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Lessons to Learn From Six Sigma

November 2011
by Jim Gordon
This month I want to dip into an issue that was raised for me by a prominent wine industry supplier: Are vineyards and wineries utilizing the same level of quality control and production efficiency practices that their suppliers and buyers are? Large suppliers and retailers frequently use quality-control certifications such as ISO and methodologies like Six Sigma to maximize the quality and consistency of their products and operations. Synthetic closure producer Nomacorc in Zebulon, N.C., is one of them.

I recently visited the factory where Nomacorc mixes and melts plastic and co-extrudes its stoppers. Everything looked spotless, smelled clean, sounded quiet and exuded an almost mellow vibe. Nearly everything is made to order here, not inventoried. The plant generates very little waste, and management urges employees to feed a well-organized suggestion process to make operations more efficient.

These are all signs of the Lean Sigma methods Nomacorc embraces. The company combines Six Sigma methodology popularized in the 1980s by Motorola to reduce product variations (defects) with “lean” measures to keep costs down and efficiencies up. Some big wine retaliers such as Albertson’s also have used Six Sigma principles.

Vintner from General Electric
Can wineries emulate suppliers and use such ideas to meet the demand for better products at lower prices? I knew just who to call for an informed opinion, the founder of 10,000-case Six Sigma Winery in Lake County, Calif. Owner Kaj Ahlmann has as much right to use the name as any vintner, having been a pioneer in adopting Six Sigma practices when he ran one of General Electric’s divisions before becoming a vintner.

He explains that at GE, Six Sigma was a data-driven process. A company needs data regarding its processes to know if any changes result in new and better data: less waste, lower materials costs, reduced energy costs, fewer man-hours, etc.

Ahlman argues that most wineries use at least some Six Sigma ideas (even if they don’t know the term) and have good data, at least in the winemaking process and sometimes in the vineyard. “That’s because the owners have a passion for winemaking, but usually not so much in the sales and marketing,” Ahlmann says.

His old company has a whole division that helps businesses build better websites and capture better customer information to boost direct-to-consumer sales. Wineries are strongly in need of such information, he says.

Six Sigma Winery is not big enough to appeal to a major distributor, so Ahlmann uses smaller distributors and DtC sales. The smaller distributors rarely use Six Sigma methodology, he says, but wineries can still apply the principles to help distributors sell more of their wine.

Listen for the voice
First, a winery should minimize defects in its wine, which is a Six Sigma tenet. Then, Ahlmann says, a winery should listen to the voice of the customer, a concept he created at GE. Applying this to working with a small distributor, he says, “We interview them and say, ‘We are interested in selling wine. Tell us what we can do to help. Do you want us to do in-store tastings? Winemaker dinners? Tell us exactly what you want.”

Many consumers cannot express exactly what they like or dislike about a wine, so it can be difficult to understand the voice of the end consumer. Wine critics, however, speak for consumers to some extent, so Six Sigma Winery has spent time and money analyzing what the critics like, then taking measurements with the tannin assay and other vineyard and winery tools and making adjustments to cater to those preferences.

Steps like this are important for wineries to become better, more sustainable businesses over the long term. Six Sigma Winery may sound like a classic second-career project launched by a wealthy executive, but it still comes with responsibilities. Ahlmann now employs 10 full-time workers who depend on the winery for their livelihoods. He believes that using the Six Sigma approach helps him keep his commitment to them.

I think winery and vineyard owners, winemakers and vineyard managers, winery salespeople and distributor personnel would all benefit from learning more about systems like Six Sigma. Much of the business world lives and profits by these ideas already. One good place for readers to start learning is at the plants of their suppliers. Just ask one of them. I’ll bet many suppliers would be glad to show what they have learned.

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