six sigma a strategic initiative in ranhill

YAP YUEN THYEYAP YUEN THYECHIEF EXECUTIVE OFFICERCHIEF EXECUTIVE OFFICER

RANHILL BERSEKUTU SDN BHDRANHILL BERSEKUTU SDN BHDRepresentative ofRepresentative of

RANHILL GROUP OF COMPANIESRANHILL GROUP OF COMPANIES

SIX SIGMA : A STRATEGIC INITIATIVE IN RANHILL

““CompetitionCompetition is stronger than ever, is stronger than ever, customer have morecustomer have morechoiceschoices and are demanding higher quality and better value for their invand are demanding higher quality and better value for their investments. estments. Customer Customer will walk awaywill walk away the moment they have an the moment they have an alternative.alternative.

To thrive and effectively compete in this kind of environment aTo thrive and effectively compete in this kind of environment and deliver on our nd deliver on our commitments to shareholders and customers, we need to explore necommitments to shareholders and customers, we need to explore new ways to w ways to improve our performance. improve our performance.

We need to develop a We need to develop a strategy that will widen our gapstrategy that will widen our gap within our within our company and competitors. That strategy is company and competitors. That strategy is six sigmasix sigma..““

Tan Sri Hamdan MohamadTan Sri Hamdan MohamadPresidentPresidentRanhill BerhadRanhill BerhadSix Sigma Leadership Jumpstart 2002Six Sigma Leadership Jumpstart 2002

Why Ranhill Chose Six Sigma

Ranhill in BriefRanhill in BriefAbout The Company & Nature of BusinessAbout The Company & Nature of Business

Six Sigma Deployment In RanhillSix Sigma Deployment In RanhillImplementation ApproachImplementation Approach

Challenges In Deploying Six SigmaChallenges In Deploying Six SigmaCritical ChallengesCritical Challenges

Revitalization of Ranhill Six SigmaRevitalization of Ranhill Six SigmaExecutive Black BeltExecutive Black BeltBalanced ScorecardBalanced ScorecardSix Sigma Governance InfrastructureSix Sigma Governance Infrastructure

Success StorySuccess StorySAJH ( Syarikat Air Johor Holdings)SAJH ( Syarikat Air Johor Holdings)RBSB ( Ranhill Bersekutu Sdn. Bhd)RBSB ( Ranhill Bersekutu Sdn. Bhd)

Topics of Presentation

Ranhill In Brief

Feb 2001 : Listed Main Board KLSE

Paid-up Capital :RM 597 Million

Ranhill Berhad Corporate Information

EPCMEPCM Engineering, Procurement, Construction Management

Asset Ownership

EPCEPC

AssetsAssets

Engineering, Procurement, Construction

Scope of Activities

Ranhill : Group Structure

Water, 49%

Power, 10%

Oil & Gas, 20%Infrastructure,

21%

Ranhill : Sectors InvolvedRevenue (%)

Our Global Reach

Six Sigma Deployment In

Ranhill(2002 ~ 2006)

1. Management 1. Management JumpstartJumpstart

2. Project 2. Project SelectionSelection

3. BB / GB 3. BB / GB TrainingTraining

4. Six Sigma 4. Six Sigma Project Project

ExecutionExecution

• Top Management workshop• SWOT Analysis• Brainstorm Potential Project List

• Six Sigma Officepropose short listed potential projects

• Top Management to decide which projects to be executed

• Motorola Universitycoached the project

• Co-coached by Six Sigma Office

• Project progressreporting to top management by SixSigma Office

• Top Management to select BB/ GB candidate & send for training

Implementation Approach (2002~2006)

BB : 23GB : 44

No. of Staff Trained in BB & GB ( 2002~2006)

0

5

10

15

20

25

30

35

40

45

50

2003 - BB 2003 - GB 2004 - BB 2004 - GB 2005 - BB 2005 - GB 2006 - BB 2006 - GB

MGSDERUBR POWERRECRBSBR BERHAD

97

44

7

No of GB & BBBB , 23,

GB , 44,

Challenges In Deploying Six Sigma

Resistance To Change* Understanding of Six Sigma

methodology* Linkage to the business strategy & objective * Commitment to drive the initiative* Inherent organisation inertia

Governance Infrastructure* Six Sigma Council* Establishment of Policy & Procedure

Challenges In Deploying Six Sigma

Revitalization of Ranhill Six Sigma

Six Sigma Six Sigma Governance Governance

InfrastructureInfrastructure

Executive Executive Black Belt Black Belt

Balanced Balanced Scorecard Scorecard


1. Six Sigma Governance Infrastructure* Establish Six Sigma Council * Establish Policy & Procedure* Enhance Six Sigma Office Roles & Responsibilities* Full Time Black Belt at Subsidiary * Establish Web-base Project Tracking System

2. Balanced Scorecard* Identify Business Strategic Objective & Initiative (As a platform for Six Sigma Project Selection)

* Linking Six Sigma Project with the Business Strategic Objective

3. Executive Black Belt* Leadership program* To equip Top Management with the knowledge of Six Sigma Methodology* Culture Change Agent


• Guideline for deployment; systematically

• Align the initiative to Business Strategic Plan

• Coach Six Sigma project• Identify best approach for

Six Sigma deployment• Identify training required• Reporting to Group SSO

• Set Standard• Develop training material• Conduct training• Monitor overall project

progress• Reporting to Council

• Web-base system forproject progress tracking

• System to track completed project performance for atleast 2 years

Governance InfrastructureExecutive Executive ChampionChampionPresident

Web-base Project

Tracking System

Policy &

Procedure

Group Six Sigma

OfficeFull Time BB

At Subsidiaries

Six Sigma Council

• Monitor overallSix Sigma implementation

RanhillRanhill’’s Six Sigma Councils Six Sigma Council

Roles and Responsibilities of Six Sigma Council:1.Set direction for Six Sigma initiative in Ranhill.2.Select strategically important projects linked to corporate objectives.3.Establish and maintain alignment of key metrics linking to balanced scorecard.4.Allocate resources such as human and financial to drive Six Sigma initiatives.5.Establish reward and recognition system for Six Sigma and other continuous

improvement initiatives.6.Establish project governance structure.7.Hold senior management review for strategically important projects.

Head of Council President

Advisor Motorola University

GCOOGHRGCAD DIV CEO DIV CEO

Deputy Head DIV CEO

SecretariatSix Sigma Office

Executive Black Belt

Executive Executive Black Belt Black Belt

• Leadership Program

• Top Management of the company to be certifiedas Black Belt

• To equip Top Management with the knowledge &skill of Six Sigma methodology

• Culture Change Agent & Driver For Six SigmaDeployment

Ranhill Group

Subsidiaries

CEOCOOCCOCFOSVPVPGM

STRATEGYVision, Mission, Values

Goals, Strategies

PERFORMANCE MANAGEMENTSYSTEM

(Managing Individual Performance)

•Strategy Map•Corporate Scorecard•Departmental Scorecards

•Objectives, Measures & Targets

•INITIATIVES

ENTE

RPR

ISE

RIS

K

MA

NA

GEM

ENT

Balanced ScorecardLinking Six Sigma to Group Strategic Initiatives

Balanced Scorecard

Six Sigma Projects

Success Stories(SAJH & RBSB)

Success Story : SAJH

REC SDE RUB

SAJHRWS RWT

RP RE RBSB

Ranhill Group

Management Management JumpstartJumpstart

Project Project SelectionSelection

BB / GB BB / GB TrainingTraining

Six Sigma Six Sigma Project Project

ExecutionExecutionMonthly Project Monthly Project

ReportingReporting

BSC BSC Management Management

RetreatRetreat

• Report Six Sigma Projectprogress & achievement in detail

• Next Action Plan

• Report latest progress

SAJH : Six Sigma Implementation Approach SAJH : Six Sigma Implementation Approach Since 2003Since 2003

SAJH : Project List

MINOR LEAK REPAIR CYCLE TIME

CHEMICAL COST REDUCTION

ENERGY COST SAVING

PRESSURE MANAGEMENT SYSTEM

IMPROVE BILLING CYCLE TIME & ACCURACY

ORGANIZATIONAL CLIMATE

ENHANCE ASSET MANAGEMENT SYSTEM

Six Sigma Project Impact* Average Leak Repair Cycle Time reduced from 60 hrs to 24 hrs. * Operation Cost Saving of RM 656,000 per year, due to reduction in NRW.

Observ at ion

Indi

vidu

al V

alue

252219161310741

80

70

60

50

40

30

20

_X =24.67

UCL=29.86

LCL=19.48

Apr-04 Oct-04 Apr-05

I Chart of Johor Bahru by Month1

Before Improvement : Average 60 Hours

After Improvement : Average 24 Hours

Minor Leak Repair Cycle Time

Six Sigma Project Impact

11

Chemical Cost For Sungai Lebam

120059457 10388

8575

31360 0 0 0 0 0 0

3869 4327 3784 3438 3768 3385 33233153

3266

16231378

1530 1.56

0.880.49

0.47

0.55

0.51

0.500.550.50

1.671.51

1.72

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Month

RM

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

Lime (RM)

Soda ASH (RM)

Cost/m3

Lime (RM) 1530 1378 1623 3266 3153 3869 4327 3784 3438 3768 3385 3323

Soda ASH (RM) 12005. 9457.0 10388. 8575.0 3136.0 0.00 0.00 0.00 0.00 0.00 0.00 0

Cost/m3 1.72 1.51 1.56 1.67 0.88 0.50 0.55 0.50 0.51 0.55 0.49 0.47

Jan Feb Mac May April June July Aug Sept Oct Nov Dec

* Chemical Cost reduced from 1.6 cent/m3 to 0.5 cent/m3.

After ImprovementPrevious

Success Story : RBSB

REC SDE RUB RP RE RBSB

Ranhill Group

PROJECT COST MONITORING

CUSTOMER FEEDBACK INDEX SURVEY

PRODUCTION OF DRAWINGS

STAFF UTILIZATION RATE

IMPROVE BOOK ORDER FOR PROJECTS OUTSIDE GROUP

IMPROVE ENGINEERING EFFICIENCY

RBSB : Project ListRBSB : Project List

Six Sigma Project Achievement85%

77%

72%

74%

76%

78%

80%

82%

84%

86%

Staff Utilization: Before Satff Utilization : After

70%

29%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Customer Feedback Index : Before Customer Feedback Index : After

ImproveImprove Staff Utilization Staff Utilization

RateRate from from 77%77% toto 85%85%ImproveImprove Customer Feedback

Index fromfrom 29%29% to to 70%70%

ReduceReduce Total Man Hour / Total Man Hour /

DrawingDrawing,, 2323 toto 2020 man hourman hour

Improve Improve PACC Reporting PACC Reporting DateDate fromfrom 1515thth toto 77thth of of the month.the month.

Man

hour

/dra

win

g

AfterBefore

35

30

25

20

15

23.02

19.97

Total Manhour/drawing Before & After

7

15

0%

200%

400%

600%

800%

1000%

1200%

1400%

1600%

PACC Report : Before PACC Report : Before

Lessons LearntLessons Learnt1. Business Strategy & Direction

- without clear business strategy / direction, Six Sigma project will be very difficult.

2. Project Selection Without Linkage to Business Objective - low financial impact- low top management support- low momentum ( project will take a long time to be closed)

3. Top Management Exposure- top management who are unexposed to Six Sigma

methodology will have difficulty in supporting Six Sigma initiative.

4. Governance Infrastructure - project with proper governance infrastructure (Six Sigma Council,

Policy & Procedure, etc) will be carried out expediently.

5. Conviction & Commitment- one of the most important factor to ensure of success of Six Sigma

initiative and it’s continuous engagement is in fact the conviction and commitment of all stakeholders.

Asian CSR Award 2005 ………Congratulations! On behalf of the Organizers, Partners and Sponsor of theAsian CSR Awards, Philippine Investment-Management (PHINMA) Inc., it is my

pleasure to inform you that Six SigmaSix Sigma--Organizational Climate ProjectOrganizational Climate Projectsubmitted by SAJ Holdings Sdn Bhdsubmitted by SAJ Holdings Sdn Bhd is deemed the most outstanding projectmost outstanding project

(winner) in the Best Workplace PracticesBest Workplace Practices category of the Asian CSR AwardsAsian CSR Awards20052005.

With 160 projects from 91 companies in 12 countries vying for the Awards infive categories, the judges had a difficult time evaluating the entries.

Your company merits our genuine congratulations.

More often than not, and as indicated in our entry rules, CEOs of thewinning companies attend the Award ceremonies to accept their

organization's award. This year's awards will be presented at the GalaDinner Ceremonies of the Asian Forum on Corporate Social Responsibility on

September 9, 2005 at the Hilton Hotel in Jakarta, Indonesia. Over 300………………

SAJH :Asian Award Winning

RBSB Award : COMPANY OF THE YEAR (2006)

BY MALAYSIA CANADA BUSINESS COUNCIL

Thank You

six sigma a strategic initiative in ranhill

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