Operations

Six Sigma

‘Six Sigma’ is a data-driven approach for eliminating defects in any process, such as product manufacturing or customer service

Six Sigma is a data-driven approach to defect elimination in any process, including product manufacturing and customer service. Six Sigma is a statistical term that refers to an error rate of three parts per million.

When to use it

● To resolve a quality issue in a manufacturing process.
● To get people thinking systematically about the causes of errors in a system.
● To make an entire system run more efficiently and with fewer problems.

Origins

The origins of 'Six Sigma' as a measurement standard can be traced back to Carl Friedrich Gauss, a nineteenth-century statistician who introduced the concept of the normal distribution curve. Sigma is one standard deviation away from the mean; 'Six Sigma' is the area under the curve six standard deviations away from the mean. Only 3.4 of one million observations would fall within this range.

Six Sigma emerged as a management tool in the early 1980s. Many businesses had attempted to address quality issues through the use of total quality management (TQM), which had proven useful in some areas but lacking in others. One common complaint was that TQM was driven internally rather than by customers.

Bill Smith, a Motorola engineer, developed the Six Sigma methodology. He created a set of tools for analyzing their quality issues, which were quickly adopted throughout the company because the CEO (Bob Galvin) had promised a tenfold improvement in product quality. Smith's ideas were first implemented in an Illinois manufacturing plant, and productivity increased 12% per year for the next ten years, saving a reported $11 billion in manufacturing costs. Motorola won the Malcolm Baldridge National Quality Award in 1988, thanks in large part to Six Sigma.

Smith co-founded the Motorola Six Sigma Institute with consultant Mikel Harry, and the company thrived throughout the 1980s. However, after Smith's untimely death in the 1990s, the Six Sigma initiative became less important to the company. Mikel Harry left Motorola in 1994 to establish the Six Sigma Academy, allowing him to spread the concept. It was first taken up by Allied Signal in 1994, then by GE Capital in 1995. When GE's Jack Welch saw its potential, he made Six Sigma one of the company's key initiatives, which helped to introduce the concept to a much larger audience. Six Sigma became a popular quality improvement tool that was used in organizations all over the world. Many books were written, and both specialist and generalist consulting firms provided Six Sigma implementation assistance.

What it is

Achieving the 'Six Sigma standard' entails having fewer than 3.4 defects per million parts or opportunities. A Six Sigma process is one that is virtually error-free, whether you are manufacturing widgets or running a call center.

Six Sigma (as a management concept) provides users with a methodology for analyzing and improving a process's predictability. A Six Sigma process consists of five steps, denoted by the acronym DMAIC:

● Define the problem, improvement activity, opportunity for improvement, project goals and customer (internal and external) requirements.
● Measure process performance.
● Analyse the process to determine root causes of variation and poor performance (defects).
● Improve process performance by addressing and eliminating the root causes.
● Control the improved process and future process performance.

This is a fairly generic set of steps that are very similar to those involved in implementing a TQM process. The distinction is that Six Sigma is more focused and technically grounded, whereas TQM is an overall management philosophy that is concerned with both people and technical issues. TQM grew broader and more abstract over time. Six Sigma can be seen as taking its adherents "back to the roots" of the original quality movement in some ways.

How to use it

The methodology for carrying out a Six Sigma project is well defined. DMAIC defines the high-level process, and many additional steps are included within it. One of the reasons for Six Sigma's success, arguably, is that it requires people to apply it in a highly consistent manner. To that end, the Six Sigma Institute places a premium on its training and accreditation processes. People earn 'belts' that indicate their level of competence using martial arts terminology:

● Black Belt: Leads problem-solving projects; trains and coaches project teams.
● Green Belt: Assists with data collection and analysis for Black Belt projects; leads Green Belt projects or teams.
● Yellow Belt: Participates as a project team member; reviews process improvements that support the project.
● White Belt: Can work on local problem-solving teams that support overall projects, but may not be part of a Six Sigma project team; understands basic Six Sigma concepts from an awareness perspective.

There is also a ‘Master Black Belt’ who trains and coaches Black Belts and Green Belts, working primarily at the programme level.

Top practical tip

Six Sigma, like many other methodologies for improving organizational performance, necessitates commitment from the top of the organization. One of the reasons GE was so successful in the 1990s was that Jack Welch made it a firm-wide priority and then stuck with it for several years. This commitment typically entails the formation of a steering committee at the top of the company, as well as senior executives participating in a two-day training session to become Six Sigma champions. The Six Sigma performance measures must then be incorporated into the business's operating plan.

Top pitfall

One common issue that businesses face is not allowing enough time for a Six Sigma training program to take effect. This isn't just a chronological issue; it's also about allocating the appropriate number of people to a task. Often, a group of employees will be given ownership of a Six Sigma process in addition to their existing responsibilities, making it difficult to complete the level of painstaking work required.

Another pitfall is a lack of concentration. It is quite common for a company to take on a process with an overly broad scope. The true value of the Six Sigma methodology is that it focuses on eliminating all defects, which is only possible if the process is carefully defined. In essence, Six Sigma works when applied in a narrow technical context and in accordance with the original principles established by its creators, Bill Smith and Mikel Harry. Its utility is lost if it is reduced to a simplified metaphor for quality improvement.