Borusan Holding Case Study
In May 2002, in the global context of adverse business conditions, Borusan Holding, a major Turkish conglomerate, launched an all-encompassing Six Sigma initiative (a quality management strategy/ process), which would ultimately help the Company to "Stay one step ahead in everything they do".
Since the inception of the initiative, hundreds of Six Sigma projects have been executed in all parts of its business and have resulted in several million dollar savings for Borusan Holding.
Six Sigma?
Before we review success of Six Sigma at Borusan companies, let's take a quick look at the Six Sigma methodology itself which is one of the approaches used globally to strive for continuous improvement.
The Six Sigma methodology was introduced by Motorola, Inc. who has reported over US$17 billion in savings from Six Sigma as of 2006. In addition to Motorola, companies that adopted Six Sigma methodologies early on and continue to practice them today include Honeywell International (previously known as Allied Signal) and General Electric (introduced by Jack Welch).
The term "Six Sigma" refers to the ability of highly capable processes to produce output within specification. In particular, processes that operate with six sigma quality produce defect levels below 3.4 defects per (one) million opportunities (DPMO). Six Sigma's implicit goal is to improve all processes to that level of quality or better. Six Sigma is a disciplined, data-driven philosophy and methodology developed by Motorola to systematically improve processes by eliminating defects.
Six Sigma asserts the following:
Continuous efforts to reduce variation in process outputs is key to business success
Manufacturing and business processes can be continuously measured, analyzed, improved and controlled
Succeeding at achieving sustained quality improvement requires commitment from the entire organization, particularly from top-level management
Features that set Six Sigma apart from previous quality improvement initiatives include:
A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project;
An increased emphasis on strong and passionate management leadership and support
A special infrastructure of "Champions", "Master Black Belts", "Black Belts" to lead and implement the Six Sigma approach
A clear commitment to making decisions on the basis of verifiable data, rather than assumptions and guesswork.
Six Sigma and Borusan
Founded in 1972, Borusan Holding has been engaged in manufacturing steel pipe and flat steel; distributorship of automotive and heavy construction equipment; logistics and new technologies. The group operates in many countries and it's consolidated sales were 2,351 million USD for the year ending 2006.
In 2002, Borusan Holding embarked its Six Sigma journey as part of a broader corporate transformation strategy aimed at reinventing itself to perform in an increasingly competitive economy.
As they state on their official website, "6 Sigma is the name of our targeted mindset change for Borusan, as a company competing against itself." In doing so, Borusan Holding has become one of the most successful Six Sigma-driven business excellence and process improvement success stories in Turkey. The program has been credited with generating over $38 Million in financial benefits (savings and top-line growth) based on the completion of over 200 projects realized by a Six Sigma community of more than 1000 employees [2005 Six Sigma published results from Borusan Holding Website].
As of 2006, Borusan Company is deploying a "Lean - Six Sigma" philosophy to combine high quality results gained through Six Sigma with speed of execution gained through Lean tools. This combined approach for continuous improvement represents one of the success pillars which it hopes will allow achieving sustainable growth (target: $5 billion revenues in 2010).
Their clearly stated objective is to use Six Sigma to create a BORUSAN Holding, which will:
Stay one step ahead in every field, among everyone, and in every sense;
Perform perfect processes; no mistake, no failure;
Represent a benchmark for companies with the most challenging targets;
Be compatible with global norms and respect the highest international standards;
Continuously "raise the bar".
Speaking on the choice of embracing the Six Sigma philosophy, one of the Borusan Holding managers states,
"The basic elements of the 6 Sigma methodology are the customer, the process and the employee. In addition to transforming our way of doing business, the harmony of these elements within the discipline of the methodology allows us to gain diverse perspectives. Business decisions made based on data increase our productivity, as well as providing added value to our customers. The affiliated companies of the Borusan Group started to achieve their vision of being one step ahead on the way to perfection through the 6 Sigma methodologies." (Billur Dalyan)Six Sigma success story: Borusan Lojistik
Experience of Six Sigma at Borusan's logistics group, Borusan Lojistik (with 2006 Turnover reported at US$ 141 million), is a good showcase of this practice applied.
To gain a reliable perspective, Borusan Lojistik sets the priority on quality improvement projects by continuously asking their customers on their performance. Their "Voice of Customer" program enables them to gather customer expectations around its product, service and process, which allows them to align with their customer needs and start Quality improvement projects to fill in gaps identified.
The Group had broken down its core business processes into primary activities (Port services, customs clearance services, integrated logistics services and delivery services) and support activities (IT, finance and reporting, purchasing, HR) and identified projects within these processes. (See chart above)
To execute their projects, the division has a pool of dedicated, 6 Sigma-trained project leaders who deploy a project management approach which combines Quality, Cost and Speed. In 2005, of the total 655 employees, 197 had been trained as Green Belts and 7 as Black Belts in Six Sigma.
The overall results have been impressive. Across its Port Operations alone, the Group has reported a productivity improvement worth over $2 million.
The Mindset
Six Sigma is another generation of improving processes. More than anything else, Six Sigma is a mindset the mindset of continuously looking for opportunities for improvement, using a methodology to make the changes and using the math to quantify the results. The mindset is part of the culture, and needs to be embraced by the organization at many levels.
This proven methodology, when embraced fully, allows people to think "Six Sigma," and to look beyond being "good enough," striving for ever-increasing thresholds of excellence.
Borusan Holding has been able to create this mindset and has catalyzed a cultural transformation to reinvent itself and "stay one step ahead".
Key Learnings:
Six Sigma is a disciplined, data-driven philosophy and methodology developed by Motorola to systematically improve processes by eliminating defects.
In the beginning 2000 (as of May 2002), Borusan Holding embarked its Six Sigma journey. Their clearly stated goal is "Staying one step ahead in everything we do".
The Borusan Holding Six Sigma program has been credited with generating over $38 Million in financial benefits (savings and top-line growth) based on the completion of over 200 projects realized by a Six Sigma community of more than 1000 employees.
By Nawal Ouzren
Dinar Standard 2008
