Question

With reference to case study #8 from (total quality management and operational excellence text with cases 4ed) book

Case Name: Operational Excellence Driven by Process Maturity Reviews: A Case Study of the ABB Corporation

Case study 8 Building quality and operational excellence across ABB

COMPANY BACKGROUND AND HISTORY

ABB is a global leader in power and automation technologies. Based in Zurich, Switzerland, the company employs 150,000 people and operates in approximately 100 countries. The firm's shares are traded on the stock exchanges of Zurich, Stockholm and New York.

ABB is the world's largest builder of electricity grids and is active in many sectors, its core busi­nesses being in power and automation technolo­gies. The company has one corporate division and five production divisions.

POWER PRODUCTS

Power Products are the key components for the transmission and distribution of electricity. The division incorporates ABB's manufacturing net­work for transformers, switchgear, circuit breakers, cables, and associated high voltage and medium voltage equipment such as digital protective relays. It also offers maintenance services. The division is subdivided into three business units - High Voltage Products, Medium Voltage Products and Transformers.

POWER SYSTEMS

Power Systems offers turnkey systems and service for power transmission and distribution grids, and for power plants. Electrical substations and substation automation systems are key areas. Additional highlights include flexible AC trans­mission systems (FACTS), high-voltage direct current (HVDC) systems and network management systems. In power generation, Power Systems offers the instrumentation, control and electrification of power plants. The division is subdivided into four business units - Grid Systems, Substations, Network Management and Power Generation.

DISCRETE AUTOMATION AND MOTION

Discrete Automation and Motion provides products and services for industrial production. It includes electric motors, generators, drives, pro­grammable logic controllers (PLCs), analytical, power electronics and industrial robots. ABB has installed over 200,000 robots. In 2006, ABB's global robotics Manufacturing headquarters moved to Shanghai, China. Also, wind generator and solar power inverter products belong to this division.

LOW VOLTAGE PRODUCTS

The Low Voltage Products division manufactures low-voltage circuit breakers, switches, control products, wiring accessories, enclosures and cable systems to protect people, installations and electronic equipment from electrical overload. The division also makes KNX systems that integrate and automate a building's electrical installa­tions, ventilation systems, and security and data communication networks. Low Voltage Products also incorporates a Low Voltage Systems unit manufacturing low voltage switchgear and motor control centres. Customers include a wide range of industry and utility operations, plus commercial and residential buildings.

PROCESS AUTOMATION

The main focus of this ABB business is to provide customers with systems for control, plant opti­mization and industry-specific automation applications. The industries served include oil and gas, power, chemicals and pharmaceuticals, pulp and paper, metals and minerals, marine and turbocharging.

CORPORATE AND OTHER

The Corporate and Other department of ABB deals with the overall management and functioning of the company as well as asset management and investment. It supports MNCs.

The company in its current form was created in 1988, but its history spans over 120 years. ABB's success has been driven particularly by a strong focus on research and development. The company maintains seven corporate research centres around the world and has continued to invest in R&D through all market conditions. The result has been a long track record of innovation. Many of the technologies that underlie our modern society, from high-voltage DC power transmission to a revolutionary approach to ship propulsion, were developed or commercialized by ABB. Today, ABB stands as the largest supplier of industrial motors and drives, the largest provider of generators to the wind industry, and the largest supplier of power grids worldwide.

THE BUSINESS CHALLENGE

To enhance ABB's ability to delight customers with the products and services they provide, a global Operational Excellence (OPEX) program was launched. In summary, the aims of this were to provide:

• A common methodology for transforming improvement ideas into business reality
• Training on tools and techniques to build improvement competencies
• Coaching of improvement projects to turn real business issues into real business results.

The fundamental idea was that OPEX would equip ABB employees with the skills and ability to generate process improvements to ensure On- Time, On-Cost and On-Quality delivery. It was felt that this approach would also create a culture of ‘Continuous Improvement' within ABB through widespread use of its established ‘4Q' improve­ment system; hence the ABB OPEX:

• provides a common approach to problem solving based on the ABB 4Q Methodology
• has a common structure to facilitate participation by all employees regardless of location and function
• provides training materials, instruction and coaching to assure a quick start and transition to local ownership.
• is the programme promoted by the OPEX and Quality networks which creates value in operations.

ABB OPEX provides the training and tools cascade for employees to quickly resolve problems and implement improvements in their workplace (Figure C8.2 ).

The 4Q Program supports the ABB Quality Policy and aims to grow continual improvement competencies and culture on a global scale. These competencies help to eliminate waste, reduce variation and enable people to work in a safe and

efficient manner. They support the primary busi­ness objectives of:

• Delivering to the customer products and services that meet their expectations of quality, cost and delivery date
• Sustainable profitable growth
• Long-term marketplace competitiveness.

Through training, coaching and practical 4Q projects the program engages employees in the drive for process improvement. ABB business leaders select urgent improvement areas in their organizations; they then select individuals from their organizations to be trained in the 4Q methods and become 4Q Project Leaders; those Project Leaders then lead 4Q project teams (Figure C8.3).

Figure C8.4 is an overlay on C8.3 to show the benefits of this approach at the various stages and levels in the programme.

ABB 4Q METHODOLOGY

4Q is the standard ABB improvement methodol­ogy (Figure C8.5) and is applicable to all types of improvement projects. It is a systematic, four step method that ensures processes are mapped and understood, performance data is gathered, real root causes are determined and improvements are built into the local processes to sustain long-lasting results.

ASSESSMENT AND SELECTION OF 4Q PROGRAM TRAINERS AND COACHES

The training for 4Q is deployed by internal change agents that deliver both 'Basic' and 'Advanced' level workshops globally across ABB. These trainers require the necessary skills and capability to deliver effective training in the improvement methodology and then coach improvement projects that deliver benefits to the business. They also require the enthusiasm and energy to help drive the program, establishing credibility and momentum. Designed, built and deployed into the programme is a complete candidate assessment process that:

• Assesses and validates the suitability of poten­tial trainers and coaches against a specific criteria of key competences

• Identifies the individual's learning needs to be addressed and provides guidance on their development requirements, as a program trainer and coach.

DEVELOPING INTERNAL TRAINERS AND COACHES

For the initial rollout, approximately 20 trainers were identified to run courses across all four regions of the business. An external consultancy designed and conducted a comprehensive ‘Train the Trainer' program that rapidly equipped the trainers with the capability to run training courses and coach improvement projects.

The training included:

• Technical knowledge of quality and perfor­mance improvement tools and techniques
• Coaching skills for improvement projects to ensure they delivered real business results
• Workshop delivery and group coordination skills in different cultures
• Presentation and inter-personal skills training.

Figure C8.6 gives an overview of the ABB 4Q certification and trainer/coaches pathway

QUALITY AND CONTINUOUS

IMPROVEMENT TRAINING MATERIAL

The ‘Advanced' level workshops provide training for experienced improvement practitioners who have the capability to lead medium/large-scale improvement projects on cross functional value chains. A level of expertise was, therefore, required to structure and develop this training material. The consultancy led the development of this ‘Advanced' training material, combining best practice lean and six sigma principles. The training modules included: value stream mapping, measurement system analysis, statistical methods, project management, cost benefit analysis and change management.

KEY ELEMENTS OF THE OPERATIONAL EXCELLENCE PROGRAMME

The critical success factors of programme are shown in Figures C8.7 and C8.8, which includes the 'A.R.O.W.' structured approach to technical coaching.

A - ASSESS

At the start of each coaching session, determine where the manager is in the improvement process using the coaching review checklist to assess progress - you are looking for supporting evidence.

Then ask the question: ‘What would you like from this session?'

R - REALITY

What is happening at the moment?

How do you know that this is accurate?

When does this happen?

How often does this happen? Be specific/precise where possible

What effect does this have?

How have you verified, or would you verify this?

Who else is involved?

What is their perception of the situation?

What have you tried so far?

O - OPTIONS

What are the relevant constraints and can they be removed?

What else could you do - options?

Think of approach/actions you have seen in similar situations

Who might be able to help?

Would you like suggestions from me?

What are the benefits and down sides of each option?

What factors will you use to evaluate the options?

W - WHAT

What are your next steps?

When?

What might get in the way?

How will you overcome?

What support do you need?

How and when will you get that support?

Do you need another coaching session?

Manager to record actions and agreements

REWARD AND RECOGNITION - THE CEO EXCELLENCE AWARDS

ABB employees make an invaluable contribu­tion to the company's success everyday so a CEO Excellence Award was launched to recognize outstanding achievements accomplished through the talent, passion, and drive of employees and teams around the world. The award acknowledges people and teams that have made significant contributions to operational excellence in ABB and recognized improvements to the business, in terms of customer satisfaction, on-time delivery and cost opportunities.

At the outset it was recognized that award schemes already existed across ABB so the CEO Excellence Award was designed to complement rather than replace existing schemes, providing a harmonized approach to acknowledging contribu­tions to operational excellence across ABB.

The award framework is shown in Figure C8.9.

BENEFITS DERIVED FROM THE PROGRAMME

In very large complex organizations such as ABB, success in improvement programmes like the

OPEX are more likely to be qualitative than quantitative, as the latter are specifically related to the particular industry sectors, geographical and even political situations. The whole OPEX approach was designed and developed to meet the future scale requirements of the ABB and is now fully documented and deployed across the organization.

The standardized trainer/coach assessment process has become embedded within the pro­gramme infrastructure as a sustainable approach to qualifying internal trainers and coaches in the divisions, regions and local business units, ensuring a standardized global approach whilst meeting local needs. This has accelerated development of the initial wave of trainers required to meet the language, cultural and geographical demands of the ABB global organization. Qualified trainers and coaches provided the early momentum required to establish the program credibility and are distrib­uted across the entire organizational footprint, supporting all divisions and regions in ABB.

Nearly 6,000 were trained by this method fairly quickly, including 350 trainer/coaches thereof 190 are active trainer/coaches with total savings from 4Q projects ramping up very quickly to over $500m. Objectives such as having at least one qualified ABB 4Q Basic Trainer/Coach under every ABB roof helped accelerate progress.

The 'Advanced' workshop material, including Lean and Six Sigma techniques, provided a sound basis on which to develop expert quality improve­ment practitioners within ABB and formed a necessary platform to deliver advanced projects with improvements in on-time, on-cost and on- quality delivery.

ACKNOWLEDGEMENT

The author is grateful for the help and information provided by Bill Black, Senior Vice President, ABB and Dr Robert Oakland in the preparation of this case study.

DISCUSSION QUESTIONS (Which i Need to be answered)

1. Consider the complexity of the ABB business and provide a rationale for the development of the approach described in this case study; identify and describe an alternative approach that could have been considered by the senior quality and operational excellence group.
2. Explain the role coaching played in the success of the ABB improvement programme and suggest additional methods and tools that might have led to even greater success.
3. Evaluate the CEO Excellence Award used by ABB and explain how this could be used in another organization of your choice to develop capability and sustainable improvement

Answer 1

In reference to the context it is evident that the ‘4Q’ improvement system is effective in bringing in operational excellence, it is the very process that focuses to understand the present challenge from the very source and then identify a possible solution after appropriate analysis in order to recognize the opportunity and control the loss along with it. This improvement system is the key factor that helps to sustain and grow business in the longer run by giving change an opportunity every time the requirement arises. Since it is evident that ABB is a diverse organization and responding to the changing needs of the consumers must be its top priority.

An alternative approach to achieve business excellence can be the SIX SIGMA methodology that considers identifying a problem before hand and focuses on its solution from the initial stages in order to minimize loss and eliminate defects. The whole concept of this methodology works on reducing error and creating an environment for the involvement of stakeholders, team members and experts to reach a profitable solution. This approach always promotes flexibility as it focuses on accepting change in an easier way, though training has to be given on order for all the departments to accept the change but the very attributes like brainstorming, continuous improvement and studying consumer behavior makes it an effective methodology for business excellence and is an option worth considering by the senior quality and excellence group.

Coaching played a significant role in shaping the way the employees of ABB worked. It is very evident from the case study that it helped the employees to have a smooth transition with technological advancements. Coaching is given by an organization in order to achieve a favorable outcome from the employees, it is given so that the transformation in the business and operational processes with time doesn’t effect the productivity of the employees. One important aspect worth adding in the coaching process is to present real life scenarios in between this will help the employees to set effective goals and engage more thereby building trust and giving profitable feedbacks.

One tool that can make any coaching model efficient is to provide training on developing emotional intelligence. The very fact that the employees undergo tremendous pressure during business development processes makes development of emotional intelligence a mandatory process of the coaching program. It helps to identify underlying issues of an employee or a set of employees from one or many departments. This also helps to identify patterns of challenges that the organization can face in the future and helps to build an effective solution for the same beforehand. This involvement of training emotional intelligence will also help the employee with their mental well-being and will result in creating balance in the organization.

The CEO Excellence Award is a great initiative by the company as it helps to recognize individual efforts and achievements. This also results in employee motivation across the organization and will help in increasing employee productivity. Every diverse organization must involve in such award ceremonies in order to give respect to the employee(s) who work with utmost dedication and commitment. This also creates an opportunity to interact and discuss about working styles, individual as well as team accomplishments. The organization can also expand the genre of awards and can nominate individuals from all levels of the organization, thereby giving equal importance to all levels of employees and promoting equal opportunity working environment.