Over the past four years, our Process Innovation initiative has transformed the way we do business from the inside out. Along the way, we've upgraded our "hardware" with information technology and our "software" with Six Sigma, sharpening our competitiveness for the challenges that lie ahead as well as delivering greater satisfaction to our customers.

The second phase of our Process Innovation initiative launched in November 2001 has intensified our focus on the customer over the past two years as we have continued to systematically improve our internal business processes. Slated to run through the end of 2004, PI-2 continued to focus on our expanding Six Sigma program, ongoing manufacturing execution system refresh project, and remaining PI-1 follow-up projects in 2003.

Heading Toward Six Sigma
Launched in May 2002, our Six Sigma program shifted from the introductory phase to the expansion phase with the launch of Wave 3 in June 2003. The 551 projects carried out in Wave 3 (312 Green Belt, 239 Black Belt) far surpassed the combined 447 projects of Waves 1 and 2, with over 2,000 employees participating on either a full- or part-time basis.

While the first two waves were an opportunity to get acquainted with the Six Sigma concept and acquire hands-on experience with various methodologies and tools, Wave 3 was when Six Sigma came into its own as a powerful vehicle for executing our business strategy. Rather than dealing with worksite problems on an ad hoc basis, we began applying Six Sigma principles and methods to business planning, technical development, and other real-world processes that determine our corporate goals. As we clearly defined the individual roles and responsibilities of multiple divisions and departments, the number of cross-functional projects dramatically expanded. The "Mega Y" automotive steel project and other cross-functional projects spanning all six of our strategic fields accounted for 32% of the 251 total Black Belt projects undertaken in 2003.

Wave 3 also marked the expansion of our program scope beyond our internal processes to include suppliers and partners. During 2003, we launched five pilot Black Belt projects with four major supply-chain partners: POSCON, POSCO Machinery, Chosun Refractories, and POSDATA.