Six Sigma Success

Last year was 'best ever' for MNAA

The past four years have progressively yielded the Metropolitan Nashville Airport Authority (MNAA) the best bottom line financial performance in its 36-year history. While impressive, MNAA President and Chief Executive Officer Raul L. Regalado says it is by no accident that these fruitful years came under the tutelage of Performance Measurement and Six Sigma programs.

Sounding to be both numerical and Greek, the name of this disciplined, data-driven approach for eliminating defects in processes also takes on a Japanese martial arts element with a systematic belt ranking from white to black. Regalado, an orange belt, first came across the Six Sigma process when he owned his own consulting business eight years ago. More recently, he gained greater exposure as part of an executive leadership course at Vanderbilt University.

"I thought it was very interesting and it rang some bells back to when I had first heard of it," Regalado recalled, noting that a three-day course was devoted to Six Sigma. "They provided more detail on what it was and how it worked, but at that time I was still of the opinion that it was more angled toward the manufacturing industry than a service industry such as an airport." Shortly thereafter, Regalado was informed by Nashville-based Caterpillar Financial Services Corporation's President and CEO that they were using Six Sigma. In fact, their entire corporation, Caterpillar Manufacturing, had mandated the entire organization implement and adopt Six Sigma in 2001 to astounding results:

• Recovered start-up costs in first 8 months
• Recovered $1.80 for every $0.10 spent in 2004
• Expected 2005 recovery to be even higher

"It was a concept Caterpillar had embraced, implemented and had had some significant successes in that implementation and they were a service industry," Regalado said. "The light went on for me, and as we got to talking, he offered to mentor us through the process and see if we really wanted to implement this within the Airport Authority."

Regalado said he took the fellow President and CEO up on the offer after he found that the MNAA board was receptive and approved his pursuit of the Six Sigma standards of excellence.

Defining Six Sigma

Regalado defines Six Sigma as the analysis of processes. "These are my words, not textbook, and I put them in the simplest terms so I can understand it and the workforce can understand it," he explained. "I have technical experts on staff that are much more knowledgeable about the technical aspects of Six Sigma than me, but everybody needs to understand what it is in plain English."

Regalado said MNAA has a number of projects that are currently in process and should be complete within 30 to 60 days. Following a recap of those projects, they will start the second wave of projects using Six Sigma as a tool to help them analyze the processes and reengineer the methods to become more efficient and effective.

Belts

Regalado suspects the martial arts reference goes back to the point in time when U.S. companies were looking at Japanese management styles. The traditional belts in Six Sigma are green and black belts, with green belts as project managers and black belts trained at a higher level of knowledge in regard to Six Sigma. Black belts have managed projects before, and are responsible or capable of managing a number of project leaders, or green belts. They also have a master black belt, an inside consultant and trainer for black belts.

Regalado said the belt system has been modified somewhat within the airport authority environment. Every employee receives a one- to two-hour orientation on what Six Sigma is and is then designated as a yellow belt, one belt above white belt beginner in the martial arts. Supervisors who receive an all-day training session to include a practical exercise are designated orange belts, one level above yellow. And once supervisors are trained to become project managers, they become green belts after they manage the requisite number of projects.

Strategic plan

Regalado said four years has been the duration of the entire continuous improvement process, starting with the long-term strategic business plan. "This was the first-ever strategic plan that we had ever developed and probably one of very few strategic plans of any airports in this country," he said, noting that he tried to find some strategic business plans at other airports but couldn't find any when they initiated the process.

Back to Top

Each year, in implementing the strategic objectives of MNAA's recently updated strategic business plan, action plans are developed. The action plans identify a number of specific things that need to be done in order to implement strategic objectives and performance is measured along the way. On the heels of a first wave of success, MNAA's leadership team gathered earlier this summer with their in-house black belt and identified opportunities to pursue. A series of projects were identified and classified to fall under four quadrants of projects: rapid action, breakthrough, leadership and expert study.

Green belt team leaders identified their teams and initiated projects. When these projects conclude in the fall, results of the projects will be reviewed to determine what was accomplished, results yielded, and recommended actions. Then a second wave of project candidates will be identified and selected to pursue for the second wave in the fall.

Generating interest

Regalado said there is a lot of Six Sigma interest at the second and third tier level within a number of airport organizations, but in order to be successful, it has to be supported from the very top down.

"If an airport organization is looking for a proven tool to assist them in becoming more efficient and effective, I would encourage them to explore the implementation of Six Sigma," he said. "That being said, they need to be committed to doing that, because there is a significant commitment of resources to carry out Six Sigma because what you doing, above and beyond the project, is changing the culture of the organization to a Six Sigma culture."

Regalado said the hard costs for his organization have included the salary of the in-house black belt, as well as the materials purchased to train the workforce and to use for the projects. Other costs yet to be calculated are staff training costs and project teams themselves. But Regalado believes, "it will pay off in dividends with significant savings," similar to their mentor, Caterpillar Finance.