept of ‘small wins’, Weick (2001) in Ryan (2004j). The ActionResearch Learning (ARL) project papers created an opportunity for developing a theoryand testing in a practical setting. Weick (2001) in Ryan (2004j) proposes three conditionsfor a small win:

1. It must be specific2. It must be realisable3. It must be immediate

There are two conditions that were dictated by the Action Research Learning process thatensured the success of the small wins:

A small win must be systemically desirable A small win must be culturally feasible in the organisation concerned

The theoretical research answer (the causal loop diagram model) must be able toreasonably pass the test as proposed by Argyris (1996) and the tests of small wins asproposed by Weick (2001) in Ryan (2004j).

The process of developing the model will be described in detail in the Rationale chapter. Ageneric model was created from the seven key drivers and key outputs that were derivedfrom the interrelation diagraph. A second model at a lower level of abstraction wascreated in order to create actionable knowledge that can be readily used in AEL. Thismodel was created from the first model by including categories that were not part of keydrivers and key outputs in order to reduce the abstraction level. It must be noted that allthe categories introduced were part of the original interrelation diagraph.

The other important fact is that both models were developed in tandem with theimplementation of six-sigma in AEL. Therefore, it is open to the process of detecting andcorrecting errors. Hence, this improves internal validity of the model (Argyris: 1996). Theprojects are monitored before and after implementation whether they give the desiredbottom line results. This improves external validity of the model (Argyris: 1996). Thecontext of each project is also carefully monitored in order to improve implementability orto reduce ‘the second order problem’ as termed by Argyris (1996).

The six-sigma projects themselves can be taken as small wins. There have beensuccessful ones and there have been failures. The organisation has learnt and will learnfrom both failures and successes. It is clear that the actionability of the model lies in thefact that the implementation process is already in motion. The model has all the elementsof a viable system, which was part of the internal design. Different paradigms were also

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built in during the design of the model. The proof of the pudding will be testing the modelin action. Fortunately or unfortunately, I am in the driving seat of six-sigmaimplementation. However, I will need a lot of men and woman to implement thisintervention. I hope I can find comfort in the following words:

“The thing needed is not plans, but men. A well thought out plan without a man toexecute it is a waste of money; and as a rule, the more comparatively the detailshave been thought out by a man who is not going to execute them himself, thelarger will be the amount of money wasted. Get a man with a plan, and the moneyhe has, the greater is his chance of doing a larger work; but a plan without a man isas bad as a man without a plan – the more he has the more he wastes”.

Hadley in Martin (1996:91)

5.3.1 Developing the lower abstraction causal loop diagram

The first loop to be introduced is the normative management loop. This consists of twoloops. The first loop of the normative management loop can be seen in Figure 30 below.

Figure 30. The First Normative Management Loop

The first loop begins with the level of understanding of the concept of highest qualityproducer as a lowest cost producer. This is a very important variable because six-sigmaor any quality improvement intervention cannot succeed if this concept is not understoodand accepted. There is a paradox that quality costs too much money. Many people whobelieve in this notion do not take the costs of endless finished and semi-finished productinspections, reworking defective product, time in dealing with unhappy customers,crediting customers for defective product and possible law suits that might ensue. If wecan follow the logic of the above costs, it may turn out that poor quality is more costly thangood quality. Therefore, this notion of highest quality producer as a lowest cost producermust be fully understood and entrenched in the leadership before embarking on anyquality improvement initiative.

It is only after accepting the above concept that leadership can begin their commitment toquality. The acceptance of the above concept will then entrench leadership/topmanagement commitment to any quality initiative. This will happen because the leadershipwill see the cost benefit of quality and waste reduction. It is important to note that any

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quality initiative will raise certain paradoxes in the beginning that might be used bysceptics to prove that the initiative is not worthwhile. One of the six-sigma paradoxes isthat you must release your best talent in order to implement six-sigma projects.

Managers always resist this because they need their mangers in “hot spots”. Welch(2001:332) also experienced the same challenge that “no one wants to give up their besttalent on a full-time basis, they have high targets to reach and they need their bestmanagers to make them”. However, the leadership/top management commitment willimprove the ability to deal with these paradoxes. Commitment always creates the strength,will and ability to deal with paradoxes. This will in turn strengthen the notion of highestquality producer as a lowest cost producer, which is a paradox in itself.

The second loop of the normative management loop can be seen in figure 31 below.

Figure 31. The Second Normative Management Loop

The Leadership/top management commitment and the management of paradoxes weredealt with in the first normative management loop. The ability to manage paradoxesprepares the organisation to create a six-sigma agenda as a new initiative. It must benoted that six-sigma at face value is full of paradoxes. This ability to create a six-sigmaagenda will in turn make room for mobilisation of the whole organisation around the six-sigma initiative. One of the most important things about entrenching six-sigma in theorganisation is the integration of six-sigma into the employees’ career. Welch (2001)supports this notion as follows:

“I became fanatic about it (six-sigma), insisting that no one would be considered fora management job without at least Green Belt training by the end of 1998. Evenwith my constant cheerleading and a lot of pounding in Session Cs and everywhereelse, it took us three years to get all the best people into Six-Sigma”.

Welch (2001: 333)



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Six-sigma will only be entrenched in employees if it is taken as part of continuous theirprofessional development. This will in turn lead to the six-sigma culture in theorganisation. This takes care of the “what is in it for me” agenda of employees.

We then get a complete normative management loop when we integrate the first and thesecond normative management loops. The complete normative management loop can beseen in Figure 32 below.

Figure 32. The Complete Normative Management Loop

The next part of the theory is the strategic management loop. The strategic managementloop consists of three sub-loops. The first loop of the strategic management loop can beseen in Figure 33 below.

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Figure 33. The First Strategic Management Loop

The strategic management loop starts with the level of six-sigma communication.Everybody must understand what is happening and what is going to happen in theorganisation about six-sigma. This will in turn help to highlight and eliminate the hiddenfactory. The hidden factory is the process of dealing with waste that results from poorproduct or service quality. This variable is for improving quality and eliminating waste.This in turn leads to the selection of the correct projects because people will now be awareof areas of poor quality and waste (hidden factory). The team involved must believe thatthe project selected is the right priority project in order to improve chances of success.Projects must not be selected because they look the easiest to implement.

This in turn would help in choosing the right people for the selected projects. Choosingwrong people will eventually lead to many project failures, which in turn will jeopardise thewhole six-sigma initiative. The ability to choose the right people will facilitate the integrationof six-sigma with the jobs of those people. The right people who accept projects are ableto handle these projects as if they are part of their day-to-day jobs. This is particularlyimportant for yellow belts and green belts, as they are not released from their jobs whenthey do six-sigma projects. The integration of six-sigma with the job will improve the six-sigma expertise in the organisation. Every employee wants to perform better in his or herjob. Therefore, if six-sigma is part of the employee’s job, the employee will endeavour toperform better in six-sigma projects. The employees will spend more time in six-sigmaprojects if they regard them as part of their jobs. This will in turn improve the level of six-sigma communication when there are more people conversant with six-sigma.

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The second loop of the strategic management loop can be seen Figure 34 below.Choosing the ability to choose the right people for projects and the level of integration ofsix-sigma with the job was dealt with in the first loop. The next variable is the ability toappreciate the complexity of dealing with people. This variable is dependant on the level ofintegration of six-sigma with the job. It is highly likely that for instance, after integrating six-sigma with the jobs, there will be a request to re-grade the “new jobs”. It is important notto react negatively to such requests. Such requests must be taken as part of normalmanagement challenges that could have arose even without the implementation of six-sigma. The understanding of people complexity will in turn help with the ability to choosethe right people for projects. Choosing the right person for the job depends onunderstanding the complex nature of human beings.

Figure 34. The Second Strategic Management Loop

The third strategic management loop can be seen in Figure 35 below.

Figure 35. The Third Strategic Management Loop

The level of integration of six-sigma with the job and level of six-sigma expertise in theorganisation was dealt with in the second strategic management loop. The six-sigmaexpertise in the organisation will lead to the improvement in the level of expertise inmetrics and measurement systems in the organisation. This is because everything in six-sigma is measured. Six-sigma is driven by data and metrics


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The resulting integrated strategic loop can be seen in Figure 36 below.

Figure 36. The Complete Strategic Management Loop

This complete normative management loop is now integrated with the complete strategicmanagement loop. The level of six-sigma culture from the normative loop will improve thelevel of six-sigma communication because the six-sigma agenda will already beentrenched in the organisation. The level of six-sigma expertise in the organisation willhelp to entrench six-sigma as part of continuous professional development of employeesin the organisation. The merged normative and strategic loop can be seen in Figure 37below.

Figure 37. The Combined Normative and Strategic Management Loop

The next loop is the control and co-ordination management loop. This loop consists of tworeinforcing sub-loops. The first loop can be seen in Figure 38 below.

Ability toSelect the right

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Figure 38. The First Control and Co-ordination Loop

The anchor variable in this loop is the ability to create teams. This improves the ability ofthe organisation to manage projects across functions. This in turn improves the ability ofmatching project scope and time frame because all functions in the organisation areinvolved. Cross-functional teams are able to estimate scope and time frame better. Theteams and individuals can only be rewarded when the performance measurements havebeen done. When the scope and time frame are matched, there is better utilisation ofcurrent resources. Hence, six-sigma is integrated with the existing tools in order tooptimise the process. This in turn leads to better methods of collecting data. Data residesin different teams; hence this expertise in data collection in turn leads to more and betterteamwork.

The second control and co-ordination loop can be seen in Figure 39 below.

Figure 39. The Second Control and Co-ordination Loop

The following variables were dealt with in the first control and co-ordination loop:Integrating six-sigma with existing tools, Level of expertise in data collection, Ability tocreate teams and Ability to manage projects across functions. These variables are part of

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the second control and co-ordination loop. The ability to manage projects across functionsleads to better performance management because this process cuts across the wholesystem rather than just its parts. The level of performance measurement allows theimplementation of individual and team recognitions. Recognition cannot be done withoutproper performance management. The rewarded and motivated teams are able tooptimise the use of tools by integrating six-sigma with existing tools. Reward andmotivation allows the employees to “walk the extra mile” and accept six-sigma as part oftheir normal day-to-day jobs.

The complete control and co-ordination loop results from the integration of the first and thesecond loops. The complete and co-ordination loop can be seen in Figure 40 below.

Figure 40. The Complete Control and Co-ordination Loop

This loop is then integrated with the normative-strategic loop. The control and co-ordination loop integrates with the normative-strategic loop between level of expertise inmetrics and measurements as well as between the ability to manage projects acrossfunctions and the level of six-sigma expertise in the organisation.

The level of expertise in metrics and measurements will improve the level of performancemeasurement in the organisation. Performance measurement depends on metrics andmeasurements. Therefore, the level of expertise in metrics and measurements will improveperformance measurement of both processes and people. The level of metrics andmeasurements can also lead to better motivation of people because they know exactlywhat is expected of them. They can also measure their performance rather than relying onthe feedback from the boss, which might not necessarily be objective.The ability to manage projects across functions improves the expertise of six-sigma in theorganisation. This happens because there is better appreciation of problems from differentperspectives. This enriches the solutions, making them more effective and efficient. Italso prevents sub-optimisation of solutions.

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The combined normative-strategic-control and co-ordination loop can be seen in Figure 41below.

Figure 41. The Combined Normative-Strategic-Control and Co-ordination Loop

The next level is the implementation loop. The implementation loop consists of two sub-loops. The first loop can be seen in Figure 42 below.

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producer as a lowestcost producer


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Figure 42. The First Implementation Loop

The anchor variable for this loop is the level of understanding the process. One of the keyoutputs of six-sigma is that it forces people to understand better the processes they aremanaging. One interviewee remarks as follows:

“I now understand the process better. Six-sigma has forced me to understand finerdetails of the process. It is frightening to realise that I have made so manydecisions and changes in the process, yet I was not fully understanding theprocess”.

Titi (2005)

The understanding of the process will help employees to feel more comfortable during thereview meetings. Hence, there will be more review meetings because employees will belooking forward to them, rather than avoiding them. The regular review meetings will helpemployees to be more familiar will six-sigma tools, hence they will learn how to use thetools in flexible manner. This will in turn cement the understanding of the processes.

The second implementation loop contains two variables that have been dealt with in thefirst loop. These variables are the level of understanding the process and the number ofregular review meetings. The second implementation loop can be seen in Figure 43below.

Figure 43. The Second Implementation Loop


the process

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The anchor variable for this loop is the level of effective and efficient implementation plans.This variable will lead to the leadership team, the Executive Committee (EXCO) and theBusiness Management Team (BMT) to become more willing as sponsors if they see clearimplementation plans. The EXCO and the BMT will also pass the accountability down theline. Hence, the leadership team will in turn ensure that the heads of departments andmiddle managers are trained and also practice as champions. The heads of departmentsand middle managers will ensure that first line managers, PTSM (Plant Technical andServices Managers) and Technical Officers (TO) are trained and practice as green beltsand black belts. The green belt and black belt training will in turn improve theunderstanding of the process. The belts will be more willing to attend regular reviewmeetings. This will in turn improve the implementation plans.

The complete implementation loop emerges from the integration of the first and the secondloop. The complete implementation loop can be seen in Figure 44 below.

Figure 44. The Complete Implementation Loop

This loop connects with the control and co-ordination loop through two pairs of variables.The first pair is the ability to manage projects across functions and the level of sponsorshipfrom EXCO and BMT. The EXCO and BMT manage major divisions and functions.Therefore, they are able to facilitate the management of projects across functions. Thesecond pair is the ability to manage projects across functions and the level of effective andefficient implementation plans. The ability to manage projects across functions improvesthe planning process because all stakeholders to the process are involved.

The implementation loop is linked to the strategic management loop by one pair ofvariables. The variables are the level of six-sigma expertise in the organisation and level oftraining of middle managers and head of departments as champions. The middle

Level of Trainingof First line

manager, PTSM,TO as

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managers and heads of department will improve the six-sigma expertise in theorganisation after training as champions. This will also happened in reverse.

The implementation loop is linked to the normative management loop through three pairsof variables. The first one is the ability to create a six-sigma agenda and level of trainingof first line manager, PTSM and TO as green/black belts. The trained first line managers,PTSM and TO will improve the creation of the six-sigma agenda. They will have a fullappreciation and confidence about the six-sigma methodology. The second pair ofvariables is the ability to create a six-sigma agenda and the level of training of middlemanagers and HOD as champions. The ability to create a six-sigma agenda at normativelevel will ensure that the agenda is also created at HOD and middle manager level. Hence,the middle managers and heads of departments will readily train as six-sigma champions.

The last pair of variables linking the implementation loop and the normative loop is thelevel of training of middle managers and HOD as champions and the level of continuousprofessional development. The middle managers and heads of departments who have asix-sigma agenda and also trained as champions will be able to make six-sigma part ofcontinuous professional development in their teams.

This then completes the picture of the whole theory. The complete model can be seen inFigure 45 below.

Figure 45. The Six-sigma Implementation Model at AEL (Lower Abstraction)



Level ofUnderstanding ofthe Concept ofhighest qualityproducer as alowest costproducer


Level ofSix-sigma

culture

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professionaldevelopmentAbility to

Manageparadoxes

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hidden factory


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measurements

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the complexity ofdealing with

people

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right projects


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and time frame

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process)


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5.3.2 Action Plans for Six-Sigma Implementation in AEL

It is now important to summarise the action plans for the implementation of the six-sigmaquality improvement model in AEL. However, I will first put forward the criteria foractionability of the model. The actionability criteria are as follows:

The leadership of AEL must be able to debate and understand the key features of themodel. It is important to debate the model in order to facilitate buy-in andunderstanding. Lack of debate might lead to the model being branded as just anothertheoretical construct without any practical value. This view may impair theimplementation of the six-sigma in general. The debate and understanding will ensuresystemic desirability and cultural feasibility of the model.

The six-sigma implementation team (external consultants, six-sigma co-ordinator,champions, black belts) must be able to debate and understand the key features of themodel. It is important to debate the model in order to facilitate buy-in andunderstanding. Lack of debate might lead to the model being branded as just anothertheoretical construct without any practical value. Such a view may impair theimplementation of six-sigma in general. This will also ensure systemic desirability andcultural feasibility of the model.

The variables of the model must be simplified into more detailed action plans for theyellow and green belts. Each variable may be broken down into more detailed andspecific action plans for this level. The yellow belts and green belts should be given thebroader picture of the model without an expectation to fully understand it in thebeginning. The understanding will come with practice and implementation of six-sigmaprojects.

There must be a balanced emphasis on all variables of the model. It is important tobalance the emphasis on variables of the model. Too much emphasis of certainvariables and disregarding some will defeat the purpose of the model. The model isdynamic and depends largely on the interaction of the parts (variables).

The action plan must be changed as the model evolves. No model is ever complete. Itevolves with time as new ideas, information and knowledge emerges. All stakeholdersin the implementation of six-sigma have a role to play in making this model a real timeand dynamic model. The stakeholders must be aware of this and encouraged to takepart in the further development of the model.

The specific and concrete action plans for six-sigma implementation in AEL are as follows:

Present the model for debate and adoption to the leadership of AEL (EXCO and laterBMT members who are implementing six-sigma in their areas).

Present the model for debate and adoption to the six-sigma implementation team(external consultants, six-sigma co-ordinator, champions, black belts).

Form a team from the six-sigma implementation team that will simplify some variablesof the model into more detailed action plans for yellow belts and green belts.

The six-sigma implementation team must given a platform (e.g. during project reviews)to suggest changes to the model. These must be presented for debate in a widerforum in order to guarantee the quality of the changes.

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Six-sigma must be a standing agenda item at the EXCO, BMT and OperationsLeadership Team meetings.

Review the bottom line impact of six-sigma implementation on a quarterly basis. Thechampions to present their projects to the EXCO during this session.

It is important to note that the action plans meet all the criteria for actionability. The modeland action plans will continually be tested against the criteria of systemic desirability andcultural feasibility as it evolves.

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Literature Review









situation.

Chapter 6: Rationale







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6. RATIONALE

Ryan (2005a: 7) describes the rationale as “the logical basis for constructing the situation,concern and answer”. It helps to build confidence around the answer. The situationreveals that AEL needs to change and adapt to the changed environment. The symptomsof a changed environment are already evident. AEL relies on two major markets. Theyare the domestic market consisting of narrow reef market (gold and platinum) andopencast market, and the regional African market.

The domestic market is declining. The gold production is South Africa has halved over thelast ten years. It is continuing to decline and this is a concern for the South Africaneconomy. A resent press release in the Business Day (2005a) captures this concern asfollows:

“It’s a bit sad really. Just as the gold price heads for $500/oz, a level last seen in1987, SA’s mining industry reports a further steep fall in gold production. The pricemay be great, and with a weaker exchange rate the gold price is looking good too-it’s up nearly a third for the year to date. But the domestic gold industry is still incost and kilogram cutting mode….output has fallen to 72,4 tons, more than 15%below the year ago-quarter”.

Business Day (2005a: 12)

The article continues to say that gold’s decline will continue and that gold mining isdefinitely not a growth industry.

The African market is stagnating. Both markets are under severe attack from internationalcompetition, including the new Chinese competitors. The Chinese competitors are able touse local conditions for penetrating domestic markets. The South African government isinsisting on Black Economic Empowerment and the Chinese are skilfully exploiting thisgap for penetrating the South African market. The other parts of Africa are in dire need ofinfrastructure. The Chinese competitors, with the help of their government, buildinfrastructure for many of these African countries in exchange for easier trading conditions.This in turn disadvantages other competitors that are competing in the same market.

This is not the first time the Chinese competitors are testing the African market. Theyhave done so in the past, however, their quality was so poor that all customers rejectedtheir products. However, the quality has improved dramatically from the last time such thatthey have taken some market share. The South African companies have been contentwith their quality and hence have not invested much in improving quality. The quality ofthe Chinese products is now comparable to the South African manufacturers. However,the price of Chinese products is almost half of the South African manufacturers.

Therefore the challenge faced by South African manufacturers, including AEL, is toimprove quality and to lower costs at the same time. AEL has embarked on a drive toimplement six-sigma in order to improve quality and reduce costs. An incidental processto six-sigma is the automation of manufacturing facilities in AEL. The automation process

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is posing many challenges in terms of skills needed for the future operation of the factory.The implementation process is a huge learning process in itself.

One of the interesting learning and a synergy of the automation project with six-sigma isthe way in which the new automated machines operate. One of the engineers/managerswho was responsible for qualifying and dry commissioning the machines in Belgium, saidthe following words to me:

“This machine does not accept anything that is out of specification. It is importantthat all raw materials are 100% correct before we put them in this machine. Hence,from now on, I will not accept any defective material because I will make scrap andpossible damage the new machine. All the upstream managers must accept thatand I do not want any arguments”.

Pheasant (2005)

It is very interesting that this fact is only being realised now. Any out of specificationmaterial will eventually lead to out of specification final product. However, thisphenomenon was not causing enough pains for people down stream. The requirement forraw materials to be within specification is the underlying philosophy of six-sigma.Therefore, it is opportune to implement six-sigma with the factory automation process.

The implementation of six-sigma is not a trivial process. Specialist skills, the ability toimplement a change process and unwavering commitment from everyone is needed,especially the leadership or top management. The six-sigma process is also very genericand hence, has to be adapted to the needs and conditions of a particular company. This isthe key to the success of implementing six-sigma. This raises a concern whether AEL hasthe capability to adapt six-sigma to its needs and environment in order to implement itsuccessfully. This lead to the research question: How can AEL adapt and implement six-sigma successfully in order to improve quality and reduce waste?

The answer was given in the form of a causal loop diagram model. It is therefore,important to understand how this causal loop diagram model was developed. Therationale and assumptions need to be surfaced and the evidence of the process must berevealed.

6.1 The Data Gathering Process

There are three sources of information. They are interviews, literature review andpersonal observation. The interviews were done on face-to-face basis. Twenty-eightinterviews were conducted. The face-to-face approach was important because of the timeconstraints. Mailed interviews have a very low return ratio. The respondents do notnecessary take the time constraints into consideration. The setting of appointments wasvery challenging, but once the appointments were set, it was all systems go.

The interview questions were open ended in order to allow the interviewee to put acrosshis or her point of view without the constraints posed by the question. This approachensures that even salient points can be extracted from the interview. One can also note

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the emotions during this process. The yes and no interviews miss a lot of salient points inan interview. The same goes with the scale (1 to 10) interviews. The advantage of theyes and no interviews as well as scale interviews is that they are easy to analyse. Theopen-ended interviews need more work during the codification and analysis process.

All interviews were recorded verbatim. An example of the filled in questionnaire can beseen in Appendix 15. Key concepts were uplifted from the interview. These wererecorded and can be seen in Appendix 6.

The next data gathering process was literature review. Selected six-sigma literature wasreviewed. The literature that had to be reviewed, especially articles, was carefullyselected. Consultants or practitioners who have a strong purpose of showing the successof six-sigma write most articles. Hence, the objectivity of some articles may be in question.Therefore, articles that talk about the problems of six-sigma or how to improve theimplementation of six-sigma were selected. It was deemed that these articles are moreobjective than the usual “praise” articles written by six-sigma consultants. The articles withthe opening words such as “we saved $10m in the first year of implementing six-sigma”were avoided in order to enhance the objectivity of data.

A reputable six-sigma book was also reviewed. Harry and Schroeder (2003) is one of theleading books in six-sigma. Former Motorola employees wrote the book and they haveimplemented six-sigma successfully before. One of these authors is one of the originalarchitects of six-sigma when he was working at Motorola. Key concepts from each articleor book were uplifted and recorded. These can be seen in Appendix 7.

I decided to be trained as a green belt and implemented one of the projects in operationsin 2005. This gave me an opportunity to observe the process of six-sigma implementationmuch more closely. It also gave me some insights that I would not have had access to if Iwas not one of the green belt trainees. I observed the process “from the inside”. I thencollected some concepts during this process and these can be seen in Appendix 9.

6.2 The Categorisation Process

All the concepts were pooled together for further analysis. The Affinity Diagram process ofcategorising concepts was used. This process entails the grouping of concepts under anappropriate heading. The process was modified in order to introduce the viable systemsmodel notion at the categorisation stage. The headings were further categorised underthe main headings of normative, strategic, control and co-ordination and implementation.This was to ensure that the final model has viability embedded in it. This Affinity Diagramcan be seen in Appendix 16.

The next process was to put the Affinity Diagram concepts through an InterrelationDiagraph process. The experience during the EMBA programme has taught me that thisprocess works well if the number of categories is between 12 and 16. The first cut ofcategories had a higher number of concepts. These categories were further reduced to a

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total of 16. The final concepts in the final Affinity Diagram, in the a Viable Systems Model,are as follows:

Normative Concepts

1. Level of Leadership / Top management commitment2. Ability to Create a six-sigma agenda3. Level of Understanding the concept of highest quality producer as a lowest cost

producer4. Level of Mobilisation of the whole organisation

Strategic Concepts

1. Level of Six-sigma communication2. Level of Six-sigma expertise in the organisation3. Ability to Highlight and eliminate the hidden factory4. Integrating six-sigma with the job

Control and Co-ordination Concepts

1. Level of Performance measurement (People and Process)2. Level of Individual and team recognition3. Ability to Match project scope and time frame4. Ability to Manage projects across functions

Implementation Concepts

1. Level of Effectiveness and efficiency of implementation plans2. Level of Understanding the process3. Level of Six-sigma training4. Number of Regular review meetings

The above concepts were then put through an Interrelation Diagraph in order to get keydrivers and key outputs of this process. The resulting Interrelation Diagraph can be seenin Figure 46 below.

The number of arrows coming in and out of each concept was counted. The concepts withmore arrows going out than coming in are drivers of the model. The concepts with morearrows coming in than going out are drivers. The D4 Definitions of all the above variablescan be seen in the glossary at the beginning of this paper. It is important to see whatdrives a process and what are the outcomes of a process.

The results of the analysis give us the following key drivers and key outputs:

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Figure 46. The Interrelation Diagraph of Concepts

Key Drivers

1. Level of Leadership/Top management commitment (normative)2. Level of Mobilisation of the whole organisation (normative)3. Level of Six-sigma expertise in the organisation (strategic)4. Ability to Create a six-sigma agenda (normative)

Key Outputs

1. Level of Effectiveness and efficiency of implementation plan (implementation)2. Level of Understand the process (implementation)3. Level of Performance measurement (people and process) (control and co-

ordination)

The key drivers are critical in making the six-sigma implementation a success. Theimmediate outputs (results) that will arise from implementing key drivers are the keyoutputs. These key outputs will in turn improve the implementation of six-sigma and the





ofConcept of highestquality producer as alowest cost producer


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performance of the organisation. The organisation will then achieve the quality objectivesand the reduction of waste from its processes. The reduction of waste from theorganisation will result in a lower cost base.

It is interesting to note that all the key drivers are at normative and strategic managementlevel. The key outputs are at control and co-ordination, and implementation managementlevel.

The key drivers and key outputs were initially used to create the higher abstraction levelcausal loop diagram. More concepts were then incorporated into the “skeleton” in order tocreate the lower abstraction causal loop diagram. The resulting causal loop diagrams canbe found in Figures 29 and 45 in the previous chapter respectively.

6.3 Further Literature Review

The initial literature review was conducted in order to create data for building the theory.The limited literature was done until the process of initial “saturation” (Goulding: 1998).This process of this limited literature review was explained in detail in section 6.1 (DataGathering Process) of this chapter. Ryan (2005b) recommends further research review asfollows:

“Selective sampling of the literature is suggested and generally follows or occurssimultaneously with data analysis……….Depending on what additional dataemerge, researchers will also need to review literature pertinent to those newconcepts”.

Ryan (2005b: 7)

One of the new concept that emerges is that six-sigma is not a standalone methodology,but employs and works in conjunction with other methodologies, theories or tools. Thisfurther research is a way of exploring various flavours of different authors about six-sigmaand other quality management programmes in general. It will be explored whethersomething further will emerge out of this literature review.

The literature was compiled from various websites and journals. There are manycompeting websites, written by academic institutions and consulting firms. There are alsofree open source websites. More than ten volumes of lever arch files consisting of variousarticles were compiled.

The articles can be categorised into four main categories:

Research articles Consulting firm articles Six-sigma practitioner articles General interested public articles

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It is therefore important to first explore quality management programmes in general beforespecific research is discussed on six-sigma. This will give us a theoretical framework forall quality management programmes.

6.4 Broad Perspective on Quality Programmes6.4.1 Historical Perspective and Theoretical Framework (Quality Process)

This section seeks to explore a broader perspective of quality management programmesand how they relate to each other. It will also highlight and surface the underlyingtheoretical framework of all quality management programmes.

The concept of quality emanates from manufacturing organisations. It was later migratedto the service industry through the lessons learnt from the manufacturing sector. Since thedays of unit manufacturing of goods, the customer was the ultimate person to be satisfiedwith the end product. The concept of unit production made it easier to control quality aseach individual product could be “reworked and fine-tuned” to suit customer expectations.Therefore, there was no “waste” emanating from the unit production process.

The advent of mass production introduced complexity in the production process, as it wasdifficult to “rework and fine-tune” each individual component to customer requirements.The knee-jerk solution was to inspect the end products to ensure that nothing that did notmeet customer requirements would leave the factory. The original intention can be seen inFigure 47 below.

Figure 47. The Original Intention of the Quality Initiative

This was the start of creating waste in the production process. The original idea was thatthe product that did not meet customer requirement would be “reworked and fine-tuned” toeventually meet customer requirements. This ended up creating what is now generallyknown as the “second factory”. The “first factory” is the factory producing good quality andthe “second factory” is the factory that is used to “rework and fine-tune” waste to customerrequirements. The inputs of the “second factory” are the defective products from the “firstfactory”. It is evident that the “second factory” has a significant contribution to the cost ofthe final product. The product would be double in price if the running costs of the “firstfactory” were the same as the “second factory”. Therefore, the relative size of the “second

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factory” and the “first factory” has a proportional contribution to the final cost of theproduct.

The “second factory” was not a conscious consequence of the captains of industry. It wasa consequence of system dynamics. This is depicted in Figure 48 below. It was theunintended consequence of the inspection of final products as a quality assuranceinitiative.

Figure 48. The Resulting Production Process from the Quality Initiative

Many companies used the above model after the Second World War. Many countries thattook part in the Second World War developed a good capacity for manufacturing variousmilitary products. The focus was on quality at all costs given that they had to perform in thefield at all times. In actual fact, cost was irrelevant. This approach was then adopted byindustrialist post Second World War. Hence, the above model of the “second factory” wasfully entrenched after the Second World War. It is needless to say that the system ofinspecting final products has introduced a considerable amount of complexity in themanufacturing process, which manifests itself in the cost of the final product. Furthermore,the quality of the final product cannot be guaranteed given that the inspection process isnot foolproof; there will always be defective product that will pass through the net.

This approach to manufacturing still exists today in many organisations. The cost of thefinal product and the resultant defective product passing through the inspection net are themajor challenges facing manufacturing organisations today. The customer is neitherprepared to pay for the high costs nor for defective products resulting from this model.That is why many organisations are trying various quality improvement programmes tominimise waste and contain costs.

The well-known quality expert, Dr W. Edwards Deming led the quality revolution in the1950s. Dr Deming was a statistician who had an appreciation for both manufacturing andphilosophy (Peterson, 1998). Deming (1950) gave a groundbreaking lecture in 1950 toleading Japanese industrialists that changed the historical approach to quality. Thischanged the manufacturing philosophy of the Japanese manufacturing industry to what weknow today.

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The theoretical framework of Deming’s work is that it is too late to inspect final product inorder to guarantee quality and lower costs. This is put succinctly in the following words:

“In adopting the Deming objective, the Japanese already realised that screeningproduct to tolerances is not a cost effective path to quality. Additionally, reducingvariation by moving the screening upstream from the final product to tighten controltolerances of process inputs is also going to be a costly and less desirable way toachieve reduced product variation”.

Blomquist (1997: 1)

Deming Web Site (2005) summarised Deming’s philosophy on quality as Deming’s 14points. These points are given below in order to help us understand Deming’s philosophy.

1. Create constancy of purpose toward improvement of product and service, with theaim of becoming and staying competitive.

2. Adopt a new philosophy. Western management must awaken to the challenge andtake leadership for change.

3. Cease dependence on inspection to achieve quality by building quality into theproduct in the first place.

4. End the practice of awarding business on the basis of price tag; build long-termsupplier relationships.

5. Constantly decrease costs by constantly improving the production system and itresultant quality.

6. Institute training on the job.7. Institute leadership. The aim of supervision is to help people, machines and

gadgets to a better job.8. Drive out fear so that everyone may work effectively for the company.9. Break down barriers between departments.10. Eliminate slogans, exhortation, and targets for the workforce asking for zero defects

and new levels of productivity.11. (a) Eliminate work standards (quotas) on the factory floor. Substitute by leadership.

(b) Eliminate management by objective. Eliminate management by numbers,numerical goals. Substitute this by leadership.

12. (a) Remove barriers that rob the hourly worker of his right to joy of workmanship.The responsibility of supervisors must be changed from sheer numbers to quality.(b) Remove barriers that rob people in management and in engineering of their rightto joy of workmanship. This means abolishment of the annual merit rating and ofmanagement by objectives.

13. Institute a vigorous programme of education and self-improvement.14. Put everybody in the company to work to accomplish the transformation. The

transformation is everybody’s job.

The list is very comprehensive and contains some controversial statements. I disagreewith some of the statements; however, the objective of listing them is to understandDeming’s perspective. The author continued to discuss the foundation of Deming’sphilosophy known as profound knowledge. Profound knowledge, according to Deming,has the following characteristics:

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Appreciation for a system Knowledge about variation Theory of knowledge Psychology

Dr Deming’s quality approach is the mother of all quality programmes that followed afterthe 1950s. I regard today’s quality programmes as “brands” of Dr Deming’s qualityapproach. Each quality programme emphasises different characteristics that differentiatesit from the other. However, the underlying framework is Dr Deming’s quality approach.

Deming’s work resulted in a “simplified factory” that all organisations aim to achieve withthe implementation of various quality programmes. All quality programmes also seek toachieve this “simplified factory”. The “simplified factory” can be seen in Figure 49 below.

Figure 49. The “Simplified Factory”

6.4.2 Further Research on Deming’s Methodology

Some of the most interesting articles that in my opinion are precursors to six-sigma arearticles from the W. Edwards Deming Network (DEN) web page and resources. Tribus(undated) has contributed a few articles in this network. Most of these articles look atquality as a system rather than something isolated. The first article begins with the “GermTheory of Management”. He uses germs as an analogy to variation. He emphasises thatmanagers must begin to re-educate themselves. He summarises his point as follows:

“The germ theory of management requires managers to pay much more attention tothe systems and processes for which they are responsible than before. It is time toadopt a new definition:

‘The people work in a system.The job of the manager is to work on the system

To improve it, with their help’”Tribus (undated: 11)

The other articles describe the history of Dr. Deming and how he revolutionised quality andmanagement theories. Incidentally, Dr. Deming is credited with improving productivity inJapanese manufacturing industry. Japan is now regarded as a centre of quality, admiredeven by the Americans. Tribus develops various management theories from his analysisof Dr. Deming’s work. It is important to note that Tribus’ work is systems based. He

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defines and explores various systems of management in his articles. It is interesting tosee that Jack Welck (Jack: 2001) did not like Dr. Deming’s approach. May be his wordsreveal an attitude towards the Dr. Deming’s approach in the following paragraph?

“In the early 1990s, we flirted with a Deming program in our aircraft enginebusiness. I didn’t buy it as a company wide initiative because I thought it was tootheoretical”.

Welch (2001: 328)

The above comment shows a lack of support from top management. I do not see anyinitiative succeeding without top management support. This definitely had somecontribution in the failure of the initiative. My experience of six-sigma is that someconsultants can make it very theoretical as well. Hence, Jack’s theoretical concern is notwell justified. James (2005) shows that Dr. Deming’s theory of management and six-sigma were never at odds as follows:

“The central message of Deming’s (1982) 14 Points is that poor quality is rooted inpoor systems. He stressed building quality into processes, thereby reducingvariation (errors) and its associated costs. To confirm that quality is built into thesystem, Deming advocated the use of statistical methods for controlling processvariation”.

James (2005:2)

A person reading the above citation without Deming’s name may think that the article isabout six-sigma. It must be remembered that Dr. Deming was an accomplishedstatistician, hence, the statistics in six-sigma would have not been foreign to him.

6.4.3 Total Quality Management (TQM)

Chase, Aquilano and Jacobs (2001) define TQM as “managing the entire organisation sothat it excels on all dimensions of products and services that are important to thecustomer”. It is important to note that this is a very generic statement, which is similar tomany other quality management programmes. The same statement would be applicableto Deming’s methodology, Total Productive Maintenance, Lean Manufacturing and the six-sigma methodology.

It is important to note that because of similarity of quality management programmes someauthors use the various names interchangeably. Lavine, Berenso and Stephan (1999)refer to Deming’s methodology as Total Quality Management. The authors also refer tothe quality work of Juran and Ishikawa as Total Quality Management. Duran (undated b)also collaborates the interchangeable use of this terminology.

The following pictorial diagram in Figure 50 gives a very good overview of TQM. It can beseen from this diagram that it has the same characteristics as that of the Demingmethodology. One has to compare this diagram with the Deming’s 14 points andDeming’s concept of Profound Knowledge.

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Figure 50. Elements of Total Quality Management (Chase, Aquilano andJacobs:2001)

Levine, Berenson and Stephan (1999) refer to Total Quality Management as “processorientated management”. They view TQM by the following characteristics in Figure 51.

Figure 51. Themes of Total Quality Management (Levine, Berenson and Stephan:1999)

There are many other research articles that are centred on Total Quality Management(TQM). Many researchers argue about the superiority between TQM and six-sigma. It isimportant to note the overlap of tools used by the two methodologies. The main differencelies in the sequence, choice and variation of tools used, Kwok and Rao Tummala (1996),Jabnoun (2000), Maull, Brown and Cliffe (2001), van der Wiele and Brown (2002), Doryand Schier (2002) and Warwood and Knowles (2004).

6.4.4 Lean Manufacturing

Lean manufacturing is a production philosophy and methodology that focuses on theelimination of waste. Waste is defined as anything that does not add value for thecustomer. It concentrates on the value stream with the intention of eliminating waste.

Managing the entire organisation so that it excels in all dimensions ofproducts and services that are import to the customer

Philosophical Elements Customer driven quality Leadership Continuous improvement Employee participation and

development Quick Response Design quality and prevention Management by fact Partnership development Corporate responsibility and

citizenship

Generic Tools SPC tools1. Process Flowcharts2. Check sheets3. Pareto analysis and histogram4. Cause and effect (or fishbone)

diagrams5. Run charts6. Scatter diagrams7. Control Charts8. Quality function deployment

Tools of the QC Department SQC methods:1. Sampling plans2. Process capability3. Taguchi methods

Total Quality Management

1. The primary focus is on process improvement.2. Most of the variation in a process is due to the system and not the individual.3. Teamwork is an integral part of a quality management organisation.4. Customer satisfaction is a primary organisational goal.5. Organisational transformation must occur in order to implement quality management6. Fear must be removed from the organisation.7. Higher quality costs less, not more, but requires an investment in training.

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Lean thinking consists of the following components:

Value: Value is a characteristic that is defined by the customer. The producer must definevalue in conjunction with the customer in order to get an accurate, usable definition.

Value Stream: A value stream is a process representation of how value is created. Theability to map a value stream helps the manufacturer to determine activities that are valueadding and those that are not value adding.

Flow: The principal assumption of a manufacturing process is flow. Products must notwait as this represents waste in itself. Flow is one of the main characteristics of theTheory of Constraints (TOC). TOC is a methodology for optimising flow in any valuestream.

Pull: The manufacturing process must manufacture to customer needs or “customer pull”.Goods must not be manufactured to stock that may lead to high inventory. Inventory iswaste in lean terms.

Perfection: This is the ability to co-ordinate all the first four components of leanmanufacturing. This is a realisation that manufacturing improvements are processes, notevents.

Some research articles exploring lean manufacturing and its variants can be found in thefollowing articles: Lean (Hines, Holweg and Rich: 2004), Benchmarking (Meybodi: 2005),Performance Measurement Systems (Neely, Gregory and Platts: 1995), Theory ofConstraints (Lubitsh, Doyle and Valentine: 2005), Best Practices (Ungan: 2004), SupplierQuality Performance (Chen, Yeh and Yang: 2004) and Strategic Quality Management(Srinidhi: 1998).

It is also important to note that all other quality management programmes have reductionof waste as an important objective.

6.4.5 Total Productive Maintenance (TPM)

TPM is a quality management system that dominated the Japanese manufacturingindustry in the 1990s. It is a concept that was initially imported from the United States in1971 to Japan. Many companies around the world adopted this system in order toimprove quality and eliminate waste. Unilever South Africa also adopted this system in theearly nineties. I was part of the team that was implementing this methodology.

Tajiri and Gotoh (1992) list the major components of TPM as follows:

The elimination of the six big losses. Planned maintenance Autonomous maintenance Preventive engineering Easy-to-manufacture product design

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Education

Nakajima (1988) also concurs with the above components of TPM. The use of teams inimplementing all the components of TPM is paramount. It is a highly co-ordinated system.It focuses on improving the physical manufacturing system. This would be viewed aprocess capability improvement in six-sigma. It also focuses on eliminating waste like allother quality improvement programmes.

6.4.6 Toyota Production System

The Toyota Production System is a combination of TPM and Deming methodology thatwas adopted and perfected by the Toyota Motor Corporation. Therefore, the qualitymanagement programme has the same characteristics as other programmes. However, itis unique to the Toyota Motor Corporation. Many organisations have tried to copy thequality management system without success. It is an entrenched culture at the ToyotaMotor Corporation. The objective of the Toyota Production System is to attain zerodefects and no inventory levels. Spear (2004) analyses the DNA of the Toyota ProductionSystem and the reasons of why it is difficult to copy it.

6.4.7 ISO 9000

The ISO 9000 is a series of standards that were developed and adopted by theInternational Standards Organisation (ISO) in 1987. This is not a quality improvementprogramme but a standard that seeks to “equalise” the concept of quality between variousorganisations. It is more of a system that helps in the traceability of quality in a process. Itis possible that a company is ISO 9000 accredited; yet it can struggle to attain the qualityrequired by its customers. AEL is currently ISO 9000 accredited, yet it is implementing six-sigma to improve quality and eliminate waste.

6.4.8 Six-Sigma

Six-sigma is a quality management programme that is in line with Deming’s methodology.Hence, it is in line with all the other quality management programmes that have beendiscussed in this paper. Blomquist (1997) articulates his sentiments as follows about six-sigma.

“The six-sigma quality programme articulates well the advantages of seeking theDeming goal and is very helpful in defining the statistical basis for such a goal.However, as a quality improvement programme, it does not define specificstrategies for accomplishing such goals and basically leaves it up to the individualorganisation to discover what methods might help achieve them”.

Blomquist (1997: 5)

Some research articles explore six-sigma directly and its tools. Most of them are casestudies where six-sigma has been used. These articles include James (2005), Snee(2004), Tong, Tsung and Yen (2004), Eckes (2003), Taghanboni-Dutta and Moreland(2004), Thawani (2004), Bigio, Edgeman and Ferleman (2004), Mcadam and Evans(2004) and Choo, Linderman and Schroeder (2004) to name but a few.

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Consulting Firm Articles

Many six-sigma websites are filled with these papers. These papers try to illustrate theskill and experience of each consulting firm. This also acts as an advertising space forconsultants. The quality of these papers range from poor to good. The poor articles haveno research content, but praise the power of six-sigma by quoting successful companieswho have used six-sigma before.

Most good articles are about the practical implementation of six-sigma and how to improvethe success of six-sigma implementation. These articles are based on extensiveexperience and observation by the six-sigma consultants. Some of these articles wereused in the preliminary literature review. Hence, it would be extravagant to name morearticles that I have read in this section.

Six-Sigma Practitioners Articles

The six-sigma practitioners are mainly not researchers. They write articles in order toshare their experience with fellow six-sigma practitioners. These papers provide goodsuggestions of how not to repeat certain mistakes that are common in six-sigmaimplementation. Some of these papers were also used in the preliminary literature reviewprocess. I will also not mention these papers due to their volume.

General Interested Public Articles

The general public is also very interested in new initiatives. They like to debate the prosand cons of new initiatives. Most of the general interested public have not implementedsix-sigma per se in their companies, but they argue from a general management point ofview. Most of the arguments are not backed up by any research or strong argument.Most of these discussions are mostly opinions.

However, there is a danger that some of these opinions may be taken as facts by someinexperienced researchers. These articles were noted but not used to substantiate anyposition in this research paper. These articles range from highly critical to gospelpreaching about six-sigma. The highly critical articles are important because there existpeople in any organisation, who are negative and highly critical about six-sigma withoutany supporting evidence. These articles reveal how such people think. A body ofknowledge for dealing with sceptics can emerge from these articles with further research.

Six-sigma will be discussed in more detail in the following sections.

6.5 Position Taken and Theoretical Framework (Quality Methodology)

It is clear from the above discussions that all quality management programmes are similarin nature and all have roots from the Deming’s methodology. The only difference isemphasis on tools used and implementation methods. Therefore, the position taken on ageneric representation of a quality management programme is Tribus (1990). This is a

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systemic representation of a quality management programme consisting of three systems,namely, managerial, social and technical system. This can be seen in Figure 52 below.

Figure 52. Generic Theoretical Representation of a Quality Management Programme(Tribus: 1990)

It is also clear that the six-sigma methodology does not dictate implementation but allowsan organisation to adapt it to suit its environment. Six-sigma is also well supported inSouth Africa and abroad. There are several companies in South Africa that are currentlyimplementing six-sigma. Some already boast about successes of implementing six-sigma.This is one of the key reasons that the executives of AEL chose six-sigma as a qualityimprovement and waste reduction methodology.

Deming’s methodology, TQM and other quality methodologies give a context andbackground within which six-sigma is operating. There are always good suggestions thatemerge from other methodologies. These can be used to improve the model ofimplementing six-sigma in AEL once specific issues are encountered during theimplementation of six-sigma.

6.6 Brief History of Six-Sigma

The iSix-Sigma Website (2005) opened a discussion about the origins of six-sigma.Motorola is credited with the invention of six-sigma. However, Frederick Gauss (1777 –1855), the original statistician who introduced the concept of a normal distribution curveearned the original credits. The industrial use of this measurement started in the 1920swhen Walter Shewhart suggested that a process requires to be corrected when it is three-sigma from the mean.

Managerial System

Management Diagnosis Goal Setting

Pol icy Development Managing and Checking Points

Cross Functional Management

Social System

Customer is next in line Recognition

Privileges Symbols

Rewards

Technical System

Tools and Techniques

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The first person to coin the term “six-sigma” in 1984 was a Motorola engineer named BillSmith. Mike Harry, a senior staff engineer at Motorola in the 1970s’ led a team ofengineers that began solving problems using statistical tools. The output of this researchwas a paper titled “The Strategic Vision for Accelerating Six-Sigma Within Motorola”. Theresults led to dramatic bottom line benefits. Mike Harry later proposed a strategy toimplement six-sigma throughout Motorola. He later headed the Motorola Six-SigmaResearch Institute that became the driver of six-sigma in Motorola.

Richard Schroeder, was able to include a change management process in six-sigma. Thistransformed six-sigma into a powerful business philosophy. Mike Harry and RichardSchroeder were able to elevate six-sigma from shop floor to the boardroom. The conceptwas successfully sold to leaders like Bob Galvin of Motorola, Larry Bossidy of Honeywell(originally AlliedSignal) and Jack Welch of General Electric. Many companies started usingsix-sigma after seeing its success in these pioneer companies. It must also be noted thatthe unwavering support of six-sigma from these leaders also contributed to its success.Mike Harry and Richard Schroeder are now running a Six-Sigma Academy in Arizona.Their book was consulted widely during the initial literature review process.

6.7 Defining Six-Sigma

It is important in an organisation to have a common understanding of six-sigma. This is byno means a suggestion that employees should memorise the definition of six-sigma, asthis usually does not equate to understanding. This also does not mean that anorganisation must have a universal elevator speech. I do not believe that employeesshould have the same words to define six-sigma, but they should have a ‘commonunderstanding’.

I will then define six-sigma, not as single definition, but will view six-sigma from differentperspectives in order to enrich the understanding. I will first use Mitroff’s four perspectivesof defining a problem in order to enrich the understanding of six-sigma. These arescientific/technical, interpersonal/social, existential and systemic perspectives. I will alsoadd other perspectives in order to create a platform for this ‘common understanding’.

6.7.1 Scientific / Technical Definition of Six-Sigma

The six-sigma concept arises from the number of standard deviations that one can fit in anormal distribution curve. Six-sigma happens when you can fit six standard deviations in anormal distribution curve. The best technical definition of six-sigma I have seen so far isthe one by Latzko (1995). This definition includes the concept of a sigma shift. This sigmashift is part of the original six-sigma approach by Motorola, the pioneers of six-sigma.They assumed that any process could shift during operation. They proposed a 1.5standard deviation allowance for this possible shift.

This standard deviation shift is used by the process operator to set operation limits for theprocess. This means that the process operator can set the upper and lower tolerancelimits to control the process. The will then ensure that the normal six-sigma curve will

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always fit comfortable within the operating range, with 1.5 standard deviation allowanceson each side. The graphical representation of this phenomenon can be seen in Figure 53below. The full technical article describing the six-sigma concept can be seen in Appendix17.

The resulting process results in what is known as Defects Per Million Opportunities(DPMO). A six-sigma operation has 3.4 defects per million opportunities. This means thatif a process has a million opportunities to make defects, only 3.4 defects will occur. Theusual misnomer is that you only get 3.4 defects when you produce a million products. Thisis definitely not the case and not the definition of six-sigma. The other six-sigma levels andtheir DPMO can be seen in Table 3 below.

Figure 53. The Visual Definition of the Six-sigma Concept (Latzko: 1995)

Sigma Level Defects Per Million Opportunities Quality level1 691 000 31%2 309 000 69%3 67 000 93.3%4 6 200 99.4%5 230 99.98%6 3.4 99.997%

Table 3. Definition of Six-Sigma Levels

6.7.2 Interpersonal / Social Definition of Six-Sigma

This definition is about the relationship of the institution and the society at large, with itsrelevant stakeholders. I would like to narrow this definition, for the purpose of thisresearch, to the relation of between the employees and the organisation (AEL).

Therefore, six-sigma is a process to improve quality and to reduce costs so that thecompany can continue to compete favourably with others, thereby protecting theemployment of its current employees. This in turn benefits the families of the surroundingcommunities where the employees live.

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6.7.3 Existential Definition of Six-Sigma

This definition is about the purpose of the organisation. This deals with why theorganisation was created in the first place. All profit-making organisations are created inorder to give acceptable returns to the shareholder. The other benefits that may arise arespin-offs from the original purpose of making the profits for the shareholders.

Therefore, the shareholder perspective will dominate the definition of six-sigma in thisinstance. Six-sigma, therefore, is a process of improving quality and eliminating waste inorder to ensure the continued profitability of the organisation.

6.7.4 Systemic Definition of Six-Sigma

This definition is concerned with the existence of the organisation in the context of thelarger environment. Therefore, this definition is more inclusive of other stakeholdersbecause it is the stakeholders that define the context of the organisation.

Therefore, this definition will be more inclusive of different stakeholders and theirobjectives. Hence, six-sigma is a process of improving quality and eliminating waste forthe benefit of all stakeholders, including the continued existence of the organisation.

6.7.5 Employee Understanding of Six-Sigma in AEL

The definitions of six-sigma will not be complete without exploring various interpretationsof six-sigma in AEL. The interview process surfaced these definitions. The employeeswere asked directly about their understanding of six-sigma. I cannot explore all theinterpretations from all interviewees because of numbers. The following are some of thefew interesting interpretations of six-sigma:

“It is a sustainable approach using a methodology for problem solving”.

“It is a methodology based on reducing variation. It is a toolbox of techniques. It has rigourin tackling problems and process variation”.

“It is a methodology for determining variance in a process using the seven steps”.

“A methodological approach used to identify problems and find ways of addressing them.It is about improving systems and making sure that the results are optimised”.

“It is a structured methodology with 7 steps to help you identify causes of variation and toeliminate waste in order to improve quality of throughput. It forces you to be diligent inanalysing and eliminating waste. It stops you from shooting from the hip and makingdecisions on that basis”.

“It is a process to drive out variation. It is applicable to all processes, production andtransaction. Variation is waste. Hence, if you drive out variation, you will make a profit”.

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“It is a process where you try to find root causes. It helps you to understand the problemYou can use statistics to improve the situation provided you have enough data”.

“It is a structured problem solving approach based on analysis of facts and data”.

“It is a set of problem solving tools. It is also a continuous improvement tool. It helps us tooptimise and improve the process”.

“Six-sigma is mainly for waste and quality improvement. I don’t know how they wouldapply it in the service industry. I know that it can be applied in a number of situations”.

“It is a tool or method. If you bake a cake, you must understand the instructions. It tells youthe process you must follow in order to improve something”.

“It is a process that uses statistical methods to identify and minimise variation”.

It is a process that provides better consistency. It is difficult to grasp in sales except wherewe deliver something. It has a space in sales. It is valuable”.

“It is a systematic approach that can help you to deliver improvement”.“It is a methodical ways of analysing your production system and from that data make adecision on how to reduce variation or optimise the process. You just don’t go on gut feel.There are things that are highlighted when you use the six-sigma process”.

“They have taken what I have learnt when I joined the company and put it in a structuredway. Collecting what the company has in a nice structured format. You rely on what thefigures tell you, not what you feel. It changes people from saying we have always done itlike this”.

“General tool you can apply to any situation. Use the appropriate tool within six-sigma.Don’t have to use all the tools. Look at the problem instead of the assumptions. Look atthe problem as an outsider. Root cause rather than symptom”.

There is definitely a variation in the understanding of six-sigma. However, the variation isnot alarming. One can distil a common theme from all the above definitions. The gap ofdifferent understandings can be closed with better communication and more focusedtraining. Some of the gaps will be closed by further experience that will be gained byvarious people through continued six-sigma implementation.

6.7.6 General Electric Definition of Six-Sigma

It is important to also look at the perspective of one of the successful implementers of six-sigma, General Electric. General Electric (2005) defines six-sigma as a highly disciplinedprocess based on delivering near perfect products and services. The central idea is that ifyou can measure “defects”, you can then systematically remove them from the process.

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This philosophy is in the DNA of General Electric. Six-sigma is the way of doing things atGeneral Electric. It is in everything they do, in every product, in service and process. GEnames three elements of six-sigma quality as customer, process and employee.

6.7.7 Personal Philosophy of Six-Sigma

Although I cannot classify myself as any expert of six-sigma, I think the experience I havehad over the last two years gives a right to express my opinion. The philosophy of six-sigma lies mainly in the approach of what is known as the Output, Process, and Input(OPI) diagram. This diagram can be seen in Figure 54 below.

Figure 54. The OPI Diagram

The traditional approach to quality has been to have broad input and process parameters.There was no emphasis to get the inputs and the process exactly right. More emphasiswas put at the end of the process to inspect the quality of the finished product. Theproduct that does not meet the specification was either rejected or reworked.

The six-sigma approach is that the inputs and the process must be exactly right before youcommence production. This guarantees the correct outputs. Therefore, there is not needto inspect the outputs if the inputs and the process are perfectly correct. The statistics,tools and techniques help the process operator to set the inputs and the process correctly.

This is my experiential definition of six-sigma.

PROCESSINPUT OUPUT

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Literature Review









situation.

Chapter 7: Evaluation







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7. EVALUATION

The purpose of this chapter is to evaluate the whole research process in terms ofrelevance, utility, validity and ethics. Further evaluation will also be made in the lastchapter of conclusions and critique. Some evaluation in this chapter and the last chapterwill recommend further research in a subject area.

7.1 Relevance

The situation creates a picture of a company that is seriously challenged by the changes inits environment. The company is more than a hundred years old. It has survived manychallenges before, but can it survive the current challenges without any innovativeresponse? The challenges are from many fronts; hence a multifaceted strategy is neededto combat these challenges.

The company only experienced fierce competition in the South African market in the mid-nineties. Sasol entered the explosives market and other international companies enteredthe South African explosives market. There was an initial drop in the market share acrossthe board, but the market share of initiating systems has remained sturdy around the 60%mark. The Chinese competition tried to enter the market around that period, but theirquality was so poor that it was unacceptable to the customers.

One strategy that saved the company’s bacon was venturing into Africa when it was stillunpopular. In fact, many people were advising against venturing into ‘dark’ Africa.Currently, approximately a third of the company’s revenue comes from this regionalAfrican market.

The South African explosives and initiative systems market has halved over the last pastten years. The African market is growing very slowly, almost stagnating. The mines areunder a lot of pressure due to the strong rand and rising labour costs. Other variable costsare also squeezing the margins in many mines. Many marginal mines are closing becausethey cannot make any margins under these tough economic conditions. The competitionis getting stronger and the mines are having more alternative suppliers. AEL is currentlylooking for international markets outside South Africa and the regional African market. Theinternational market does not tolerate any poor quality. The international miningcompanies in Africa have proved this intolerance to poor quality beyond a shadow ofdoubt.

The mines are putting a cost bite on AEL and other explosives manufacturers. They aredemanding that the prices of explosives and initiating systems be reduced. However, thecosts of manufacturing in South Africa is increasing, especially the labour costs.Explosives manufacturing is currently a very labour intensive process. The labourcomponent constitutes about 70% of the fixed costs. Therefore, the reduction of priceswould be very challenging to say the least. The mines are also threatening to importcheaper Chinese explosives and initiating systems if the local suppliers cannot reduce

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prices. The mines argue that Chinese explosives and initiating systems now havecomparable quality to that of local products.

The above situation raises a lot of concerns. The challenges for AEL are to improvequality and to reduce costs. There is very little time to respond to these challenges. AELhas chosen six-sigma to respond to these challenges of quality and costs. However, six-sigma is quite a complex process that can be very frustrating if not implemented properly.It also needs to be modified to suit the particular circumstances of the company and theenvironment. The concern is whether AEL can respond to these challenges with six-sigma. Does AEL have enough capacity to adapt and modify six-sigma such that it yieldsthe required results?

The quality of AEL is not stable and also not improving, as shown by the quality report inAppendix 14. The five-year history of customer complaints indicates huge variation overthe five years. This implies that AEL is not in full control of quality. There are externalfactors that are controlling quality, but AEL has not been able to put these factors under itscontrol. Therefore, a process is needed where AEL can identify these factors and put inplace processes to control them. The process has been identified as six-sigma. However,it still needs to be adapted and modified such that it can be implemented successfully inthe AEL environment.

One of the sources of high costs in many companies is waste. The lean thinkingmovement has identified seven types of waste in organisations that add to costs. Jonesand Womack (2003) identify these types of waste in the context of Toyota MotorCorporation. Toyota has been successful over many years and has successfully enteredand dominated both the European and US markets. The labour costs in Japan areastronomically high but they are able to produce good quality cars at competitive prices forthe global market. Many top end models are made in Japan and shipped across theworld.

The local Toyota production facilities in different countries have adopted the lean thinkingprinciples of Toyota. The lean thinking principles enable Toyota to have competitive costsaround the globe. However, Spear (2004) notes that no company has successfully copiedthe Toyota Production System. Today, six-sigma incorporate lean thinking principles in itsprocess. The lean thinking principles are used to eliminate waste, thus reducing costs.Will AEL be able to adapt lean thinking principles during the six-sigma process in order toimpact directly on costs?

An interesting article related to lowering costs and satisfying the customer demands forlower prices of products was in the Business Day. The Business Day had two interestingarticles. Lourens (2005) wrote about the Indian motorcar manufacturer, Tata who isdeveloping a vehicle that will cost between R12 762 and R19 142. Whilst this looksunbelievable, it must be an attainable goal for Tata to broadcast the effort before it isachieved. The same article says that Renault has already produced a “super-budget”sedan that sells for about R40 000, which is far below the current cheapest car in SouthAfrica that costs R65 000.

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Phasiwe (2005) wrote about the price warfare in the South African domestic airlineindustry. South African Airways reduced its domestic flights between Johannesburg andall coastal cities. However, the low cost carrier ‘One Time’ started the warfare by offeringa single ticket from Johannesburg to Durban for R199, including airport levies. The priceis almost the one-way toll fees to Durban by road. All other airlines followed suit, althoughwith different prices. This indicates to me that even in our business, the 40% lowerChinese explosives will bring a serious challenge, not only to AEL, but also to all localmanufacturers.

I can therefore conclude that the concern is very relevant to the situation that has beenpainted. The situation was painted in detail so as to expose all the current challenges andtheir root causes.

7.2 Utility

The answer to the question of this research has been given in the form of a detailed causalloop diagram model. This model was explained in detail in the chapter dealing with theanswer. Whetten (1989) argues that a good theory must contain four essential elements,which are: What, How, Why and Who, Where, When. Van de Ven (1989) also agrees withthis approach. Weick (1989) emphasises the characteristics of verification, validation andplausibility. Weick (1989: 516) continues to say “theorising consists of disciplinedimagination that unfolds in a manner analogous to artificial selection”.

I would therefore propose that if the proposed model meets all the above criteria, then ithas utility, since it will be able to answer the research question. The “what” is representedby concepts in the causal loop diagram model. The concepts are described in detail inorder to eliminate any misinterpretation. The arrows of the model and the positive ornegative indication, represent the “how” part of the criteria. This part of the modelindicates how the concepts are interrelated. If the arrow is positive, it means as the firstvariable increases, the second variable increases as well. If the arrow is negative, itmeans as the first variable increases, the second variable decreases and vice versa.

The “why” part is explained in detail in the chapter dealing with the answer. The reasonswere clearly described as to why the variables would affect each other. The “who” isinitially indicated by level of organisation. The model is divided into normative, strategic,control and co-ordination and implementation levels. It is clear to see in the model whichactions are supposed to be done by which level. The model also specifies someresponsibilities. The examples are the following variables of the model: First line manager,PTSM, TO as green/black belts, Middle manager and HOD as champions, EXCO, BMT assponsors.

The when part will form part of the implementation plans that are part of the variable,effective and efficient implementation plans. It is also important to note that this is a liveproject, and the implementation plans for next year, 2006 are in place. This plan is mainlygeared to improve the six-sigma expertise in the organisation by training and developing

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more people in the organisation. The plan deals with the “where’ and “when” part of theanswer.

It is also my assertion that the concepts were derived from interviews with people who areintimately involved with six-sigma, literature from six-sigma practitioners and personalobservation of a person currently undergoing green belt training, hence, the resultantcausal loop model is plausible.

7.3 Validity

Validity is a process that gives confidence to a theory or model. It explores how the modelwas established by examining the sources of data that were used to construct the theoryor model. This process is mostly driven by evidence and argument.

7.3.1 Dependability

Grounded theory was chosen as a research methodology for this research. I considerthree reasons for using any tool or weapon (theory or methodology), if I can use theseterms interchangeably. The first one is that the tool or weapon must be able to do the job.It must have proven itself over a considerable period of time. It must have shown successin many diverse situations in order to prove that success was not a chance.

The second reason is that the person using the tool or weapon must be skilled enough touse the tool or weapon effectively. The outcome of using any tool or weapon is the outputof a system consisting of the person using the tool/weapon, the tool/weapon and theinteraction between the pair. It is therefore, an imperative that the person using the toolmust have used the tool/weapon long enough in order to claim and show expertise.

The third reason is that the tool/weapon must be relevant to the situation where it is used.Therefore, the research methodology must be relevant to the research question. In thiscase, grounded theory was relevant to the research question.

The tool/weapon metaphor I have just used, demonstrates the reasoning I have used inchoosing grounded theory as the preferred methodology for my research. Glaseer andStrauss developed the grounded methodology as a tool (Goulding: 1998; Ryan: 2005b). Itoffered a unique alternative from hypothesis testing. Grounded theory is unique becausethe theory emerges from data, whereas in the traditional approach, theory is a first guessin hypothesis testing.

Grounded theory has established itself firmly in social, qualitative research. It has alsoshown to be a preferred methodology in systems thinking. The Graduate School ofBusiness, of the University of Cape Town has anchored its Executive MBA programme insystems thinking. The methodology used for position papers and action research learningpapers is grounded theory. This has proved to be one of the most effective and efficientmediums in this programme.

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The second part of my metaphor is the user’s skill of the tool/weapon. I cannot profess tobe a master or a highly skilled person in grounded theory methodology. The only evidenceI can produce is that I have used it over and over again in position papers and actionresearch learning papers during the course of the Executive MBA programme. Thisexposure and practice has helped me to understand the tool in greater detail, both intheory and in application. The reasoning behind choosing grounded theory was alsodiscussed in detail in chapter one. The problems associated with hypothesis testing forthe question raised by this dissertation was also discussed.

I have already mentioned that the grounded theory methodology is used extensively in theUCT EMBA. I have followed the process in the exact manner as I have used it during theEMBA programme. The only deviation was in the questionnaire design where I designedquestions such that they are “consultative” with all paradigms. I did not take a view thatgrounded theory is an interpretivist paradigm as in du Plessis (2005), Wadeson (2005) andGoulding (1998). However, it must be noted that Goulding (1998) does not exclude theuse of grounded theory in other paradigms. Postmodernism is not excluded in herdiscourse.

“…what is apparent, however, is that interpretive and post-modern scholars arechampioning the use of methodologies that provide insights, reveal meaning andacknowledge the possibility of multiple answers to problems…..grounded theoryhas largely been excluded from the discourse on interpretive and post-modernmethodologies”.

Goulding (1998: 50)

It must be noted that the application of the six-sigma methodology is more in line with thepost-modernist paradigm because six-sigma is a diversified combination of methodologies.

The only other deviation from the usual Executive MBA grounded theory process was thelayout of the causal loop diagram. I decided to use the Viable Systems Methodologystructure to layout my causal loop diagram. This kind of layout was trying to ensure thesustainability of the six-sigma implementation process. This layout is very similar to theManagement Practice CLD Template that was proposed by Tom Ryan in module 4 of theEMBA 6 programme.

The grounded theory process was followed rigidly, except for the minor deviationsmentioned and explained above.

Figure 8 in Chapter one explains the research framework and process followed in thispaper. The underlying philosophy of grounded theory as used in this research is realism.Although a pragmatic approach was also used, it must be noted that the dominantphilosophy is realism. Pragmatism in this instance means the balancing of rationalism,empiricism, idealism and realism. Realism, in this context is defined as “objects in the realworld exist independently of the mind, their meaning exist within them”.

Management theories are not like physical theories that strictly exist independently of themind. Human beings create management theories. Physical theories are created by

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nature itself and they precede human existence. “Credible, independent and objective”processes are usually used to create management theories that seek to eliminate humanbias. However, the underlying fact is that they are still created by human beings andhence not independent of the mind. Therefore, realism alone cannot be used to create aframework for dealing with management theories. This is why pragmatism was also part ofthe underlying philophy.

Wieck (1989) contrasts the problem solving process between organisational theorists andnatural scientists. He suggests that organisational problems are very wide in scope andvery limited in detail. The theories are also ‘limited’ by the views of other theorist in thefield. Natural theories do not suffer these limitations.

7.3.2 Credibility

There are three sources of data in this research. The first one is interviews. They arefrom the executive committee of AEL, six-sigma champions, the AEL six-sigma co-ordinator, external six-sigma consultants, green belts and black belts. All theseinterviews were done face-to-face. I conducted all interviews in person. Thequestionnaire can bee seen in Appendix 5. The ethics statement for the questionnairescan be seen in Appendix 18. A schedule of all interviewees can be seen in Appendix 19.A sample of a completed interview schedule can be seen in Appendix 15.

The questionnaire is accompanied by a description of each question. This ensures thatthe questions are interpreted in the same manner by all interviewees. In the ethicsstatement for the questionnaire, there is a part that informs the interviewee that he/shemust not try to impress the interviewer. He/she must not answer questions in a mannerthat he/she thinks will appeal to the interviewer. He/she must be brutally honest in his/heranswer. There would be no recriminations as the interview is totally confidential; nobodywill know who said what in the interviews. Express permission was sought where therewas a need to reveal the source.

The second source of data is from selected six-sigma literature. Six-sigma literature canbe very biased. Some people take six-sigma as an ideology and assume that it can solveevery problem under the sun. Such articles are easy to spot as they always start withpraises of six-sigma and never critically analyse the process. These types of articles wereavoided for this data collection process. The articles that were selected for this datagathering process are mainly those that deal which the problems of six-sigma and how tocorrect them. A reputable six-sigma book was also used during the data gatheringprocess. The former Motorola employees who were part of the original architecture of six-sigma wrote the book (Harry and Schroeder: 2000). They currently run a consultancyacademy and are consulting to reputable fortune 500 companies including GeneralElectric.

The third set of data came from my personal observation of the six-sigma implementationprocess. I was selected as an executive responsible for the implementation of six-sigma inmy organisation in 2004. I was trained as six-sigma champion in 2004. The first round of

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projects was implemented but I felt that I did not have enough insight into the process. Idecided in 2005 to join the green belt six-sigma training programme. I selected a project inone of the operations.

I was able to observe the process from the classroom training session to discussions withvarious green belts and black belts. I was able to conduct better discussions with the AELsix-sigma co-ordinator and the external six-sigma consultants. I was able to suggestimprovements for the classroom training session to the practical six-sigma projectimplementation. The other green belt and black belt trainees ended up seeing me as oneof the fellow trainees, who is experiencing the same problems in the field. They werewilling to give me honest views and opinions because they believed that I could help themsince I understand their “point of view”. It is from this insight that I believe in the credibilityof this source of information.

The three sources of data are different, but the concepts that resulted from theseprocesses were strikingly similar. This triangulation process worked very well, consideringthat the sources of information were very diverse. The answer is also in agreement withthe initial quality model (Figure 6) that was developed in module 5. It is also in agreementwith the postmodernist conceptual model (Figure 7) developed in module 6. It must benoted that different sources of data were used in developing these models.

7.3.3 Confirmability

The situation was constructed from publicly available data. The parent company of AEL,AECI is a publicly listed company. Therefore, all its trading information is publicly availableand that of its operating companies. Some of the information can be traced via theJohannesburg Securities Exchange. Some of the information can be traced from thefinancial reports. The financial reports and other relevant information can be seen in AECIwebsite, http://www.aeci.co.za.

The finer details of the information regarding AEL can also be seen in the AEL website,http://www.explosives.co.za. AECI usually conducts investor road shows every year. Alloperating companies are supposed to present their trading activities and their future plansto the investor community. Most of this information was presented to the investorcommunity in 2005. Therefore, many institutional investors can collaborate thisinformation as it was presented to them and they also received hard copies of tradingactivities and future plans of AEL.

Most of the information that was used to develop the concern is publicly available. Theactivities about the South African mining industry are publicly available. Statistics can becollaborated with data and history kept by the Chamber of Mines. The Chinese activitycan be traced through the Chief Inspector of Explosives, South African Police Service, whois responsible for licensing and registering every explosive that enters the country.

The quality and waste statistics is an internal document only available to AEL. Someinternal documents dealing with these areas have been included as appendices in this

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report. The quality history can be seen in Appendix 14. The waste report can be seen inAppendix 13.

The answer was constructed from publicly available terminology, the six-sigma technology.Most of the variables are known six-sigma terms. There are places where I have usedAEL specific terminology, such as Technical Officers (TO), however, I have also used thegeneric equivalent like first line manager, in order to give more understanding about thelevel of the job.

The conventional grounded theory methodology was followed and therefore it is easy tofollow the steps of creating the causal loop diagram model. All the concepts and how theywere categorised, are given in the appendices. The concepts and the process ofcategorisation can be seen in Appendices 6,7,9 and Appendix 16 respectfully. Theschedule of all interviewees in Appendix 19 can be verified by phoning the AEL generalphone number: 011 606 0000. The phone numbers of external consultants is given in theschedule itself.

7.3.4 Transferability

One of the difficult things to distil from the implementation of a methodology is what drivesthe process and what immediate outcomes can be expected from the process. Theprocess on creating an interrelation diagraph and extracting key drivers and key outputs isvery important in terms of understanding the process. Now I know what the key driversand key outputs of the six-sigma process are.

It must be noted that this is a live project that is already unfolding. However, it was initiallyimplemented without a rigorous theoretical process. Therefore, I have been guessingwhat drives the process and what immediate outcomes should be. I have now createdgood understanding of key drivers and key outcomes. This will be shared with theleadership of the organisation, management and all other stakeholders involved in theimplementation of six-sigma.

These key drivers and key outputs are generic and I believe that they are applicable to anysix-sigma implementation process. Therefore, these can be used by any organisation thatis in the process of implementing six-sigma. This will also give additional insight to six-sigma practitioners and consultants.

The causal loop diagram model itself is very detailed, however, I believe that it can beused by any organisation that is implementing six-sigma. There will be slight terminologychanges, like where I have used EXCO; another organisation might be using a differentterm for this level of management.

There are many things that I could not understand why they were happening before. Oneof the things that make people uncomfortable when implementing a new initiative in anorganisation is the lack of expertise in a particular subject. This was revealed by the

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interviews and also confirmed by my experience in implementing a six-sigma project aswell as my personal observation.

It is my personal belief, supported by the causal loop diagram model, that this researchhas opened new insights six-sigma implementation. It has also captured a new angle andinsights about implementing change and new initiatives.

7.4 Ethics

Business ethics has been around for many years, yet it is on the spotlight because ofmany corporate failures around the world. The international corporate governance failuresinclude companies like Enron, Worldcom, Parmalat and others. The domestic corporategovernance failures include companies like Regal Bank, Leisurenet, Masterbond andothers. The spotlight on corporate governance has increased due to these corporategovernance failures

South Africa has also strengthened corporate governance through the promotion of King IICode of Corporate Governance. Corporate governance in South Africa has been part ofthe SA Companies Act of 1973. The King I Report was developed in 1994 and the King IIReport was developed in 2002. (Wilkinson: 2003). Wilkinson continues to highlight thedifference between the Companies Act and the King II Report as follows:

“The Companies Act and other Acts define the law whilst corporate governance isabout principles and not laws or regulations but cannot be in conflict with the law,the principles define the ‘Rules of the Game’”.

Wilkinson (2003: 1)

The King II Report is now fully accepted in South Africa as a benchmark for corporategovernance. King II is a voluntary code of conduct. It is not promulgated as part of anylegislation. There is a school of thought that would like to see King II being legislated.However, there is an equally opposing view. This school of thought believes that the KingII would lose its “principles” punch if legislated. This would further lead to the introductionof technicalities in the implementation of the code, which will in turn reduce theeffectiveness of the code. It is interesting that one of the lead architects of this code isfavouring voluntarism.

It is important to look at ethics from different viewpoints in order to create a richunderstanding of the concept. One of the more inclusive definitions is by Rossouw (2003)who defines business ethics as follows:

“The principles, norms and standards that guide an organisation’s conduct of itsactivities, internal relations and interactions with external stakeholders….Ethicalconduct means staff adhere to defined standards in all their business decisions andactions”.

Rossouw (2003:7)

Williams (2004) defines business ethics as follows:

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“A study of how moral standards apply to the conduct of individuals involved in theorganisations by which societies produce and distribute goods and services”.

Williams (2004:6)

It is clear from the above definitions that the key operating words are ‘conduct according tocertain standards’. The key question would be ‘Who sets those standards and how?’.This question will be answered in the course of this discussion. Clarity to the question ofethics will help us to judge whether the answer reached in this research is ethical for thedefined situation.

The latest focus on ethics has led to companies to change their annual reports drastically.Most companies these days structure their annual reports into what is known as “triple-bottom line” reporting. This means that companies give a balanced financial report thatincludes finance, social and SHE (safety, health and environment) perspectives.Companies must disclose other items that enable investors to obtain a “better sense of thelong-term prospects of the organisation” (Everingham and Wixley: 2003:106). Khoza andAdam (2005:14) propose that corporate governance is the “catalyst to economic growth,particularly in developing countries”.

Let me now concentrate on the theory of ethics. Ryan (2005f) names key ethical theoriesas:

Virtue Utilitarianism Rights and Duties Justice Caring

Virtue theory is about the moral character of humans as opposed to the morality ofpeople’s actions. It helps to identify traits that enable human beings to live life well. Thesetraits can be developed. Virtues are the ‘middle’ ground of positive and negativeextremes.

Over the years this theory has undergone various metamorphosis. However, the followinglist of virtues has emerged from various philosophers and thinkers; courage, temperance,justice, prudence, faith, hope, charity, honesty, persistence, self-control, tact, respect forothers, tolerance, fairness and non-discrimination and benevolence (Ryan: 2005f).

However, the more modern theories of ethics are based on behaviour rather than humantraits. The next theory to explore is the Utilitarian theory or principle. This theory iscommonly known as “the greatest good for the greatest number”. Inherent to thisdefinition is the ability to:

Identify all options or alternatives Identify all stakeholders

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Quantify the costs and benefits Select the best option or alternative and act

It is clear from the above inherent requirements that, whilst the theory sounds veryplausible in its definition, the practicalities may be more challenging than it meets the eye.

The rights and duties criterion is based on the Universal Declaration of Human Rights.This is a foundation for equal treatment and dignity of human kind. It ensures that everyhuman being has a right to be treated with dignity and impartiality. This theory continuesto emphasise that individual rights are not unlimited; they are bound by duties on the otherend. You cannot enjoy a right whilst trampling on other people’s rights.

The justice principle considers three types of justice (Williams: 2004 and Ryan: 2005:k):

Distributive justice: A fair distribution of benefits and burdens in the society. Itinvolves consistency in the treatment of people and situations.

Retributive justice: A fair imposition of punishment and penalties to people who dowrong.

Compensatory justice: Fair compensation for people who have been wronged byothers.

The last principle is caring. Caring involves passion, concern, love, friendship andkindness. This highlights our interdependence and relationship as human beings (Ryan:2005g).

It is therefore, important for me to explore whether the above principles are upheld in thedevelopment and potential application of my proposed theory or model. The first part ofthis research was the interview of people in the organisation. Interviewees are usually notsettled because they do not know who will have access to their opinions and whatrepercussions might arise from such opinions. They want their rights to privacy andanonymity to be guaranteed before they participate freely in an interview.

The first step I did was to give them the background for these interviews. I also gave theman ethics statement that will guarantee anonymity of opinions. The ethics statement can beseen in Appendix 18. I also explained to them that this anonymity would be respected inthe analysis of data and even when I write the final paper. All the ethics principlesexplained in this chapter were upheld during the interview process. They will also beupheld in the final document. All the people involved will be able to judge this since thisdocument will be publicly available to all employees at AEL.

There are instances in this paper where the interviewees were quoted directly. Permissionwas requested in all cases. A typical correspondence that shows how the request processwas followed can be seen in Appendix 18. All interviewees had to give express, writtenpermission before they were quoted in this paper.

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The next step is to explore whether the causal loop diagram model upholds the ethics asdescribed in this chapter. The point of departure of the model is that it was created tosave the company from an impeding threat. Therefore, the basis and point of departure ofthe research is utilitarian in essence, ‘the greater good for the company’s continuedexistence’. However, it does not mean that the other ethics principles will be disregardedor compromised. They will be applied fairly in conjunction with the anchor principle ofutilitarianism.

The first step of looking at the model is to inspect the variables for any conflict with theprinciples as described in this chapter. The variables themselves do not violate any ethicsprinciples. The next step is to analyse the interpretation or interaction of variables andsurface any possible violation that may arise.

The major outputs of six-sigma are viability and the achievement of business goals. Theresulting efficiency of the six-sigma process is invariably a perceived threat to theemployment levels. It is important for the organisation not to reduce numbers afterachieving six-sigma, but to deploy the “extra” resources to other growth areas of thebusiness. The reality in AEL is that six-sigma is not happening in isolation of otherinitiatives. There is currently a factory automation and renewal initiative. This will result inthe reduction of jobs from about 2000 employees to about 800 employees.

It is therefore important to constantly communicate the effects of each initiative in theorganisation. The employees must be able to separate the effects of each initiative. Oneof the key variables in this model is effective communication strategy. It is important toexploit this variable to its maximum benefit. Safeguards must be put in place not to usepropaganda or elevating six-sigma to ideology levels during implementation.

The other important aspect of six-sigma is the distributive justice principle; fair distributionof benefits and burdens. It is important that the benefits that will arise from six-sigma aredistributed fairly. The potential bonuses must not be seen as an intention to enrich thefew. Bonus payment is always a controversial subject that must be debated among allstakeholders in the organisation. There is a variable in the model that deals with thisaspect. It is individual and team recognition variable.

One of the most successful initiatives in AEL is the care and growth thematic. Theinitiative proposes that a company can only be successful when it takes care and grows itsemployees. There are two variables in the model to deal with this aspect. The variables,‘level of integration of six-sigma with existing tools’ and ‘level of continuous professionaldevelopment’ deal with the aspect of care and growth.

It is clear from the above discussion that the model passes all the tests of ethics theoriesmentioned in this chapter. However, the greatest test of the model will be in theimplementation phase and continuous modification of the model in order to adapt to thechanging environment.

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Literature Review









situation.

Chapter 8: Conclusions and Critique







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8. CONCLUSIONS AND CRITIQUE

This chapter provides the overall conclusions and critique of the whole process that led tothe proposed model. The model provides very detailed variables that can be used aslevers for driving the process of six-sigma. The pillars that are critical to the implementationof six-sigma are the key drivers and key outputs that were surfaced by the process. It isimportant to make certain conclusions regarding the key drivers and key outputs.

8.1 Level of Leadership / Top Management Commitment

It is very important that the leadership/top management of the organisation are fullycommitted to the implementation of six-sigma. It must be noted that six-sigma is a changeprocess, that seeks to change the culture of the organisation. There is no change thatcan happen in an organisation without the support of the leadership/top managementteam.

The employees are very clever in noting the tempo of a new initiative. Most employeeshave been through many initiatives in their careers. They first weigh a new initiative byobserving the commitment of the leadership team. They are very skilled in noticing thedifference between what top management preach and what they practice. If the topmanagement is paying lip service to an initiative, the employees will also pay lip service.However, they will say the “right noises” in support of the initiative.

The next thing employees do is to gauge the momentum of an initiative over time. Whenthey are required to submit monthly reports for instance, they skip one month and gaugethe consequences. If nothing happens, they can end up not submitting anything! That ishow they can kill any initiative, with “top management” permission, of course.

Therefore, the EXCO of AEL must show unwavering support for six-sigma if they wouldlike it to be a success. There are no substitutes for commitment.

8.2 Level of Mobilisation of the Whole Organisation

The promotion of an initiative is very important. One of the most recurring commentsduring the interviews was that six-sigma was not promoted properly in the organisation.The interviewees compared six-sigma with certain past initiatives that were promoted well.It is important to re-launch and promote the six-sigma initiative. This process will alsoneed the support of the leadership team. Management support at local level will also becrucial.

8.3 Level of Six-sigma Expertise in the Organisation

One of the complaints during the interviews was that there is no six-sigma expertise in theorganisation. It is important for the organisation to develop six-sigma expertise as quicklyas possible. This will help to build confidence in the people who are involved with six-sigma. This will help them to convince the sceptics that the six-sigma process works. The

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sceptics cannot be convinced if the six-sigma practitioners are not speaking withconviction and confidence.

8.4 Ability to Create a Six-sigma Agenda

One of the key success factors for implementing an initiative is to ensure that it isconstantly part of the management agenda. The more people talk about a concept, themore they debate it, and the more they understand the concept.

There are various key meetings in the organisation. This starts with the executivecommittee meeting. Six-sigma must be part of the agenda of the executive committeemeeting. The Business Management Team (BMT) is the next level of management fromthe executive committee. It is important that six-sigma is part of the agenda of the BMTmeeting.

The departments also have their own weekly or monthly meetings. It is important that six-sigma projects and their progress are discussed in these departmental meetings. The firstline management level must also include six-sigma in the agenda of their team meetings.

8.5 Level of Effectiveness and Efficiency of Implementation Plans

The six-sigma process is a multiple project implementation process. Any project musthave an implementation plan in order to be successful. Therefore, six-sigma co-ordinationis very important. There must be a clear plan of how the six-sigma process will beimplemented. Time frames must be very clearly defined in order to ensure maximumparticipation from all stakeholders. Poor plans always give people a chance to advanceexcuses because they have “prior arrangements” that clash with the process.

The plans also help to create a vision and direction for the process. The employees cansee that the initiative is not a fad if the plans are clear and measurable. The six-sigmaprocess is very demanding on resources. Hence, the plans help to schedule theresources properly. This will be able to reduce competing commitments in employees.

8.6 Level of Understanding the Process

It is very interesting that many people make decisions even if they do not understand theprocess. One of the outputs of six-sigma is the understanding of work processes. This isa basic ingredient for solving a problem. An employee cannot be expected to solve aproblem if he/she does not understand the problem and the context of the problem. Poorunderstanding of the process leads to quick fixes that do not solve problems permanently.

The six-sigma process ensures that problems are solved permanently through betterunderstanding of the process.

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8.7 Level of Performance Measurement (People and Process)

One of the many challenges of management is performance management of people andthe process. AEL uses a balanced score card to monitor the performance of theorganisation. There are balanced score card measurements for various departments inthe organisation. A measurement is sometimes questioned in the executive committeemeeting. Sometimes the executive team cannot remember why a certain attribute wasmeasured in a particular manner. This usually leads to the measurement to be thrown outof the balanced score card and a new one proposed.

There are many process parameters that are measured in AEL. The current employeesand management sometimes do not necessarily know why a parameter is measured. Six-sigma helps to create measurement of parameters that will result in a quantifiableoutcome.

The performance management of people is usually a very emotive and a controversialsubject. Sometimes people are not measured on quantifiable outcomes that can be seenin the bottom line. The six-sigma process helps to create quantifiable outcomes that willresult in bottom line savings.

8.8 Data Collection

All care was taken during the interviews to ensure that people tell the truth as it is.However, some people might have not told the exact truth during interviews. Whilst thismay not significantly change the structure and robustness of the model, some minordistortions may occur. However, these distortions can be ironed out during theimplementation process as they arise.

It is also important to note that most people who were interviewed were involved with six-sigma in a certain way. Other stakeholders who are not involved with six-sigma were notinterviewed. It is important to include these stakeholders as the six-sigma implementationprogresses. These people may come up with different perspectives they might not havebeen taken into consideration during this research process. These different perspectiveswill help to improve the model and the learning process.

8.9 A critique of Six-Sigma

Antony (2004) provides one of the best critiques of six-sigma from an academicperspective in his article “Some pros and cons of six-sigma: an academic perspective”.Antony notes that six-sigma is in a very advanced stage in industry, yet the academicshave not provided enough theory to back this methodology. He comments as follows:

“Six-sigma has made a huge impact on industry and yet the academic communitylags behind of this powerful strategy. It will therefore be incumbent on academicfraternity to provide well-grounded theories to explain the phenomena of six-sigma.

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In other words, six-sigma lacks a theoretical underpinning and hence it is ourresponsibility as academicians to bridge the gap between the theory and practice ofsix-sigma”.

Antony (2004: 305)

It is important to note that this paper did not concentrate on the theory behind six-sigma. Itconcentrated on the methodology; how to implement the methodology successfully. Themethodology itself has pros and cons according to Antony (2004). I will attempt tosummarise Antony’s proposed pros and cons in the next paragraphs.

It must be noted that, although the cons seem to be more than cons, it is not all doom andgloom. The author predicts good future for six-sigma as long as the projects delivers onthe bottom line. Bottom line contribution is one of the critical viability characteristics of six-sigma. One of the advantages of six-sigma that will prolong its life is that it is based onsound statistical thinking. He mentions the foundations of six-sigma as the following threeprinciples:

All work occurs in a system of interconnected processes. Variation exists in all processes. Understanding, analysing and ironing out of variation are keys to success.

8.9.1 Pros of Six-Sigma

The advantages of six-sigma are the following:

1. Good focus on achieving measurable benefits and financial returns.2. It requires support from top management as an initial step.3. Integrates the human and process elements.4. It has a core set of tools and techniques.5. It creates a knowledge base in an organisation.6. It is driven by data rather than gut feel.7. It is based on statistical thinking will well proven tools.

8.9.2 Cons of Six-Sigma

The disadvantages of six-sigma are the following:

1. Quality data is not always available.2. Data infrastructure can be a very expensive initial exercise.3. Difficulty in prioritisation of projects.4. Difficulty in defining defects in service industry.5. The concept is based on a normal distribution curve.6. The concept of 1.5-sigma shift does not make sense for all situations.7. Non-standardisation procedures of certifying green and black belts.8. Can become a bureaucratic process.9. The culture aspects and learning in six-sigma not documented well in literature.10. Overselling of six-sigma by consultants.

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8.10 Generalising the Results

One of the challenges of grounded theory is the question of generalising the results sincethe process is not based on empirical evidence. There higher level of abstraction CLD ismore general and hence transferable to similar situations and organisations. The lowerlevel of abstraction CLD is more suited for internal use in AEL. Whilst the model is not apanacea for solving six-sigma failures, it gives a new insight about improving the successof six-sigma implementation.

Whilst this research paper is mainly on the methodology, the pros and cons highlighted inthe preceding section must be taken into account during implementation. Solutions mustbe put in place in order to minimise any adverse effects.

The model is not static and complete. The model will be modified as the six-sigmaimplementation progresses in the organisation. Therefore, the model is a dynamic and aliving organism. Sherwood (2002) puts this succinctly as follows:

“No causal loop diagram is ever finished. Not even the ones in this book (hisbook)…..The real world is complex, and any diagram, however insightful, willalways emphasise some things and ignore others. But the world changes and whatmight have been less important a while ago might become more important later.Expect diagrams to change. Like the world, causal loop diagrams are living things”.

Sherwood(2002: 136)

8.11 Further Research

One of the six-sigma weaknesses cited in the preceding sections is organisational cultureaspects and learning. This is not just critical to the core theory of six-sigma, but veryimportant to the methodology as well. Therefore, one of the action research questions thatarise from this paper is how to change the organisational culture in order to accept the six-sigma process. What are the key factors to be considered? What does the processentails? It is my opinion that any change process will fail if the culture does not accept it.

My experience in six-sigma so far is that the consultants are very weak in the changemanagement process. Most of the consultants are engineers who pay more attention tothe “hard” tools at the expense of the “soft” tools. The impact of organisational cultureshould be researched in order to predict its influence on six-sigma implementation.

One of the process weaknesses of the methodology, according to my experience, is thelack of prerequisite knowledge assessment of people who can do six-sigma. There is noprior assessment to ascertain whether an employee will be able to cope with thisdemanding process, both from an emotional and cognitive ability. Further research shouldbe done to assess the level of variety that is needed by various six-sigma practitioners.

My observation has also highlighted weakness in the six-sigma learning process. Six-sigma uses the “Knowledge Notebook” concept in order to foster learning. I have usedthis concept in the EMBA programme; it was known as the “Learning Logs”. The value of

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this tool is enhanced when the information in the “Knowledge Notebook” or “LearningLogs” is used for further knowledge acquisition. The “Learning Logs” in the EMBA processwere used to develop theories of management. These theories were personalised toindividuals developing them. This is how the process of learning multiplies itself when thistool is used effectively. The six-sigma methodology must try to emulate the EMBAknowledge acquisition process in using its “Knowledge Notebook” to develop individualtheories about six-sigma implementation in their areas of work. The poor use of the“Knowledge Notebook” or “Learning Log” is in my view a major weakness of the AEL six-sigma implementation process. However, this needs further research in order to come upwith a culturally desirable method of incorporating the “Knowledge Notebook” theorybuilding into the process.

Another challenge that was not explored in this paper is the impact of project managementcapability of the organisation. Six-sigma is implemented as a series of projects that arescattered throughout the organisation. Multiple project management is a skill that is vital toproject success. It is therefore possible that the implementation of six-sigma may failbecause of poor project management rather than methodological reasons. This dynamicneeds to be researched further in order to quantify its impact on six-sigma implementationsuccess.

Proposed costs savings are calculated at the beginning of each six-sigma project.Accounting is not an exact science. All accounting calculations are based on certainassumptions. I have observed savings calculations as a participant observer where thesavings disappear during the course of the project because of the change of assumptions.The entire six-sigma project is then regarded as a failure in this instance. However, this isnot a problem that arises due to failure of the six-sigma methodology per se, but from lackof support from a crucial management component.

It is therefore important that common assumptions are used in calculating six-sigmaproject savings. The common assumptions can only come from a well co-ordinatedsupport from the accounting department. Further research is needed to look at the impactof accounting support during six-sigma implementation.

The other knowledge gap is the lack of underpinning theory of learning in the six-sigmaprocess. The theory would give the participants the “bigger picture” and an anchor. Thetheory of learning (Lewin’s Cycle of Adult Learning and The Wheel of Learningrespectively) of Kurt Lewin (Ryan: 2004a) and Charles Handy (Stewart-Smith and Bond:2004) is fundamental to learning as is thinking to philosophy. Chris Argyris’ Double ActionLearning (Stewart-Smith and Bond: 2004) process should also be incorporated into six-sigma learning. The integration of the learning theory into six-sigma can enhance thelearning process in the six-sigma methodology to new levels.

The diagrammatic representation and a brief description of the above theories can be seenbelow for ease of reference. The Wheel of Learning by Charles Handy can be seen inFigure 54 below. The theory says that any learning starts with a question. It is thenfollowed by a plausible explanation of what is happening or theory. The theory is then

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tested in order to confirm the explanation. A process of reflection follows this where thetesting is compared with the theory. If the theory is not confirmed, another question isasked and the process continues.

Figure 55. The Wheel of Learning (by Charles Handy)

Lewin’s Cycle of Adult Learning can be seen in Figure 55 below. This process starts withconcrete experience. This is followed by reflective observation, where the learner tries tocompare the experience with his/her past experiences. An explanation or abstractconceptualisation is then reached. This is followed by testing or active experimentation.This process tries to confirm the abstract conceptualisation that it holds true in all or mostcases. If the abstract conceptualisation is not confirmed, the concrete experienced is thenreframed and the process begins again.

Figure 56. Lewin’s Cycle of Adult Learning (by Kurt Lewin)

Question

Theory

Testing

Reflection

ConcreteExperience

ReflectiveObservation

AbstractConceptualisation

ActiveExperimentation

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Chris Argyris’ Double Action Learning can be seen in Figure 56 below. Chris Argyrisproposed two processes of learning. One is single loop learning where the learner onlyreacts to the consequences. This is similar to animal instinct where an animal reacts to astimulus. There is no effective learning in this process. The most effective learning isknown as double loop learning. The learner does not just react to the consequence(stimulus), but looks at the root cause or governing variable of the consequence. Thelearner uses the governing variable to design a plan of action (strategy).

Figure 57. Double Loop Learning (by Chris Argyris)

8.12 Reflection on Personal Learning and Development

I had specific intentions when I enrolled for the EMBA programme. There were three mainobjectives for doing an EMBA. These were:

a) To prepare myself for my “last lap” of my career.b) To consolidate and enhance my performance in my current employment.c) To close the gap between my current knowledge and the ever-changing business

environment.

8.12.1 Preparing myself for the “last lap” of my career

I am over 40 years and have been an executive since 1996. I studied towards MSc inIndustrial Administration / Industrial Engineering in 1988 and this qualification has helpedme tremendously throughout my career so far. The course was modelled along the MBAprogramme but with a “scientific bias”. It is through this experience that I understand thevalue of a programme like an MBA.

GoverningVariable

ActionStrategy Consequences

Double LoopLearning

Single LoopLearning

.

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8.12.2 Consolidating and enhancing performance in my current employment.

As can be seen from my qualifications above, a qualification in EMBA would enhance mybroad business skills and thus make me well rounded. We are in the process ofrestructuring my organisation and shaping it to be competitive and successful for the next50 years. The interaction and the teamwork that is encouraged by this programme withother individuals from other organisations ensures that one learns those building blocksthat creates a successful and great organisations.

This, I believe, ensures that one benchmarks one’s organisation against the best andfacilitates the adoption of best practice. The exposure, I believe, almost guarantees aperformance that is much superior than current performance. Moreover, this would alsoprepare me for any other job challenges that I will find in my current or future employment.Apart from my current job, I also have business ambitions. I also hope that thisqualification would help me in starting my own business should that opportunity arise.

8.12.3 Closing the gap between my current knowledge and the ever-changingbusiness environment

The third objective was to close the gap between my current knowledge and the ever-changing business environment. I felt a need to improve my conceptual skills in order tobetter cope with the more uncertain environment that I am managing. I had a choicebetween constantly relying on consultants to give me solutions or develop these skillsmyself.

8.12.4 Personal Learning and Development

To summarise, I strongly believe that the EMBA programme has met all of the aboveobjectives. I feel that I have now prepared myself for the “last lap”. This qualification willbe able to take me through the rest of my career and would only need to embark onspecialised programmes when necessary.

I now feel that I am in control of outcomes in my current job. I have consolidated myknowledge and also improved my performance. This is the evidence I get from thefeedback from various teams. The feeling of drifting in a vast ocean has disappeared. Thethings are now not “happening by themselves”. The EMBA programme has taught me theconcept of causal relationships and how to use them effectively.

The gap between my current knowledge and the business environment requirements hasnarrowed tremendously. One of the most important concepts I learnt was the concept ofvariety. The various theoretical frameworks that I have learnt in the EMBA have improvedmy variety tremendously. I am able to make decisions in a highly complex and uncertainenvironment without pain. I now personally design solutions to many complex problems inmy work environment. I only involve consultants to fill gaps that are very specific ifrequired.

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Nick Segal concurs with my view on complexity in the following excerpt.

“The complexity of the environment and its exceptionally tough operating conditionsoffer a unique learning opportunity………Africa’s challenging conditions includeturbulent politics, poor insfrustructure, poor schooling, lack of management skills,HIV/AIDS and corruption”

Business Day Management Review (2006: 5)

The Viable Systems Model was one of the most important methodologies that I have learntin the EMBA. I have applied this model in many practical situations. One of thechallenges of top management is to ensure that everybody operates at the right level. It isimportant not to be sucked into the next lower level of management. I have used thismethodology to ensure that each level of management does what is supposed to do. Ialso use the model to check the “health” and viability of various departments in mybusiness unit. Most of the suggestions I make to my managers are usually accepted afterexplaining the rationale.

I am currently handling a factory renewal project of about R450m. The first phase of thisproject was about R75m. The project was overspent by about R15m. One of the problemsthat surfaced from our EXCO discussions is that different managers were not operating atthe levels they were expected to operate. This decision was made independently of theViable Systems Mode. I have used the principles of the Viable Systems Model to correctthis problem in the next phase of the project.

The Viable Systems Model has also enabled me to understand and develop businessacumen at various levels. Table 4 indicates my personal conceptualisation of businessacumen.

Table 4. My Personal Perspective of Levels of Business Acumen

Level AttributesNormative Level Marketing

Globalisation Entrepreneurship

Strategic Level(Dimensions ofBusiness Acumen)

Creating Enterprise Value Identifying and Exploiting Market

Opportunities Enhancing Enterprise Value

Operational Level(Elements of BusinessAcumen)

Growth Asset Efficiency Cash Flow Customer Value Profitability

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The EMBA programmes have also exposed me to various methodologies like SoftSystems Methodology (SSM), Strategic Assumptions Surfacing and Testing (SAST),Critical Systems Heuristics (CSH), Critical Systems Practice (CSP) and the differentparadigms (Promoting Goals and Viability, Stakeholder Purposes, Ensuring Fairness andPromoting Diversity). I have mainly used these methodologies during the action researchexercises. I have not been able to use them practically to the same extent as the ViableSystems Model.

Lastly, the EMBA programme has enabled me to look at problems from differentperspectives. This has helped me to design and implement long lasting solutions andprevents me from embarking on knee-jerk reactions. A typical problem was the solution tothe demand of performance bonus from the various unions on site. This was a wellthought solution and has resulted in a long-term solution.

Charles Handy and Kurt Lewin’s cycles of learning have helped me to embrace learning asa life long process and understand how to use it effectively in all the challenges Iencounter. The six-sigma implementation project is also taken as part of learning in theorganisation. I was also trained as a green belt and was assigned a project like any otheremployee. I also wanted to show that I do not expect people to do things that I cannot domyself. I was also using the technique of leading from the front. The training anddevelopment of people is a key result area of all my managers.

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APPENDIX 1: FORCE FIELD ANALYSIS DURING PROBLEM FORMULATION

My experience in production has shown me that quality is a function of people, processand raw materials and logistics.

i.e. Quality = f(People, Process, Raw Materials, Logistics)

The following variables are at play in AEL:

People

1. Understanding of quality by operators2. Understanding of quality by first line managers3. Commitment to quality by senior managers4. Understanding of customer needs5. Level of innovation6. Level of process understanding7. Need to keep customers (survival now)8. Need for growth (survival in future)

Process

1. Process capability

Logistics

1. Efficiency of supply chain

Raw Materials

1. Quality of raw materials

It is important to note that the above approach can be modified to include other attributesof quality. Some of the methodologies also include things like specifications,measurement systems etc. My proposed methodology of quality attributes must be takenas a summary of other attributes that can be introduced by other methodologies.

The ideal situation is where there are no customer complaints. The information gatheredfrom the rich picture, discussions and analysis of AEL using various tools resulted in theForce Field Analysis in table 5 below:

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Forces driving AEL towards theideal

Forces driving AEL away from theideal

Need to keep customers

Need for growth

Efficiency of supply chain

Understanding of quality by operators

Understanding of quality by first linemanagers

Commitment to quality by seniormanagers

Understanding of customer needs

Level of innovation

Level of process understanding

Process capability

Quality of raw materials

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APPENDIX 2: AVOIDING THE E3 ERROR DURING PROBLEM FORMULATION

a. Picking the right stakeholders

A variety of stakeholders were identified. These include both internal and externalstakeholders.

Internal stakeholders (employees, unions, managers, directors etc.) External stakeholders (shareholders, customers, government and its agencies,

surrounding communities, competitors etc.)

b. Expanding options

The problem was formulated using Mitroff’s four perspectives: Scientific/Technical,Interpersonal/Social, Systemic and Existential.

c. Phrasing the problem correctly

The concern is phrased using both the technical and existential perspectives. “Thenumber of” is technical phrasing whilst the “customer complaints” indicate the reason forour existence, to serve the customer.

d. Expanding boundaries of the problem

The initial impulse of AEL last year was to blame the Chinese for all its problems. Onequestion I have asked through the progression of the EMBA course is: “Will the problemsof AEL go away if the Chinese were to disappear?” The answer is an emphatic no!Therefore, I expanded the boundary of the problem. It was then when growth arose as afundamental problem. There are many contributors to growth. One of them is quality thatwill be an area of focus of this research.

e. Managing the paradoxes inherent in problems

One of the paradoxes is that growth markets identified by AEL include Eastern Europe,China and India. These are emerging markets with high risks but they can offer goodreturns if one picks the right business. These paradoxes were discussed at length in theexecutive committee meetings.

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APPENDIX 3. PROBLEM FORMULATION OF THE POSTMODERNIST PARADIGM

Postmodernist (Promoting Diversity) CATWOE

Root Definition: A quality improvement and waste reduction system, owned by theExecutive Committee (EXCO) of AEL, operated by “system operators” to provide qualityproducts and services to the mining companies and explosives distributors in order toimprove revenue growth and profitability of AEL in a manner that harness the diversity ofideas, within the resource constraints.

C - Mining companies, Explosives distributors

A - Outside six sigma facilitators, Champions, Black Belts Trainees, Green BeltTrainees, Process Operators and all other stakeholders involved in operations

T - Unsatisfactory quality and waste levels into satisfactory quality and waste levels

W - This will improve the revenue growth and profitability of AEL

O - EXCO

E - Resources, Current relationship among stakeholders, Other competitors

Using the above root definition and the CATWOE, the following conceptual model in

Conceptual Model of the Postmodernist Paradigm

Identify areas ofpoor quality andhigh waste levels

Agree the abovewith processowners

Implement theagreed projects

Identify and trainchampions

Identify people who canbe freed to handle six-sigma projects

Canvass support fromall relevantstakeholders and createa support structure

Know how six-sigma willaffect day-to-dayoperations efficiency

Deliver therequired qualityimprovement andsavings

Agree projects,process andtime frames

Train Green Beltsand Black Belts

Check effectivenessand take correctiveaction

Ensure that nobody isalienated and/oroppressed by the six-sigma implementation

Harness the diversityof all stakeholders

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APPENDIX 4. QUESTIONNAIRE DESIGN PROCESS

Dissertation Questionnaire Design

1. Dissertation Question:

How can I adapt six-sigma to improve quality and eliminate waste in African ExplosivesLimited?

2. Data Sources:

There will be three primary data sources as follows:

Interviews from all stakeholders involved in the implementation of six-sigma. Limited literature review. Personal observation.

The approach taken here is aligned to the Viable Systems Model. The six-sigmaimplementation must be viable on its own; otherwise it would collapse. Therefore, it mustpossess all the requirements of a viable system in order to survive. Hence, the choice ofstakeholders must ensure that they can help the six-sigma implementation by supporting itwith all the elements of a viable system. The stakeholders were then chosen as follows:

Normative:

MD and EXCO members

Strategic:

1. BCG members in general2. BCG members involved/been involved/to be involved in six-sigma3. Champions4. CCI consultants

Operational:

1. Black Belts in training2. Green Belts in Training3. Black Belts4. Green Belts5. Managers to whom the Green and the Black belts report6. CCI consultants7. The six-sigma co-ordinator

3. Identification of Stakeholders

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4. Questionnaire

The questions were designed by following the four paradigms of functionalist, interpretive,emancipative and post-modernist paradigms as proposed by Jackson (2003:308).Jackson has reinterpreted and gave more meaning to the four paradigms as follows:

1. Functionalist paradigm (Promoting Goals and Viability)2. Interpretive paradigm (Stakeholder Purposes)3. Emancipatory paradigm (Ensuring Fairness)4. Post-modernist paradigm (Promoting Diversity)

The key characteristics of the above paradigms are as follows:

4.1 Functionalist Paradigm (Promoting Goals and Viability)

Goals setting and achieving a purpose Viability, adaptation and survival Efficiency and efficacy Orderliness of solutions Give the manager the ability to control the system Expert knowledge application The system must obey laws Facilitates how to improve the work system and how to design it in future

Applicable Metaphors

Machine, organism, brain

4.2 Interpretive Paradigm (Stakeholder Purposes)

Organisation’s purpose results from collective interpretation from all stakeholders “Small Wins” are desirable and feasible Encourages stakeholder participation Explore purposes, reduce unease and generate learning Effectiveness and elegance of solutions Facilitate how to understand “ideal type” human activity systems


Political System, Culture

4.3 Emancipatory Paradigm (Ensuring Fairness)

Concerned with the alienation of individuals and /or oppression of particular socialgroups

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Problem analysis to take into account who is disadvantaged by the currentarrangements

Allows everyone to participate properly in addressing the problem situation Seeks to remove all forms of oppression and alienation Empower the alienated and the oppressed The goal is to ensure fairness and to improve the position of the alienated and

oppressed The solution is evaluated in terms of empowerment and emancipation


Instrument of domination, psychic prisons

4.4 Postmodernist Paradigm (Promoting Diversity)

No single paradigm can explain the world, organisation or social system All stakeholders are allowed to express their diverse ideas Learning occurs through acceptance and surfacing of conflict Diversity and creativity is encouraged Marginalized voices are heard and subjugated discourses are surfaced Reveals who is marginalized by existing power/knowledge structures (paradigm

domination) Do not take anything as gospel truth, always question things, concepts, theories,

methodologies and ideas Solution evaluated in terms of exception and emotion There are no ready made solutions, there are no panaceas in the world,

organisations or social systems

Carnival, Turbulent World

The following questions were then concluded, in line with the above paradigms.

5. Functionalist paradigm (Promoting Goals and Viability)

1. What is six-sigma?2. What are the objectives of six-sigma?3. What do you know about six-sigma implementation in AEL?4. Is the six-sigma implementation a success in AEL? Why?

Interpretive paradigm (Stakeholder Purposes)

5. What prevents six-sigma to be implemented successfully in AEL? What are theobstacles?


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6. Are there any stakeholders who were ignored before or during theimplementation of six-sigma?

Emancipatory paradigm (Ensuring Fairness)

7. Are there any stakeholders who are alienated or oppressed by theimplementation of six-sigma?

8. Is everyone allowed to participate meaningfully in the implementation of six-sigma?

Post-modernist paradigm (Promoting Diversity)

9. How can we improve the implementation of six-sigma in AEL?10. Give me any other comments about the implementation of six-sigma in AEL.

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APPENDIX 5: QUESTIONNAIRE SCHEDULE

1. What is six-sigma?

This is your understanding own of six-sigma. This is what you have heard about it or yourexperience if you have been involved with it. This is not the elevator presentation asrequired when you do a green belt training. This is also not a textbook definition of six-sigma. It is your personal perspective of six-sigma or your own interpretation.

2. What are the objectives of six-sigma?

What is the organisation trying to achieve by embarking on six-sigma. This will includedwhat you have heard and your own perspectives.

3. What do you know about six-sigma implementation in AEL?

The organisation started the first round of six-sigma projects in the second half of 2004.What do you know about the first round of projects? How much were you involved withthem?

The organisation started the second round of six-sigma projects in the second half of2005. What do you know about the second round of projects? How much were youinvolved with them?

4. Is the six-sigma implementation a success in AEL? Why?

In terms of what you have heard, seen or your involvement, would you say that six-sigmaimplementation in AEL is a success or a failure? What are your reasons for your views?

5. What prevents six-sigma to be implemented successfully in AEL? What arethe obstacles?

What prevents us from implementing six-sigma effectively and efficiently?


Do you think that there are stakeholders who were ignored that would have made theimplementation of six-sigma easier or more effective?


An intervention like six-sigma is meant to make life easier in the long run. However,depending on how an intervention is made, people can feel alienated or oppressed by it.Were there any incidences of this nature? If there are, give examples.

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8. Is everyone allowed to participate meaningfully in the implementation of six-sigma?

Some interventions are only driven and acted upon by a few in organisations. Thishappens even if the intention was to include all stakeholders. Some individuals sometimesbar people from participating meaningfully during an intervention. Was there anyincidence on this nature? Give examples if there was such an incidence.

9. How can we improve the implementation of six-sigma in AEL?

Give me a few ideas of how we can improve the implementation of six-sigma in AEL.

10. Give me any other comments about the implementation of six-sigma in AEL.

Is there anything that was not asked from my questions that you would like to say?

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APPENDIX 6: QUESTIONNAIRE CONCEPTS

1. Six-sigma as a methodology2. Systemic nature of six-sigma3. Based on facts4. Reduction of process variation5. Process nature of six-sigma6. Cost reduction7. Waste reduction8. Quality improvement9. Overall co-ordinator10. Organisational culture11. Organisational wide focus12. Take root in manufacturing13. Line management support / Leadership buy-in14. Own tools vs. six-sigma15. Limited resources16. Day-to-day fire fighting17. Permanent solutions18. Not-so-keen people19. Ability to deal with numbers20. Lack of confidence21. Workload22. Six-sigma as an add-on to day-to-day work23. Organisational wide six-sigma presentations24. Despondence due to workload25. Six-sigma capacity development26. Part of the score card for manufacturing27. General approach to solve problems28. Resistance to something new29. Advertising the “wins”30. Rigour of the methodology31. 5-year long term plan32. Toolbox of techniques33. Rigour in tackling problems34. Bottom line savings35. Lack of resources / Resources for six-sigma36. Release of people from their jobs37. Mobilisation of manufacturing to their full extent38. Organisational wide initiative39. Integration of six-sigma into day-to-day jobs40. Keep EXCO involved41. Continuous communication42. 20 minute presentation in an EXCO meeting43. EXCO to attend six-sigma review meetings

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44. Organisational understanding of six-sigma45. Recognition of six-sigma achievements46. Bottom line projects47. Continuation of external six-sigma consultants48. Use of the ROI principle49. Flexibility in the use of tools / Rigidity and inflexibility50. Gauging the period allocated / Project time allocation51. Difficulty in getting accurate information52. Huge volume of work53. Bring everyone on board54. Do not find fault with individuals55. Six-sigma fatigue56. Big picture communication57. Choosing the right projects58. Frequent leadership changes59. Champion training of team, plant and section managers60. Proper training of coaches61. Line influence of the green belts62. Involvement of operators63. Co-operation from team managers64. Teaching of core people65. Right qualifications / Tertiary qualifications66. Tying of six-sigma with existing quality initiatives67. Tying of six-sigma with the leadership thematic68. Tying of six-sigma with multi-skilling of operators69. Tying of six-sigma with operator quality training70. Common understanding between team managers and operators71. Making decisions on rational basis72. Broadening the pool of six-sigma practitioners73. Dedication to the project74. Dedicated six-sigma implementation teams75. Good six-sigma support structures76. Good, effective champion77. A set of tools78. Sustainability79. Scope and project selection80. Applicability of certain tools in a specific project81. Timing and resources82. Green belt to agree with the project scope83. Interdepartmental buy-in84. Data driven approach85. Short term project timing86. Beyond fixing things87. Structured process of handling a project88. A tool that gives measurements89. Business improvement objective

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90. Buy-in from all stakeholders91. Champion / green belt teamwork92. Champion / green belt one-on-one meetings93. Enhance better knowledge of work processes94. Improve performance95. Six-sigma / daily tasks balance96. Getting results from line people97. Four project timeframe too short98. Six-sigma course rushed99. Understanding of the problem better100. Not enough data101. Improving of the process efficiency102. Root cause analysis103. Inaccurate instruments104. Trials not part of six-sigma105. Six-sigma not for the experienced person106. Co-operation from people107. Possible reduction of people108. Six-sigma as a combination of known tools109. Structured problem approach based on facts and data110. Remove emotions111. Leniency in certifying green belts112. Learn, apply tools and demonstrate understanding113. Obstacle of time114. Difficulty of four hours a week115. Informing vs. consulting stakeholders116. Operators not part of six-sigma117. Does not contribute to day-to-day jobs118. Poor choice of projects119. Day-to-day problems take priority120. Need for champion training for black belts121. Continuous improvement tool122. Problem solving tool123. Process optimisation tool124. Process Improvement tool125. Structured methodology126. Cumbersome tools127. Shifting goal posts128. Way of life129. Following the steps regardless of situation130. Fear of statistics131. Relevance to the problem132. Level of understanding of a problem133. Positioning of six-sigma in the organisation134. So-and-so’s project135. Limited knowledge is limited participation

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136. Performance through line process owners137. Archive knowledge books138. Document things139. Instil understanding of process140. Communication about six-sigma141. Pilot stage142. Constant guidance from expert143. Internal expert144. Common understanding of six-sigma145. Sigma alignment with day-to-day work146. Competing commitments147. Champion to have superior knowledge of six-sigma148. Deeper understanding of problems149. More formality in improving things150. Technical officers to become green belts151. Team manager as a green belt152. Plant manager as a champion153. Technical officer as an agent of change154. Process controllers as part of the team155. Cascading of six-sigma to the people156. Maintenance people as part of the team157. Tool or mapping the flow of things158. Removing unnecessary activities159. Quantifying savings accurately160. Top down implementation161. Problem of data gathering162. Too many initiatives163. Keeping the existing tools e.g. TOC164. Wider involvement165. Streamlined version of six-sigma, yellow belts???166. Formal introduction and communication167. Full co-operation and support168. Preventing regression through continuity169. Time constraints170. Involvement of maintenance people171. Understanding of end results172. Understandable six-sigma lectures173. Practical examples in class174. Progress monitoring mechanisms175. Understanding the recipe176. Person and project section177. Visiting other plants to get different perspectives178. Consultation when choosing projects179. Launch day with different stakeholders180. Quality of actions determine quality of outputs181. Training session too short (Variety???)

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182. Correcting the intervention by the co-ordinator183. Integration of various departments or stakeholders184. Consultation with green belt before the course185. “Certify” other members of the team186. Recognition of the team187. Cultivate relationship to get information188. Shop floor involvement189. Supervisor checking of the knowledge book190. Teaching about filling in the knowledge book and the charter191. Sharing of experience of different tools192. Standard setting tool193. Rigidity in applying tools194. Match project scope with the timeframe195. Managing suspicion and mistrust196. Verifying accuracy and correctness of data supplied197. Integration of project with day-to-day work198. Flexibility in the application of tools199. Confidence and control200. Support from the EXCO / Senior management support201. Six-sigma management agenda202. Few properly resourced projects203. Specifications within plant capability204. Package of “old” tools205. Two-year cycle fad death206. Root cause analysis207. Make life easier / Bottom line impact / Extract value-added from customers208. Chance to practice (Learning cycle – implementation???)209. Failure of TQM in AEL210. Boss’s agenda211. Measurement of the success of the process212. Line ownership of experts213. Passion at the top of the organisation214. Publishing small wins215. Improvement of contract management216. Disbelief that the process will work217. Changing the mindset of people218. Sharing of information219. PTSM to be trained in six-sigma220. Consultation with green belts221. Team managers as green belts222. Plant managers as coaches223. Fair rewards to six-sigma participants224. Project discipline225. Time dedication226. Choosing to solve an important problem227. Fear that improvement will result in reduction of numbers

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228. Line management resource229. Regular review meetings230. Commitment of line management231. Better process understanding (Temperature control syndrome??)232. Increased throughput233. Gut feel to scientific methods234. Paradigm shift235. Challenges of data gathering236. Battle of myths and data237. Meaningful team contribution238. Plant team feedback239. Sequence of solving a problem240. Green belt buy-in241. General problem solving tool242. Process ownership243. Knowledge book

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APPENDIX 7: LITERATURE REVIEW CONCEPTS

1. Failure to deliver ROI2. Six-sigma as an academic exercise3. Failure to appreciate the complexity of dealing with people4. Difficulty of control5. Failure to sever oneself from old job6. Failure to transfer ownership to the team7. Not spending time in the process8. Poor communication with management9. Poor progress presentations10. Avoiding resistance11. Creating an exclusive club12. Not sharing credit with the team13. Taking credit for work accomplished by another initiative14. Focusing on certification15. Not allowing the team to present16. Generating false data17. Poor understanding of tools18. Lack of content in presentations19. Overuse of champion20. Not using champion21. No concept of customer expectations22. Lack of alignment (horizontal or vertical)23. No visible leadership at executive level24. Poor attendance in report-outs25. Deploying six-sigma without a goal26. Deploying six-sigma without a plan27. Abdicating deployment plan to a consulting company28. Lack of a detailed change process29. No metrics in place for management participation30. No metrics for champions31. Champions do not show for report-outs32. Poor feedback to stakeholders33. No multiple projects queued for belts34. Not communicating deployment plans effectively35. No rewards or recognition programme36. Reward or recognition programme that does not recognise teams37. No retention for trained personnel38. Poor project selection process39. Projects not aligned to business objectives40. Middle management have own agenda41. No accountability42. Champions do not break roadblocks

A. Understanding Six Sigma Deployment Failures by Mike Carnell

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43. Lack of process owner buy-in44. Poor quality material45. No consequence for supplier sending bad material46. No follow up deployment in R&D and Marketing after Operations47. Regarding six-sigma as a panacea48. Using belts for fire fighting49. Poor support resources

B Turning Management Reluctance into Six-Sigma Support by Tom Devane

1. Senior management fully on board2. Dedication of time and money3. Short term financial pressures4. Taking away from the “real” job5. Stealth six-sigma6. Limited initial commitment six-sigma7. Six-sigma benefits shown on a small scale8. Senior management involved with articulating problems9. Senior management involved with scooping projects10. Quick results11. Good project selection criteria12. Well defined and contained scope13. Teams that set their own improvement goals14. Team members who understand lean/six-sigma15. Interim progress monitoring16. People intensive projects17. Machine intensive projects18. Attention to team dynamics19. Engineered by-in20. “Gut felt’ reactions that reshapes current beliefs

1. Leadership / top management commitment2. Training leadership as champions3. Integrate six-sigma with the business operating plan4. Select the right consultant to train your belts5. Return On Training Investment at least 20 times6. Get the movement going at the shop floor level7. Create a certification process8. Develop a mentoring process9. Ensure financial validation of projects10. Six-sigma not a Quality Manager’s job

1. Toe in the water

C. Top 10 Tips for Managing Six-Sigma by Ritesh Chatterjee

D. Six-sigma and beyond by Thomas Pyzdek

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2. Defect3. Defective

1. Cultural change2. Full engagement of top management3. Top management not different from other people4. Change things that motivates people5. Showing how six-sigma can help them attain what motivates them6. Create a “story” of six-sigma vision7. Tell the “story” at every opportunity8. Find senior leader champions inside and outside the company9. Total system perspective10. Innovation the only way to survive and prosper11. Creativity and constant change12. Redundancy, slack and variability13. High tolerance for failure14. The Six-sigma Management Paradox15. Six-sigma not a panacea16. Top down programme

1. Ignoring the customer2. Starting six-sigma at the bottom or middle of the organisation3. Not changing the incentives of the managers4. Doing it on the cheap5. Not integrating six-sigma with other initiatives6. Trying it on a small scale to see if it works7. Not documenting the bottom line impact of projects8. Letting the quality department lead the effort9. Emphasizing statistical skills when choosing black belts10. Letting black belts report to local managers11. Using part time black belts12. Not setting overly tight deadlines or ambitious goals for black belts13. Select projects based on local criteria

1. Being your own customer2. Walk in the customer’s shoes3. Sign up for your own service4. Purchase your own product5. Be cautious of not sampling representative data6. Using raw data

E. Six-Sigam Questions and Answers by Pyzdek

F. Six-Sigma Shortcuts by Thomas Pyzdek

G. Know Your Customer by Zack Swinney

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7. Complaint logs biased by design8. Data bias9. Validity and integrity of data10. Understanding how the data was collected11. Understanding how the data was interpreted

1. The Six-sigma Paradox2. Minimise process variability3. Slack and redundancy by building variability in the organisation4. Risk of failure5. Trying many new things6. Increase waste in the short term7. Extra resources8. Understanding the paradox by leaders9. Process efficiency, capability and predictability10. Preventing growth and adaptability through six-sigma11. “Hard wired” organisations12. Inflexible and difficult to change organisations13. Resistance to change14. “Soft wired” organisations15. Floating resources16. 15% of time allocated to own projects17. Freelance engineers18. Spontaneous enterprise19. Complex adaptive systems20. Self organising organisations21. Six-sigma as a management programme22. Radically modifying six-sigma to work in a spontaneous organisation23. Being aware of The Six-sigma Paradox

1. Defining your opportunities2. Defining your defects3. Measuring your opportunities and defects4. Calculating your yield5. Looking up process sigma6. Understanding the assumptions

1. Getting no support from the champion / sponsor2. Having no green belts to implement projects3. No support from the Master Black Belt

E. Six-Sigma and Beyond

F. Should You Calculate Your Process Sigma by Zack Swinney

G. Works Of Advice for Frustrated Black Belts by Zack Swinney

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4. Very little interaction with the other six-sigma practitioners5. Projects already have outcome decided6. Poorly defined projects7. Lack of six-sigma methodology understanding8. Sharing every success9. Developing a communicating plan10. Educating ignorance within the business11. Networking with other black belts12. Defining “success” with the champion / sponsor

1. Marketing/Sales is an art, not science2. Everything in business is a process3. Business runs because of processes4. Process efficiency in meeting customer requirements5. Identifying defects using metrics6. Isolating root causes7. Eliminating causal factors8. Nothing improves without change9. Understanding how to lead change10. Defining the customer11. Defining requirements12. Defining correct metrics13. Measuring the requirements14. Improving your processes

1. Green belts spending 25 to 50 % on six-sigma projects2. Way of doing business3. Understanding causal relationships4. Projects within their own functional area5. Six-sigma methods, tools and techniques training for10 days6. Selected by the organisation’s management team7. The Kano diagram and how it relates to customers8. “Certified” green belts before promotion9. Varying green belt training from company to company10. Evaluating green belt performance during regular appraisals11. Incentives for completing projects12. Completing one project a year to maintain certification requirements13. Scheduling regular meetings with black belts14. Project reviews with management team15. Ability to create a histogram and pareto diagram16. Starting to prevent fires from occurring17. Planning ahead and staying in control of the project

H. My Business Is Different, Six-Sigma Won’t Work by Zack Swinney

I. 101 Things A Green Belt Should Know by Zack Swinney

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18. Managing data is always defensible19. Helping other employees to “see the light”20. Quantifying project benefits and speaking the language of management21. Should not necessarily know how to use every tool available22. Should know the existence of tools23. Lead the data collection process24. Work on and improve team facilitation skills25. Calculating the short and long term sigma value of the process26. Green belt as a business professional27. Lead brainstorming sessions with project team28. Overcome resistance to change by involving co-workers29. Data driven solutions30. Top management sponsorship willing to commit resources31. Solid communication plan32. Communicating with all stakeholders

J. SIX SIGMA, The Breakthrough Management Strategy Revolutionising theWorld’s Top Corporations by Mikel Harry and Richard Schroeder

1. Recreate the process such that errors and defects don’t arise2. A new set of questions3. Moving out of the comfort zone4. Receiving quantifiable answers that change behaviour5. Can change what can be measured6. A process of asking questions7. Tangible and quantifiable answers8. The goal of improving profitability9. Profitability as a by-product of improved quality and efficiency10. Measurement as a link between philosophy and action11. Conformance to standards12. Interacting standards13. Value entitlement14. Form, fit and function15. 3.4 DPMO16. Quality costing money as a fallacy17. Reducing costs through quality improvement18. Highest quality producer as a lowest cost producer19. Proactive process20. Improvement in all operations within a process21. Industrial process22. Commercial process23. Challenging the status quo24. Critical to Quality characteristic25. Focussing on process26. Results as what happens during a process27. Most misunderstood strategy in business

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28. Systematic map to reduce process variability29. The most difficult “stretch” goal GE ever undertook30. The most profitable initiative31. Analysis to pinpoint the sources of error32. Methods of eliminating sources of error33. Performance metrics34. Statistical thinking as a necessity for efficient citizenship35. Total cost of quality36. Speaking out critically inside the company37. Capitalise on employee’s knowledge and perspective38. Eliminate unnecessary work39. Create an new paradigm40. Identify problems and come up with solutions41. The hidden factory

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APPENDIX 8: MY PERSONAL SIX-SIGMA PROJECT

Project Scope.

The metering and measurement of Ammonia usage.

1.) Introduction.

The Nitrates plants primarily produce nitric acid and ammonium nitrate from ammonia thatis sourced from Sasol. Ammonia is the raw material with the single biggest spent in AEL.Ammonia is delivered by rail to the Modderfontein site. From off loading, the quantity ofammonia that is not pumped directly to the production plants, is sent to a low pressuretank (LP5) for storage. Ammonia in the LP5 storage tank is still the property of Sasol. AELdoes not keep any stock of ammonia. Ammonia usage is measured by in line flow metersto the production plants.

According to the contract AEL operates and maintains the LP5 storage tank and theammonia off loading facility for Sasol. A certain percentage (0,5%) is allowed for ammonialosses during the off loading process. Losses in excess of 0,5% would be for AEL’saccount. AEL gets invoiced on a monthly basis for the ammonia consumed as measuredby the plant flow meters. A monthly reconciliation is also done using the weighbridgetickets of the ammonia tankers before and after off loading, the flow meter readings andthe LP5 level indicator.

2.) Goals.

The goal of the project is to ensure that the metering and measurement, as well as thereconciliation of the ammonia usage are accurate.

3.) Objectives.

Review the current measures for ammonia usage and make improvements that will lead tomore meaningful cost figures.

Reduce the monthly ammonia loss provision.

The project will not look into the efficiencies of the production plants in terms of theirammonia usage. This is the topic of another 6-sigma project.

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4.) OPI diagram for ammonia measurement.

INPUT PROCESS OUTPUT

Plant flow meters Ammonia usage

Mass Balance Variable cost

Weighbridge tickets Invoices

Calibration of equipment

LP5 level indicator

Monthly reconciliation

5.) Budget.

No budget has been set for this project. Projects identified will be subjected to AEL’s usualbudget approval process, and will have to be motivated based on their individual merit.

6.) Benefits.

The ammonia loss provisions for the past 4 years are as follows.

Year Tonnes Rand2002 3 523 R 6 156 3262003 2 049 R 3 952 9652004 1 189 R 2 553 781YTD 2005 (June) 466 R 941 633

The potential benefit is to further reduce the ammonia loss provision to zero.

7.) Project Schedule.

The project is scheduled to start on 1 September and will end on the 30th March 2006.The Green Belt will meet with the Champion formally each Monday at 8h00 to discussprogress on the project, as well as constraints hindering the scheduled completion of theproject.The Green Belt will assemble the project team with support from the Champion. Teammeetings will be held regularly, and the Green Belt may add or remove team members asrequired during the project.

Ammonia meteringand measurement

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The Green Belt is expected to devote a minimum of 4 hours work per day to this project.This does not limit the time worked on the project, and any time worked in excess of thisminimum is encouraged if it accelerates the benefit realisation.

Cost of doing nothing.

Assumptions:

Average cost of ammonia (R/ton): 2076

Ammonia usage (tpm): 15382

BaselineLoss contribution: 0.97%Ammonia Loss / Month 149Loss Provision/month 309324CODN 3711888

Target:Loss Contribution: 0.50%Ammonia Loss / Month 76.91Loss Provision/month 159665.2Target Saving: 1795906

Current:Current Loss Contribution:0,97%Current Saving:

Ammonia In LP 5 Stock Ammonia out Nitrates Productionweighbridge Level indicator. plant flow meter flowmeters, mass balance.

Tanker off load - AEL 114,699.40tanker off load - Sasol 115,361.40

Difference 662.00Difference in NH3 Consumed 586.00

NH3 Consumed 107,674.00S&D Meters 102,225.38Plant Meters 103,213.13Difference 987.75

NH3 Invoice 106,438.59Actual Difference 1,235.41

Allowed Difference 230.94Loss Provision 1,004.48

Loss Contribution (%) 0.58 0.54 0.97 0.94

LEVERAGE POINT

First Level Value Chain

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Update Log 08-Sep-05 03-Oct-05 11-Oct-05 21-Oct-05

#Initiation

Date

TargetCompletion

Date

1 08-Sep 24-Oct1.a 08-Sep-05 03-Oct-051.b 09-Sep-05 10-Oct-051.c 10-Oct-05 17-Oct-051.d 10-Oct-05 24-Oct-052 21-Oct-05

2.a 21-Oct-05 18-Nov-052.b 21-Oct-05 04-Nov-053 15-Nov-05 15-Jan-063a 15-Nov-05 29-Nov-053b 30-Nov-05 30-Dec-053c 02-Jan-06 15-Jan-063d 28-Nov-05 05-Dec-053e 28-Nov-05 12-Dec-054567

#Origination

Date

1 02-Sep-052 03-Oct-053 15-Nov-054 15-Nov-055 25-Nov-056 28-Nov-05

Original CODN Current CODNOriginal CODS Current CODSOriginal ROI % Current ROI N.A.N.A. %

Target MetricStarting Baseline

Comments/Status: Complete the MSA, do the calibration and confirm it independantly. Negotiate with Sasol about the newcalibration and the adjustments therof.

3711888N.A.

3711888N.A.

Visit to the LP5 plantAccuracy of the DP Cell and Dip Tape measurements on LP5.Cost estimate of additional DP cell and two outlet flowmeters/ additional inlet meter

Negotiate with Sasol about the stock adjustment in LP5 according to new measure

Review Operating Instruction for offloading rail/road tankers (loading arm weight)Confirm the calibration of the Diptape meter

Project Barriers Date Removed05-Sep-052005/10/21

Process characterisationProcess optimisationProcess realisationProcess re-evaluation

Input and output diagramsProcess flow and Process mapping

Texas style FMEAProcess stabilisation - Implement OI

Cause and Effect DiagramProcess simplification5 S at NH3 Storage and Distribution

11-Oct-0521-Oct-05

11-Nov-05

21-Oct-05

Significant Project MilestonesDate Completed

21-Oct-0503-Oct-05Micro value stream

Process identification

80 tpm

Ammonia metering and measurement

Name of Green Belt Champion's Name BB Coach

Project Title:

08-Sep-05Initiation Date

Project Initiation and Update Sheet

Cyril Gamede Leon Aucamp Gavin Barberini

Joe Mailindi

Project Charter

Eugene Saayman Robin Fisher Lappies Labuschagne

Measurement Systems Analysis

Project Description:Optimise ammonia metering and measurement in LP5 in order to reduce the ammonia loss provision.

Project TasksMetric Current Metric

Monthly ammonia loss provision 80 tpm 40 tpm

Cause and Effect Diagram for Measurment Variation

Writing the OIImplement and trainMonitor the effect of the OI

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APPENDIX 9: PARTICIPANT OBSERVATION CONCEPTS

I was trained as a champion in early 2004 as part of preparing to embark on six-sigma inAEL. I also made sure that all my direct reports where six-sigma was to be implementedwere also trained. During the implementation of six-sigma, which started in the middle of2004, I found that the champion training did not give me enough knowledge to manage thewhole process of six-sigma implementation.

I then decided to do a green belt training in order to get a deeper understanding of six-sigma. This involves doing a green belt project in the area of my choice. The second legof six-sigma projects was kick started in the second half of 2005. It was difficult to getacceptance into the green belt training in the beginning. The consultant felt this type ofinvolvement would not be appropriate for me since I am a director; it would be better forme to remain as the company sponsor for the six-sigma implementation. I was acceptedto the programme after some discussions.

The process involved choosing a project for my six-sigma training. I also had to choose achampion. I chose the general manager where I was going to do the six-sigma project.The project started in August. The project has not been finished yet, but the process isnow towards the end. I gained valuable experience during the process and I havenarrated this experience through concepts below.

1. Project not properly defined in the beginning of the course2. Lack of clear articulation of the six-sigma methodology3. Six-sigma as a systemic methodology4. Six-sigma to improve quality and lower the costs5. Different levels of intellectual ability (variety)6. Gaps in the course notes7. Presenter getting stuck in something8. Lack of class exercises9. Lack of practical examples in the course10. Lack of coherence in the course11. Value in champion/green belt meetings12. Black belt/champion/green belt meetings not scheduled13. Unclear next steps in black belt/champion/green belt meetings14. Different levels of progress among green belts15. Support from champion important16. Lack of time to visit plant17. Scepticism of plant personnel18. Inflexibility (using tools even where they are irrelevant)19. Difficulty of creating a team20. Subprojects arising from my project21. Lack of senior management support22. Lack of middle management support23. Poor continuity for trained employees24. Poor communication about six-sigma

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25. No involvement of operators26. No involvement of first line managers27. Not given green belts enough time for projects28. Black belts not released from their jobs29. People involved without explanation30. Poor co-ordination of the six-sigma implementation31. Poor control of the of the six-sigma implementation32. Poor implementation of the six-sigma implementation33. No clear strategy for the implementation34. No documentation for previous projects35. Poor understanding of the six-sigma concept36. Abelene Paradox37. Poor support from process owners38. Poor process of choosing projects39. Poor process of scoping projects40. Inaccuracy of process measuring instruments41. No logic provided for some basic assumptions42. Inconsistency of operations43. Difficulty to get original manufacturers manual44. Inconsistent calibration of instruments45. Poor appreciation of the project value46. Slower pace of subprojects arising47. Six-sigma not part of a change process48. Poor six-sigma mobilisation49. Lack six-sigma integration with other existing tools50. Poor understanding of data collected51. Difficulty in applying certain tools52. No interaction with other green belts53. Few management presentations54. Poor interest at EXCO level55. Poor interest at BMT (Senior Management Level)56. No presentations at EXCO meetings

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APPENDIX 10: THE SIX-SIGMA READINESS ASSESSMENT PROPOSAL

ACTIVITIES SUGGESTEDINVOLVEMENT

COMMENTS

SCOPE OF ASSESSMENT:o Fuse Igniter Cord Factorieso Administration: Financeo Distribution: Witbanko Ammonia Nitrate production (if

time allows)

CCI ASSESSEMENT TEAM:o David Botha – Project Leader (082

6060032)o Carl Loubser – Senior Consultant

(082 6016558)o Mark Sinnicks – Senior Consultant

(082 8802024)ASSESSMENT METHODOLOGY:

o The 3-man assessment team will split up and work separately during the weekfocusing on different areas.

o If possible we would like to give brief feedback during the morning on findings ofthe previous day so as to keep management informed.

o The assessment program is fluid and we can accommodate you where possible.o There will be a formal assessment feedback on Friday 16 January in the

afternoon (time to be confirmed).Day 09/1

Meet with senior managementfor informal discussion ofapproach, and to clarifyobjectives, constraints, issues…

Introduce CCI

Seniormanagement

The meetingwith the seniormanagementteam will beinformal.

Day1

12/1

Meet with senior managementto introduce the CCIAssessment Team.

Discuss potential of meetingwith a few key customers.

Discuss potential of meetingwith few key suppliers

Brief tour of facility

Seniormanagement

Productionmanager andUnion/shop floorrep.

The meetingwith the seniormanagementteam will beinformal with oneobjective ofarrangingseparatemeetings forlater in the week.

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Day

1 12/1

Start Loss & Waste Analysis &Opportunity Assessment

Manufacturing Best Practicesassessment (Team work, 5 S,VPM, Focused Improvement)

FinancialManager

Multi-disciplinaryteam involvingshopfloor,union, middlemanagement &seniormanagement.

Access toManagementAccounts isrequired.

Theassessmentwill take about4 hours forthesepractices,involvingoperationspeople

Day2

13/1

Continue Loss Analysis

Start with Value Stream Mapping

Meet withmanagement/Customers/Sales onmarket order winners andoperational issues. High-levelmarket analysis:

Meet with key customers Meet with key suppliers

Ad Hocinvolvement byfunctionalmanagers ordesignated rep

Middlemanagementworkshop tomap the valuestream

Key customers& key suppliers

Loss analysiswill onlyrequireoccasionalinput byselectedmanagers.

The ValueStreamMappingWorkshop willrequire inputfrom middlemanagementthatunderstandsthe wholevalue stream.

Day3

14/1

Populate Value Stream with KeyPerformance Indicators

Continue loss analysis

Quality Flow Review

Manufacturing Best Practicesassessment (AutonomousMaintenance, EffectiveMaintenance, Set-up TimeReduction, Quality & Supply ChainAlignment)

Meet with shop floorrepresentatives to discuss potentialconcerns

Selected reps

Multi-disciplinaryteam involvingshopfloor,union, middlemanagement &seniormanagement.

Access toManagementInformationSystem isrequired.

Theassessmentwill take about5 hours forthesepractices,involvingoperationspeople

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Day4

15/1

Review Measurement System

Calculate opportunity costs

Meet with management todiscuss loss analysis andopportunity areas

Manufacturingand Qualityrepresentatives

Financial rep andad hoc meetingswith functionalmanagers

Selectedmanagers

Day5

16/1

Finalize site requirements Document and prepare

presentation Feedback to management and

selected representatives

Seniormanagement,Functionalmanagers, Shopfloor and Unionreps as required

A two hourpresentation ofassessmentresults, aninformal meetingwith seniormanagementbefore leavingsite.

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DOCUMENTS AND INFORMATION REQUIRED FOR THELOSS ANALYSIS

1. LOSS DATA (PER FACTORY) - 2003 AVAILABLE(Y/N)

SUPPLIED BY

o Factory Management Monthly Reportso Distribution Management Monthly Reportso Factory KPI Summary Reportso Distribution KPI Summary Reportso Financial Management Accounts per departmento Credit Notes Monthly Reports

1.1 Downtimes with reasons per area for 2003

1.2 Material losses (deviation from standard) for 2003- both in volume and cost terms

1.3 Rejected product and rework per area for 2003

1.4 Line speeds compared to standard

1.5 Production efficiencies per line (OEE, OE, PE)

1.6 Energy costs compared to standard

1.7 Adherence to production schedule per week 2003

1.8 Product cost vs. target

1.9 Expenses per area

1.10 Cost of lost production time (lost sales or directcost) per hour of lost production

1.11 Overtime (% of normal hours)

1.12 Detailed credit notes summary

1.13 Stock holding (Raw Material, WIP, F-Goods) detail

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APPENDIX 11: BRIEF REPORT ON AEL SIX-SIGMA READINESS

24 November 2003

Mr. G EdwardsAfrican Explosives LimitedModderfontein HouseModderfontein1645

6 Sigma Best Practice Readiness Assessment at African ExplosivesLimited

Dear Graham

Thank you for the opportunity for myself and David Botha to visit youroperation in Modderfontein. We visited the Igniter Cord, Safety Fuse and CapFuse operations and found it very interesting. As discussed, please findbelow our proposal to conduct a 6 Sigma Readiness Assessment.

Summarised in this document is an outline of how we will conduct theassessment, insight into the elements that will be assessed, as well as thetiming and cost estimate.

If you require a greater level of detail regarding the content of specificelements of the assessment, or examples of the assessment results fromother clients, we would be pleased to assist.

Assessment Outline

The assessment we propose will be conducted over one week, with thefeedback given to the Management Team on the Friday afternoon of the sameweek. Two of the major issues we will be assessing are a) the potentialopportunity for improvement and b) the capabilities within the organisation tofully exploit the 6 Sigma methodology. The content of the assessment isoutlined below:

Background and Context Overview of market and shareholder needs Strategic alignment Leadership and organisational review

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Readiness Assessment and Focus areas Value stream mapping Operating practices maturity assessment Quality flow review Review of measurement systems

Deliverables Identified focus-areas Maturity of operating practices Opportunity quantification Action plan Resource requirements

The first three items on the list are primarily for the benefit of the assessmentteam to understand the context within which the organisation operates. It isnot an exhaustive process, but will give insight onto the operationalchallenges and complexities, plus highlight risk areas as to the 6 Sigma BestPractice intervention.

As an outcome of the assessment, improvement focus-areas will behighlighted and opportunities quantified. A high-level implementation plan willbe presented.

Initiatives currently underway (e.g. ISO, 20 Keys…) will be reviewed todetermine their contribution to achieving the operational requirements.Progress from these initiatives will be used to ensure that any proposal for animprovement programme does not duplicate activities, but builds uponprogress already made.

A summary of the areas covered during the assessment are:

Background and Context

Overview of market and shareholder needs

Information regarding the Market and Shareholder needs will begathered in one-to-one discussion with the General Manager and theMarketing Manager. This information will be used to determine the keyOrder-Winners and Order-Qualifiers at present, but also highlight anystrategic shift that is expected over the next three to ten years.

Strategic Alignment

The strategy of the organisation will be assessed in terms of thepriorities identified during the above interviews and subsequent

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information gathered during the assessment. The strategic initiativescurrently underway, will be reviewed at a very high level.

Leadership and organisational review

The leadership style and culture will be assessed through a series ofstructured interviews. The organisational structure will be assessed interms of the three tiers of problem solving, and the problem solvingtechniques reviewed.

The organisational readiness and risks in terms of resourcing and skillswill be determined.

Readiness Assessment and Focus-Areas

Value stream mapping

The high-level Current State Value Stream (Refer to Picture 1) fromconsumer through to supplier will be assessed of a specific pilot areaas indicated by the management team.

Picture 1: Example – Current State Value Stream Map

Current State Value Stream Map

Source: Going Lean by P Hines and D Taylor

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Critical-to-Quality input and output variables will be determined. Threevalue-areas are typically addressed: Waste, Delivery and WorkingCapital. Where necessary a more detailed value stream map will bederived for some of the sub-operations and systems.

Operational practices maturity assessment

A Practice-Performance Matrix (Refer to Picture 2) will be prepared tosummarise the key systemic and situational practices that need to be inplace for the operation to satisfy the future market and shareholderrequirements. Key performance indicators will also be reviewed.

Picture 2: Example – Practice Performance Matrix

Operating practices must be focussed on reducing variability andwaste, whilst still allowing for focussed improvement activities andshopfloor ownership and initiative. This is achieved through astructured continuous improvement programme focused on results andshould encompass best practice routines as well as training atmanagement, supervisory and shop floor levels to support theseresults.

STRAGGLERS

CAN'T GO THE DISTANCE

CONTENDERS

PROMISING

BACK OF THE PACK

Practices

Per

form

ance

1 2 3 4 5

1.5

Bad

Ave

Best

45%

Practice-PerformanceImprovement Targets

2.3

60%

3.3

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Building on the successes of the other shopfloor improvementprogrammes, we will use the TRACC assessment tools (refer topicture 3) to determine the maturity ranking (Stage 1 to 5) of practices.

Picture 3: Manufacturing Practices Maturity AssessmentToolkit

The operational practices that will be reviewed are (Refer Picture 4):

- 5S (Housekeeping and Workplace organisation)- Visual Performance Measurement- Teamwork- Focussed Improvement (Problem Solving)- Autonomous Maintenance- Effective Maintenance- Quality- Set-up Time Reduction- Supply Chain Effectiveness

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Picture 4: Operational Best Practice Model

The assessments will be done in a discussion forum, some validationwill be required and a TRACC maturity chart will be prepared. As anoutcome of the assessment an action plan can be compiled, listing theactions required to advance through the next stages.

Quality flow review

Rolled throughput yield will be calculated. Where applicable, someprocess capability studies will be done. The causal factors for theprocess variability will be assessed.

Review of measurement systems

Typically 50% to 60% of “variation” exists in the measurement systems.It is important to determine how the measurement systems arecompiled and determine the level of consistency.

As an outcome of the assessment, CCI will have conducted an analysis ofimprovement opportunities (Loss & Waste Analysis) (Refer to Picture 5).

© CCA

PR

OC

ES

SF

LO

W

QU

AL

ITY

CO

NT

RO

L

TEAMS WORK 5S VISUAL PERFORMANCEMEASUREMENT

OPERATIONS & BUSINESS STRATEGY

LEADING AND MANAGING CHANGE

WORLD CLASS

FOCUSED IMPROVEMENT

AD

MIN

EX

CE

LL

EN

CE

SU

PP

LY

CH

AIN

OP

TIM

ISA

TIO

N

AU

TO

NO

MO

US

MA

INT

EN

AN

CE

EF

FE

CT

IVE

MA

INT

EN

AN

CE

SE

T-U

PT

IME

RE

DU

CT

ION

Manufacturing Practice Model

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Based on a simplified root-cause analysis in collaboration with thedepartmental managers, our experience will allow us to give an indicativemonetary value for these opportunities.

Picture 5: Example – Loss and Waste Analysis

Key obstacles (and risks) to a 6 Sigma Best Practice intervention will beidentified and the preparatory actions agreed. An implementation roadmapwill be presented and discussed.

Timing and Cost

We estimate that a team of three people can complete the assessment duringone week, with the feedback given to the management team on the Fridayafternoon. Some preparation will be required from AEL prior to theassessment.

We will do the assessment for R 50,000-00 (exclusive of VAT). All travel,accommodation and subsistence cost will be carried by AEL, however weplan to use regional resources which will minimise these costs.

We are confident that if CCI is allowed the opportunity to conduct thisassessment, it will not only demonstrate the depth of our offerings and

2002

R0m

R2m

R4m

R6m

R8m

R10m

R12m

R14m

R16m

R8.2m

2004

R4mR1.0m

R1.6m

R2.9m

R3.2m

R3.0m

R0.5mR12.2m

Rework

Interest RMInterest WIP

Yield Loss

Scrap

Overtime

Loss & Waste Analysis

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implementation expertise, it will also allow AEL to identify what theimprovement focus should be.

Our normal project conditions are attached.

I trust you find the above in order. Please feel free to phone me at any time on083 601 0836 if anything is unclear. We are more than willing to do a formalpresentation to the senior management team. We look forward to theopportunity of working with you and your colleagues.

Regards,

Bill Pierce

Conditions

1. This proposal is valid for 15 days.

2. Invoices will be on completion of the work, with payment due within 30days.

3. If applicable, VAT or any other government taxes will be added.

4. Interest will be charged at prevailing rates on overdue accounts, olderthan 30 days.

5. Both parties agree to respect and safeguard the intellectual propertyrights of the other, and undertake in no way whatsoever to divulge ordisclose to other parties any information, methodology or materialwhich could be interpreted as proprietary or confidential, or which couldin any way undermine the parties’ competitive positions with respect toeither local or foreign competitors, unless express permission to do sois given in writing from the representatives of the respectivecompanies.

6. This proposal will form a binding contract between CCI and AEL andupon agreement substantiate an official order on CCI.

7. Any agreed work cancelled or postponed will be subject to the agreedpayment according to the following pro-rata basis:

- Cancellation less than 5 working days before due date – 100%payment.

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- Cancellation less than 10 working days before due date – 50%payment.

- Cancellation more than 10 working days before due date – 0%payment.

- Any preparatory work wholly or partially completed in anticipation ofthe cancelled or postponed intervention will be paid for in full.

8. In as much as travel, accommodation and any venue costs are for theclient’s account, CCI undertakes to be reasonable in this respect, andto do whatever possible to keep these costs under control.

Undertaking

CCI undertakes to deliver all goods and services, subject to the statedconditions, as described above or in the standard contract conditions.

…………………………………………………………………………………………

CCI Director DATE

Thus accepted:

……………………………………...…………………………………………………

African Explosives Limited DATE

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APPENDIX 12: FISRT SIX-SIGMA PROJECTS CLOSE OUT REPORT

A.E.L. 2004 Green Belt Project close-out summary.

22 April 2005.

Attention: Mr Cyril Gamede.

Dear Cyril,

The feedback below reflects my opinion of the 6 Sigma intervention at A.E.L.The areas covered are:

“Go Live”Champion training and SupportProject Selection / ResultsGreen Belt selectionProject reviewsThe co-coordinator role

Go Live.The support and presence of Graham and yourself at the outset underpinnedthe importance and commitment required to ensure a successfulImplimentation. The “launching” of each project to the Champion, Belt andteam by you further reiterated this commitment and strategic importance.A.E.L. is the first company that I have worked with where the Leadership teamhas lead from the front.

Champions.The training was well received and the Champions were well preparedconsidering the limited time they had available before Green Belt training wasto commence. All Champions were well selected with certain Championsgoing the extra mile to ensure Project and Process success. These

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Champions need to be retained in their roles as new Project Champions tomaintain the current momentum within A.E.L.It was also very evident that regular reviews were held by all Champions toreview Step, Tool and Process progress.

Project Selection / Results.As the first wave of Green Belt projects there was a cross section of targetsfrom waste reduction, efficiency improvement, and throughput improvement toeffluent control. All, good projects.A total saving “hard and preventative” of R8,6 mil has been reported andsigned off by finance. I have requested that Maropeng summarize thesesavings for your records.As part of the second wave of projects, it is of utmost importance that allprojects be selected, firstly using data, but more importantly, selectingprojects that will deliver substantial financial returns.As there will be three Black Belt projects, the process areas where theseProjects should focus, should entail the redesign of an existing process thatis somewhat complex.

Green Belt selection.This is an area where I can only compliment A.E.L. Time is always a barrierno matter the company, the Belt or the process area, however not the case atA.E.L.. The discipline and commitment demonstrated by all the Belts wasexemplary. The only Belt where I encountered any resistance was Allan,which could be partly attributed to the project selected. Wilma’s’ projectremains incomplete. Trevor’s’ project was agreed at the outset to be a 12month project. Although good results from Alois’ project, the steps and toolsremain incomplete.All belts if not moving through to Black Belt need to be reassigned newprojects, where the duration of these projects could range between one monthand four months depending on the process targets. It is these projects whereonly the tools specifically selected and required will be applied.

Project Reviews.To maintain the momentum and impetus, reviews were held at the requiredintervals by the Champions, the Leadership team and I.An area that requires attention is the written feedback I provided, that was notacted upon between the reviews held by myself. The Champions need to takethe lead role to ensure all actions are completed prior to the next externalreview.

The co-coordinator role.Based on my dealings with Maropeng to date, I am very confident that he willtake on his new role with great passion. I have already discussed the keydeliverables of a coordinator with him and will list the details thereof underseparate cover. In summary, the role of a coordinator:Interview and screen ChampionsInterview and screen Green and Black Belts

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Take the lead role in project selection using the available data, and involvingfinance.Schedule Champion TrainingSchedule Belt trainingSchedule project reviews with Champions and the external facilitatorSchedule Leadership reviewsDevelop Leadership review templateMaintain the Project scorecard measuring:

Project ProgressProcess Improvement

Schedule the role out of completed projectsTransfer project learnings through the intranet or a shared drive.Provide support and guidance to Belts who require assistance.

Based on the above there is very little to critique other than those Belts whohave not completed their projects. This has been discussed with Maropeng.

I would appreciate any advice, criticism or areas requiring improvement youmay have regarding my training and support provided in 2004.

Please contact me should you wish to discuss any of the above points in moredetail with myself.

Regards

Mark Sinnicks0825537150

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APPENDIX 13: WASTE LEVELS OF DETONATORS IN AEL

DETONATOR DESTRUCTION REPORT

REPORT BY

Maropeng BahulaFactory Technical Services Manager

DATE ISSUED: 01 July 2005

Issued to: Mr. Cyril Gamede – Operations DirectorAEL

Dr. Graham Edwards – Managing Director AELDr. Piet Halliday – Technical Director AEL

CC: Ms. Zola Khoza – Factory Manager ExplosivesMr. Kobus Theron – Destruction ManagerMs. Ellen van Dongen – Environmental

ManagerMs. Cheryl Kelly - IT & Logistics ManagerMs. Catherine Royce – Strategic ProjectsMr. Darian Chinner – Project EngineerMr. Tony Rowe – Technology Custodian

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INDEX

1. Executivesummary………………………………………………………..……..2

2. Background…………………………………………………………...3

3. Sequence ofevents………………………………………………………………..…3

TABLE 1 – Quantities destroyed vs. quantities received fromplant………………………………………………………. 4

4. Accumulation of waste stocks in magazines 1998-2000………………………………………………………………….…4

TABLE 2- Historical detonator wastestocks…………………………….………..……………...5

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1. EXECUTIVE SUMMARY

The detonator destructors(Z37) have been in operation since mid-2000. Thedestructors have been serving a dual purpose of dealing with both historicalwaste and continuous plant arisings. The capacity of the destructors is morethan sufficient for plant arisings. However, it is not sufficient to deal with plantarisings and historical waste. Therefore, a facility is needed to deal withhistorical waste.

Historical and slow moving waste accumulated due to

1. A fatality in Detonators at an expense magazine in 1996 resulted in amanagement decision to discontinue the operation of the destructors.

2. Mechem was then contracted to do the destruction at their facilitiesalmost immediately. However, fatalities at Mechem in June 1998resulted in this being discontinued. Waste started building up andShocktube product recalls in 2000 due to quality issues and Electrodetin 2002 aggravated this.

3. Destructors(Z37) were built at Modderfontein and commissioned in2000. These destructors are not sufficient to deal with historical waste

4. Roger Fardell contracted DesTech to destroy historical waste bydetonation in 2003, which had accumulated to 12206 cases. A total of6083 cases were destroyed. This was stopped due to complaints fromneighbouring communities.

5. A further 6123 cases are awaiting destruction in a magazine atMankwe, 55% of which is historical plant arisings and 45% historicalslow moving stock. The condition of the plant waste is suspect andneeds careful handling.

Initiatives undertaken since July 2004 to destroy the remaining are

1. Tom Szendrei contracted to investigate complaints from neighbouringcommunities in Mankwe. Findings rejected by Councillors of theMoses Kotane Local Municipality and permission to continue notgranted.

2. Alternative venues investigated and found to be unsuitable due toneighbouring communities, transport costs and risk of transportingwaste of unknown condition to venues distant from Mankwe.

3. Trials conducted of destruction with Thermite were not successful.

Plan of action

1. Destructor at Mankwe is in the process of refurbishment and will becompleted by 15 July 2005.

2. Trials will be run to determine capacity of destructor – plan to completeby end August 2005. If successful, destruction will commence on thisdestructor

3. EP for one more destructor similar to Mankwe’s will be processed – byend September 2005. This destructor will be used for clearinghistorical waste and then ultimately for use for plant arisings from 2007

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onwards. Z37 must be shut down by end 2006 due to the land releaseproject.

4. Waste will be destroyed over 6 to 12 months until 2nd or 3rd quarter of2006.

2. BACKGROUND

Detonator destruction has been an issue for very many years in AEL. Overthe years, various methods of destroying detonators have been explored,many of them with mixed success. Some of the methods explored were

1. Burning in incinerators or destructors2. Dumping – which creates environmental problems3. Detonation – detonation with Anfex resulted in environmental problems4. Chemical neutralization – was not pursued as it creates an effluent

problem5. Bury – was not pursued as it creates an environmental problem6. Chemical dissolution – was not pursued as it creates effluent problem

3. SEQUENCE OF EVENTS

1980 1996 1998 2000

TABLE 1 – Quantities destroyed vs. quantities received from plant

On 23 November 1998,Burt Homan generated acontrol of investigationsand proposals document.It was intended toinvestigate the feasibilityand provide designoptions for destroyingcase lots of detonator

On 12 January1996, an incidentoccurred at theexpense magazinein Detonators,which resulted in afatality. As a resultof this incident andthe sensitivity of ICIto fatalities the useof these destructorswas discontinued.ICI was a 51%owner of AEL at thetime.

In the 1st quarterof 1996, Mechemwas contracted todo the destructionat their Pardekraalfacility.

In June 1998, Mechemhad fatalities duringdestruction of non-AELwaste. They discontinuedthe destruction ofdetonators. Detonatorwaste startedaccumulating.Approximately 4500waste detonator caseshad accumulated in Z48 &

In the early1980’s, twodestructorswere built inDetonatorsand one inMankwe.Thesedestructorswere built forthe destructionof daily plantarisings fromthe detonatorplants.

At the end ofthe 2ndquarter of2000, Z37,the currentwastedetonatordestructionfacilitybecameoperational.Table 1shows thequantities ofdetonatorsdestroyed atZ37 throughthe years

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YEAR QUANTITYDESTROYED (in

cases)

QUANTITY RECEIVEDFROM PLANTS(in cases)

ACCUMULATIONIN Z49(in cases)

April 1999 0 4500Dec 2000 1521

2001 4213

Nothing received intoaccessories magazines.All plant arisings were

kept in plant magazines.Some were sent to Z49 in2002-2003 and the rest to

Mankwe

Quantity receivedfrom the slowmoving stock

unknown but isestimated at 1514

2002 3765 34852003 10343 11016

(6714 Electrodet)673

2004 5094 5723 1376

Note: 2 factors contributed to the decline in the quantities destroyed between2003 and 2004 namely

1. The destructors were damaged as a result of packing 500 to 1000detonators per case. It was too expensive to routinely replacedestructors. The replacement cost for a destructor is R40000. Thequantity of waste detonators packed was reduced to 250 and ultimatelyto 200 per case.

2. Also, noise complaints from Linbro Park necessitated the reduction

Please note that the above waste does not include other slow moving stock,which was in the accessories magazines and subsequently sent to Mankwe.Other slow moving stocks are reflected in Table 2 below.

4. ACCUMULATION OF WASTE STOCKS IN MAGAZINES

Stocks in the magazines accumulated due to plant arisings generatedbetween 1998 and 2000 after the Mechem incident. In 2000, a lot ofShocktube quality problems were experienced and Shocktube product wasreturned from various mines and accumulated in the magazines. Similarly,the Electrodet resulted in a safety incident that necessitated product recall in2002. In 2003, the entire Electrodet product recalled was sent to Z49magazine for destruction at Z37.

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TABLE 2 - HISTORICAL DETONATOR WASTE STOCKS

The total number of detonators destroyed from 2000 to 2004 is 24936 cases.The total number of detonator cases destroyed in 2004 alone is 5057 vs. 5723cases received.

The detonator waste split per product family is

Shocktube - 45%Capped Fuse – 33%Quickshot/Hotshot – 15%Research/Smartdet – 6%

PLANT WASTE 2004(in cases)

1368

1005

466

172

Shocktube

Capped Fuse

Quick/Hotshot

Research/Smartdet

YEAR MAGAZINE QUANTITY OFHISTORICALWASTE (incases)

PRODUCTDESCRIPTION

1996 Z48/Z49 4500June 1998

(after Mechem stopped)Z48/Z49 About 2000

Jan 2003 AM7 3455 Shocktubedetonators

Jan 2003 AM6 6278 ElectrodetsJan 2003 AM6 2473 ShocktubeDec 2004 Mankwe 3523 ShocktubeDec 2004 Mankwe 1600 ElectricsDec 2004 Mankwe 1000 Misc(Constadets,

6D’s & 8D’s,Magnadet)

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The split of the waste received was 53% plant waste and 47% historical wasteand slow moving stock.

SLOW MOVING STOCK RECEIVED IN 2004(in cases)

3011

2692

20

Plant wasteSlow moving stock

Mankwe historical

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APPENDIX 14: AEL QUALITY REPORT

African Explosives LimitedComplaints (IS and Explosives including Detnet)

05

1015202530354045505560

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Nu

mbe

r

2000 Total 2001 Total 2002 Total2003 Total 2004 Total 2004 Total excl. Detnet2005 June YTD Total

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AEL yearly customer complaints 2000-2005

African Explosives LimitedComplaints (IS and Explosives including Detnet)

0

100

200

300

400

500

2000 2001 2002 2003 2004 2005 JuneYTD

2005 DecLV

Tota

lnum

ber

ofC

om

pla

ints

Total

IS

Expl

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AEL & DETNET 2004/2005AEL / DetNet Complaints 2004vs2005

0

5

10

15

20

25

30

35

40

45

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

DetNet05 AEL05 Total 05 DetNet04 AEL04 Total 04

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AEL & DETNET 2004/2005 CUMULATIVE

AEL/DetNet Complaints Cumulative 2004 vs 2005

919 22

31 35

53

16

37

60

8296

118

2 310 11 16 19 24 26 29 32 37 41

11

2941

4861 67

8899

111120

137

156

0

20

40

60

80

100

120

140

160

180


DetNet05 AEL05 DetNet04 AEL04

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AEL Operations customer complaints 2005

African Explosives LimitedComplaints (Operations)

05

10152025303540


Nu

mb

er

2005-Nitrates 2005-Logistics 2005-M anufacturing 2005-Electr.Dets Target

ExclED

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AEL 2005 customer complaints – IS Manufacturing

African Explosives LimitedComplaints-Manufacturing Sections

0

5

10

15

20


Nu

mb

er

2005-SSI 2005-FIC 2005-DP Target

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AEL IS Manufacturing customer complaints splitper section 2001

2001 IS MANUFACTURING COMPLAINTS

30%

29%

41%SSIDP

FIC

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23%

13%63%

SSI

DPFIC


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8%

18%

74%

SSIDP

FIC


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29%

12%59%

SSIDP

FIC


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2005 JUNE YTD IS MANUFACTURINGCOMPLAINTS

47%

20%

33%SSIDP

FIC


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FIC Complaints Analysis

T o t a l n u m b e r o f c o m p l a i n t s p e r y e a r .

0

5 0

1 0 0

1 5 0

2 0 0

2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5

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Pareto on FIC failure modes –2001-2005

0

1 0

2 0

3 0

4 0

5 0

6 0

2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5

D a m a g e d A l k a th e n eR o c k C u t - o f f

M i s s e d U n i tD e t M i s f i r e

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FIC 2005 complaints

2 0 0 5

F l a s h i n g ( n o tj u s t )

R o c k C u t - o ff( n o t j u s t )

00 . 5

11 . 5

22 . 5

33 . 5

M i s s e d . . .

D a m a g e .

D e t M i s f i r e

R o c k C . . .

T a p e j o i n t

F l a s h i n . . .

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FIC Interventions

2003-2004-To reduce the number of applicationrelated errors (damaged alkathene)

Training disc for the Failure Modes wasdeveloped and training was conducted for the

customers.- 2004 May

To reduce the number of Fuse stoppedburning and wide range in fuse, a Leadershipdiagnostic was conducted by cross functional

team, and actions implemented to adressissues picked up.

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FIC Interventions(cont.)

- 2005 May•Safety fuse process and product re -qualification to establish process capability tominimise out of spec Safety fuse.•Traceability system in Safety fuse implementedto minimise out of spec fuse.•A system to identify tape joints in the spoolsthat are sent to CF is under investigation.

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FIC Interventions(cont.)

Capped FuseDamaged alkathene ex cutting machine –standardisation of the cutting machines is in

progress to minimise knicks in the fuse.New glue introduced in Capped fuse to

minimise boxes opening up in the magazines.Cross stacking of boxes to minimise boxes

collapsing in the magazineCF Random audits to check for missing units

and tape joints.

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SSI Pyrotechnics & Elemented Detonatorscomplaints

Pyrotech & Elemented Dets Complaints Breakdown2001 - 2005

0123456789

10111213141516

2001 2002 2003 2004 2005

Years

Num

ber

ofC

ompl

aint

s

Out of spec delay imingE/Y pick-up failuresElement fadingWrong element usedNo base chargeVisual defectsSoft shots

Visual defects:Bent detsM ixed delays

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SSI Exel complaints

Shock Tube Plant 2001- 2005

0

1

2

3

4

5

6

7

8

9

2001 2002 2003 2004 2005

S/Tube pick-up failureLow/No powder in S/TTube burstDefective reelsCrimp collapseLumps/pinho les

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SSI Assembly complaints

ST Assembly Plant 2001 - 2005

0123456789

101112131415

2001 2002 2003 2004 2005

StrangulationCoiler damageStand-offS/T pull outWrong Dets usedVisual defectsHandidet blocksSeries8

Visual defects:Packing errorsM issing detonatorWrong labellingIncorrect L-in assemblyM issing components

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SSI PETN & Cord complaints

CORD & PETN Customer Complaints 2003 -2005

0

1

2

3

4

2003 2004 2005

Thin Fuse

Water ingression

Packing error

Unconsistant coating

Spools falling apart

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SSI Boosters complaints

Boosters Customer Complaints 2003 - 2005

0

1

2

3

4

2003 2004 2005

Packing error

Blocked channels

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SSI InterventionsPlant Failure Mode Corrective action Status

Mixed products/Incorrect labelling "No labels, no production" Implemented and monitoredMissing Compo Attention to detail. DonePoor quality HM blocks CP modified the process - slow ed dow n cooling profile. DoneBent dets Use w ooden press spoon. DoneLow /no base charge Revert back to parallel tubes and use U65 tubes. DoneStrangulation Enforce quality pre-checks. DoneS/Tube pick-up failures Redesign Hanidet blocks DoneCrimp collapse Suretube annealing trials In progressWrong elements used Improve Key 1 In progress

Wrong detonators used Ensure boxes are properly labelled. Improve Key 1 DoneY-element burns halfw ay&E/Y pick-up failures

Y-compo reformulation. Revisit R/material specs.Trial alternative composition.

In progressDelay timing out of spec Increase drying period. Done

Short supply Improve planning and buffer management. DonePacking error Pay attention to detail DoneGaps/low pow der charge Funnel re-arrangement and Cord crushing.

Improve the system's robustness.In progress

Water end-creep Investigating w ater proofing agents. OngoingSpools breaking Side flanges made thicker. Manufacture new mould. ongoing

Contamination KEY 1 improvements. DoneDiscoloured PETN Install online f ilters. In progressNo consollidation

PE03 Plant upgrade project. Close loop betw een DP andPETN plants.

Ongoing

Packing error Pay attention to detail. DoneSmall channels Modif ications to 150 and 60g Booster shells. 250g

Booster new mould.In progress

BOOS

Shock Tube

Cord

PETN

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DETONATOR PRODUCTS

Quality Improvements

Starting 2001 - YTD

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Carrick, Shurstarts, BCI's &VFA's

16

12

10

3 3

0

2

4

6

8

10

12

14

16

18

2001 2002 2003 2004 2005YTD

Year

Am

oun

tof

Co

mpl

aint

s

EDA Customer Complaint Progress

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2001 Spotwelding 29 /10,000 (Tested)Operators eyes were tested, discovered a few had bad eye sightBetter and longer training of spotwelding operators

Element (length & timing) 28 /10,000 (Tested) Process capability conducted on element cutters.Statistical analyses done on length calculations & new spreadsheet

developed.

2002 Packing problems 21/10,000 (Tested)Better control implemented at packing table (only finally resolved in 2005)

EDA Major Problems.

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2002 Fusehead Quality 15 /10,000 (Tested)Cleaning of fusehead skeletons caused problems.Better control at cleaning of skeletons implemented.

2005 Out of Spec 14 /10,000 (Tested) Action plan compiled with SSI (U307).Action plans re-visited from 2001 and re-evaluated.

EDA Major Problems cont...

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Capped Fuse Connectors & Detonators

8

54

23

14

5

24

53

0

5

10

15

20

25

30

2001 2002 2003 2004 2005YTD

Years

Am

ou

nt

of

Co

mp

lain

ts

Capped FuseDets

Connectors

Problems with theNitrocelluloseusedin theconnectors resulted in thehighamount of complaints.

ICC & Priming Customer ComplaintProgress

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2002 CPU’s 38 /10,000 (Tested)Alcohol contamination of the Nitrocellulose.Somchem Nitrocellulose used as cheaper alternative, but caused quality

problems.

Split Tubes 2 /10,000 (Tested) Change in Al grade at tube drawing plant.

No Slots 4/10,000 (Tested)The use of a single rumbler caused the problem.Control measures implemented to eliminate problem.

ICC Major Problems.

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2003 - YTD PETN Priming problem (Still problem)PETN plant improved their process and implemented controls around

density measurements.PETN drying houses upgraded and task team was formed to investigate

problem.Batch control implemented in PETN magazine @ Distribution.Exact cause still unknown.

2004 Lead Styphnate QualityAddressed the problem with PMP.More stringent acceptance criteria implemented (No Berries).

Priming Major Problems.

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2003 Split Tubes (Cu & Al) 20 / 10,000 (Mnf)(Still problem on Copper)New Grade of Al introduced in 2002 & rod quality addressed with

Malesela.New Copper supplier evaluated, but not converted yet.Thicker tubes walls introduced on Carrick No. 0All tubes are screened before releasing to plant.

Deep Marks 68 / 10,000 (Mnf)Improved tooling quality.Improved tooling control and set-up of machines during tooling changes.New grade of Al also improved the situation.

Tube lengths 29 / 10,000 (Mnf) Improved tooling control.

Tube Drawing Plant Problems.

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2003 Wire & Connector problems.New wire developed and introduced with water inhibitor.Quality addressed at suppliers. QC inspections introduced.

Lachaussee Machine (217)Implemented waste control and analyses.Implemented the Quality Threshold Model to address quality issues.Introduced ‘dash board’ measurements. (Three failures then stop)

Pops on pressing & Foiling station RSR conducted.Aligment and maintenance schedules improved.Copper problems and header cracking reduced by introducing 5,9mm

tooling.

Smartdet Plant Problems.

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2004 Packing Problems.Introduced scanner and counter.Box traceability introduced.Daily manning records introduced for accountability purposes.

Grease in Connector problem.Grease dispensing machine introduced.Daily manning records introduced for accountability purposes

Culling. New testing regime on culler highlighting operator related problems.Better analyses of culling data.New culling station design begin developed. To be introduced in next 2

Months.

Smartdet Plant Problems cont ….

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2005 Broken PCB.Refurbish station 18 on Lachuassee Machine. (Next 2 weeks).

Cracked Headers.Quality issues being resolved with DetNet

Continuity and ID Reg @ Culling.New culling stations to resolve the problem.

Smartdet Plant Problems cont ….

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APPENDIX 15: AN EXAMPLE OF A COMPLETED INTERVIEW

INTERVIEWEE NAME: Joe Bloggs, Chief Induna

1. What is six-sigma?

Based on reducing variation.

Characteristics Methodology Toolbox of techniques Rigour in tackling problems, process variation

2. What are the objectives of six-sigma?

It can be used in different places to achieve different things. Can be used inmanufacturing and service environment alike.

It can be used to Improve quality Reduce waste Reduce costs

It introduces rigour and process.

It can help us to achieve our main objectives like OTIFF (on time and in full) Safety

3. What do you know about six-sigma implementation in AEL?

I attended the first steering committee meeting. Therefore, I understand

The process The projects Progress Most results and outcomes Who finished the projects and received certificates

4. Is six-sigma implementation a success/failure in AEL? Why?

Successful phase 1 of the implementation

The key output of phase 1 was the training of green belts. That was achieved.Some green belts are now training as black belts. We have started achievingtraining and input to the organisation.

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However, we have not seen hard financial results. The savings were notthere when we did the budgets. Some savings were in efficiency. Ourmeasurement system does not pick up some of the costs, e.g. R1m savingswould be difficult to pick in the broader scheme of things.

We need more focus. We must use green belts to deliver bottom lineprojects.

5. What prevents six-sigma to be implemented successfully in AEL?What are the obstacles?

Perceived lack of resources Not being able to release people from their jobs to do six sigma

projects. We need to release people for real bottom line projects. Have not mobilised manufacturing to the full extent. Six sigma has also

not taken root outside manufacturing. Have not achieved the status one could have achieved. People see this as a job to be done because the boss says so.


Have not kept EXCO involved. The people who have been involved isCyril (Operations Director) and Graham (MD).

Have not given EXCO updates, continuous communication, etc. Musthave a green belt doing a 20 min presentation in an EXCO meeting.

The other EXCO members must also attend the six sigma reviewmeetings. Only Colin (Director of Strategic Projects) attended themeetings last time.

I don’t think that other people understand six-sigma other than thoseinvolved in projects in some way or another. If you were to take peopleat random, I don’t think they would answer your first question.


Six sigma has basically solved many problems. People were not from outside,hence not seen as imposing. I don’t know whether this is sustainable.

8. Is everyone allowed to participate meaningfully in theimplementation of six-sigma?

Everybody was allowed to participate meaningfully.

9. How can we improve the implementation of six-sigma in AEL?

We must think seriously about resources for six sigma We must also be more public about our recognition of six sigma

achievements. E.g. We only invited green belts during their graduation,

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we can do something like this in a manufacturing multilevel meetingand other management forums.

We must also pick projects that deliver real bottom line benefits.

10. Do you have any other comments about the implementation ofsix-sigma in AEL?

We must keep the outside influence on six sigma i.e. we must continueto use the six sigma consultants even if we have passed our black beltsfor some time.

Six-sigma must ripple outside operations, however, it must also takeroot firmly in operations itself.

Must use the principle of RESOURCES VS BOTTOM LINE i.e. R5msavings can attract R1m resources.

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APPENDIX 16: AFFINITY DIAGRAM FORMULATION

FIRST CUT AFFINITY DIAGRAM

1. Appreciating the complexity of dealing with people2. Allocating enough time for six-sigma practitioners3. Developing an effective communication strategy4. Ability to create teams5. Developing six-sigma expertise in the organisation6. Accurate performance measurement of all stakeholders7. Individual and team recognition8. Selecting the right projects9. Matching project scope and time frame10. Leadership/top management commitment11. Monitoring progress and financial performance12. Creating a proactive culture13. Managing the six-sigma paradox14. Managing the Abilene paradox15. Effective and efficient documentation16. Effective and efficient implementation structures17. Understanding the customer18. Understanding the process19. Expertise in data collection20. Flexibility in the use of tools21. Floating resource pool22. Root cause analysis culture23. Expertise in metrics and measurement systems24. Continuous professional development25. A questioning culture26. Understanding the concept of highest quality producer as a lowest cost

producer27. Capitalising on employee knowledge28. Highlighting and eliminating the hidden factory29. Choosing the right people for projects30. Mobilisation of the whole organisation31. Integrating six-sigma with the job32. Creating long term vision of six-sigma33. Extending six-sigma to non-operational areas34. Balancing short term and long term goals35. Integrating six-sigma with existing tools36. Managing projects across functions37. Forging a six-sigma agenda into managers38. First line managers, PTSMs, TOs as green belts39. Middle managers and HODs as champions40. EXCO and BMT members as sponsors41. Regular review meetings

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FINAL AFFINITY DIAGRAM IN THE VSM FORMAT

1. Leadership/top management commitment2. Forging a six-sigma agenda into managers3. Understanding the concept of highest quality producer as a lowest cost

producer4. Mobilisation of the whole organisation

1. Developing an effective communication strategy2. Developing six-sigma expertise in the organisation3. Highlighting and eliminating the hidden factory4. Integrating six-sigma with the job

Co-ordination and Control

1. Performance management (people and process)2. Individual and team recognition3. Matching project scope and time frame4. Managing projects across functions

Implementation

1. Effective and efficient implementation plans2. Understanding the process3. Relevant six-sigma training for all levels4. Multilevel review meetings

Normative

Strategic

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APPENDIX 17: TECHNICAL EXPLANATION OF SIX-SIGMA

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APPENDIX 18: ETHICS STATEMENT FOR THE INTERVIEWS

DISSERTATION QUESTIONNAIRE ETHICS

1. The objective of the exercise is to improve and adapt six-sigmaimplementation in AEL in order to achieve quality and cost reductionobjectives.

2. The interview is not to gauge your understanding of six-sigma, but tounderstand your viewpoint.

3. The interview is confidential – no individual interviews will be releasedin a form that will link results with a particular individual. Exceptions willbe made where permission has been granted to quote individuals.

4. Honesty to the questions will improve the integrity and validity of theresearch. This will in turn help to develop a robust theory that will helpAEL to achieve its quality and cost reduction objectives. Therefore:

Do not tell me what you think I want to hear Do not tell me what you think EXCO or senior management

would like to hear Do not be politically correct, say it as it is

5. The information will also be used as an input into my MBA dissertationand therefore the integrity of the data/information is important.

An example of permission that was requested to quote an interviewee

Morning,

What an honour!!! I have no objections at all.

ThanksThabisile

-----Original Message-----From: Cyril Gamede [mailto:[email protected]]Sent: Thursday, February 09, 2006 7:34 AMTo: Titi, ThabisileSubject: PERMISSION TO QUOTE ONE PART OF YOUR INTERVIEW

Thabisile

I hope you have settled well in your new job. I also hope that youwill be given enough space to grow. But most importantly, a careeris the responsibility of an individual, therefore, don't wait forgrowth opportunities, be proactive, look for them.

I had interviews with a number of people about six-sigma in theorganisation last year. I am currently finishing an MBA dissertation

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and I would like to use one quotation from your interview and citeyour name in the dissertation. I have to get permission from you aspart of research ethics.

The quotation I want to quote is as follows:

"I now understand the process better. Six-sigma has forced me tounderstand finer details of the process. It is frightening torealise that I have made so many decisions and changes in theprocess, yet I was not fully understanding the process".

Titi (2005)

This is exactly how the quotation will appear in my dissertation.Any objections?

Regards

Cyril Vuyani GamedeOperations DirectorAfrican Explosives Limitedemail : [email protected] : +27 11 606 0179 (Direct)Phone : +27 11 606 0653 (Secretary)Fax : +27 11 605 0251Cell : 082 771 1840

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APPENDIX 19: SCHEDULE OF INTERVIEWEES

Graham Edwards Managing Director 3/10/05 11H30Gys Landman Executive Director:

Markets5/10/05 15H45

Colin Rilley Executive Director:Strategic Projects

7/10/05 11H30

Piet Halliday Director: Research andTechnology

12/10/05 12H30

Danie Richards Financial Director 12/10/05 12H30Leon Aucamp Manager: Nitrates

Complex12/10/05 13H30

Clive Gregor Operations Manager:Nitrates

12/10/05 14H30

Thabisile Titi Technician: Nitrates 6/10/05 14H00Hendrik Burger SeniorTechnician:

Nitrates6/10/05 15H00

Allan Pikor SHEQ Manager: Nitrates 12/10/05 13H30Joe Malindi Team Manager: Nitrates 28/10/05 9H00Shane Pheasant Section Manager:

Manufacturing18/10/05 15H00

Beauty Mazibuko Plant Manager:Manufacturing

19/10/05 13H30

Johan Barnard Section Manager:Manufacturing

18/10/05 8H00

Norberto Terclavers Plant Manager:Manufacturing

18/10/05 13H00

Maropeng Bahula Quality Manager:Manufacturing

18/10/05 15H00

Kelvin Pillay Plant Manager:Manufacturing

28/10/05 10H00

John Sambo Technician:Manufacturing

28/10/05 11H00

Julius Thomas Section Manager:Manufacturing

20/10/05 8H00

Sylvestor Duma Purchasing Manager 6/10/05 9H00Whilma Kok Manager: Purchasing 6/10/05 11H30Nathaniel Willemse Technical Manager:

Manufacturing28/10/05 13H30

Max Makra Plant Manager:Manufacturing

28/10/05 15H00

Mark Sinnicks Black Belt Consultant:CCI: 082 553 7150

9/11/05 16H00

Gavin Barberini Black Belt: Consultant:CCI: 073 439 1414

19/10/05 15H30

Moss Sibiya Plant Manager:Manufacturing

20/10/06 9H30

NAME DESIGNATION DATE TIME

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Silas Malope Team Manager:Manufacturing

21/10/05 8H00

Colin Wilson Area Manager: Witbank 25/10/05 12H00Alois Kwenda Manager: Witbank 25/10/05 13H00Trevor Roberts Manager: Detnet 21/10/05 10H00Zola Khoza Manufacturing Manager 21/10/05 12H00Godfrey Baloyi Process Operator:

Nitrates21/10/05 15H00

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