More than two decades after Motorola executives in 1986 developed Six Sigma business practices to eliminate defects and improve manufacturing operations, the company's travel procurement team relied on the now-widespread process methodology to devise global control procedures to procure more than $130 million in annual meeting and event spend.
While Motorola was an early adopter of StarCite meeting sourcing and registration technology deployed in the United States and Europe/Middle East/Africa, Darrell Marciniak, global hotel commodity manager in Motorola global travel since 2006, said the tool "never really got more than 5 percent adoption. It was just really a broken system from the start--not the system capabilities--but the rollout, introduction and communication of the process." The problem was that there was "no central source of meeting/event-related expenditures."
At a session on Six Sigma during the National Business Travel Association's Los Angeles convention in July, Marciniak told attendees, "There were tons and tons of meetings flying under the radar and, quite honestly, we had no idea what they were. I know you often hear the term the 'wild, wild West,' but, truly, that was what it was." More than 600 employees were found to have purchased meetings, but there was no preferred supplier network, leverage of the company's substantial spending or use of technology or payment platforms. Nor was the company best managing contract risk: Motorola employees often signed hotel contracts without a Motorola standard contract addendum that limited liability.
[PROFILE_1]In February 2007, the four-person Green Belt project team set out to change all that by following the Six Sigma "DMADV--define, measure, analyze, design and verify" process to determine its charter, scope and goals and, ultimately, a new process to procure meetings globally and track compliance. "Scope creep" often wreaks havoc on such projects, Marciniak noted. "One way to manage that early on is to truly define and put into black and white what you want to handle and how you would decide if you were successful."
Through a "fact-finding mission," the team determined what was "important to the internal customers--the professional planners, financial controllers and procurement." The team created a meetings and events council to share best practices and help identify the critical success factors for the new policy. While its focus has changed, the council continues to meet to share best practices and insight on venues. The council also identified other multinational companies that had tackled strategic meetings management as future potential benchmarking partners.
As the team studied the unique procurement requirements within meetings and events, they recognized the need for speed on business and finance approvals, so as not to lose "tentatively held space," and for an enterprisewide portal for information sharing and tool access. The team also found that "introduction and utilization of a Motorola-approved legal addendum" would help the company mitigate risks. To track compliance to the policy requiring such addendums, the team decided to count as a defect any contract that lacked the approved addendum.
In the measure phase of the project, the team focused on how to fix the problems identified and the impact various solutions would have on the optimum process. The team defined success as a 25 percent increase in compliance to the meetings and events procurement control process and a 25 percent reduction in contract risk defects, provided it could "successfully pass 200 meetings/events" through the new process--all by September 2007.
Using such common Six Sigma tools as a cause-and-effect matrix and "five whys," Marciniak said, he realized that Motorola could use its existing Ariba eForm procurement tool to "automate and expedite meeting and funding approvals" and automatically generate a meeting payment card. Five whys is aimed at digging at the root cause of a problem by continually asking why, sort of like peeling back layers of an onion, Marciniak said.
[PULL_1]To effectively track success and meeting expenditures, Motorola needed a "unique meeting identification system" and "central source of meeting/event-related expenditures." On the back end, Motorola implemented a new meetings and events payment platform. "If a purchase requisition comes into our Ariba system and does not have a meeting identifier on it, the request gets kicked back with a note that it needs the number to get into the process," Marciniak said. Without this central source, he said, Motorola couldn't "get to areas of opportunity, highlight the value of advanced planning or assist in developing sound budgeting tools and methods."
Once the "future state" process was mapped, Marciniak said, the team determined that the success was dependent on a communications plan that included "distinct messages" for each audience type of senior executives, planners and external suppliers. For "Motorolans, the messaging needed to indicate exactly what was required of them, included in a new global meetings and event policy ... as well as the ramifications if they didn't follow that policy," Marciniak said.
Motorola now requires employees to enter their meeting needs within StarCite, but global travel now manages all contracting. "We have done the metrics on risk mitigation, in addition to cost savings," of centralized contracting, noted Marciniak, who earned his Six Sigma Green Belt on this project.
Motorola's Meetings Six Sigma Timeline
|February '07||-Project launch |
|March||-Define and measure |
-Develop initial models
|June||-Go live in North America|
|July||-Transfer best in class to region|
|September||-U.S. control check |
-Deliver detailed design
Communication of all the policy changes began via e-mail, monthly videoconferences and Webconferences, as well as "Lunch & Learn" sessions or open dialogue. Interaction among planners was so productive that some planners continue to meet to share best practices, information on venues or issues they face, he said. The new program went live in the United States in April and by year-end 2007 had expanded to all of the Americas, Asia and the top five countries in Europe/Middle East/Africa.
"When you spend time on detailed communication plans on the front end, it really does net some terrific benefits on the back end," Marciniak said.
The Six Sigma team also designed reporting requirements for various departments and stakeholders. "The reporting package is huge," Marciniak said. "Monthly reporting was probably one of the most arduous tasks of this implementation," as members tried to determine the needs of all the business leaders, business unit vice presidents and financial controllers. Multiple reporting packages now are delivered throughout the company, but the "common thread" is that the company benchmarks all business units against each other.
"This is the beauty of Six Sigma: It's all based on numbers, and the numbers don't lie," Marciniak said.
While Motorola culture doesn't allow Marciniak to establish meeting budgets for any department, business leaders do look to his team for information, trending and analysis. "We have started to look at benchmark pricing within the top markets so we can constantly work on some of the inefficiencies in the sourcing process," he added.
By the target date in September 2007, Marciniak said, the team confirmed that it not only met its goal to increase process compliance by 25 percent, but far exceeded it to nearly 82 percent. Motorola also decreased the contract defect rate to just 8.2 percent, a 66.7 percent improvement over the 25 percent increase goal.
But the project also revealed that there is still plenty of work ahead to further communicate the new policies and begin using the goldmine of new data to leverage spending and provide more guidance to meeting professionals on opportunities.