Profitable Processes

Six Sigma

Six Sigma

Six Sigma is a methodology for pursuing continuous business improvement and innovation by reducing inherent variability. It requires a thorough process and product/service understanding and is clearly focused on customer-driven expectations. It is a methodology that is equally well suited to transactional or operational processes.

Although Six Sigma started life as a quality methodology it has evolved into a methodology that adds value to a business and all its stakeholders. 

Six Sigma = value creation

Increasing value of six sigma

Introduction to Six Sigma

Business improvement has been high on the agenda of most successful and/or emerging organizations globally for many years. Several methodologies exist to bring this about, but non-so powerful as Six Sigma.

Six Sigma is a rigorous and disciplined methodology that uses data and statistical analysis to measure and improve a company’s operational performance by identifying and eliminating “defects” in operational and service-related processes. Commonly defined as 3.4 defects per million opportunities, Six Sigma can be defined and understood at three distinct levels: metric, methodology, and philosophy.

Six Sigma Metric

Six Sigma uses metrics, unlike any proceeding methodology. These metrics not only tie in customer Critical to Quality (CTQ) needs with what is measured by the company, but they also allow processes within the company to be compared with each other using a single scale called DPMO (Defects Per Million Opportunities).

The statistical representation of Six Sigma describes quantitatively how a process is performing. To achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. A Six Sigma defect is defined as anything outside of customer specifications. A Six Sigma opportunity is then the total quantity of chances for a defect.

The Six Sigma Methodology

Six Sigma’s most mature methodology is DMAIC – Define, Measure, Analyse, Improve, and Control. It is a structured methodology that, when correctly implemented, results in significant improvement in an organization’s performance. 

Six Sigma DMAIC is applied to both transactional / service and operational / manufacturing environments. It is used to improve productivity, lower cost, improve cash generation and even enhance growth.

At many organizations, Six Sigma simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process — from manufacturing to transactional and from product to service.

The fundamental objective of the Six Sigma methodology is the implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects. This is accomplished through the use of three Six Sigma sub-methodologies: LEAN, DMAIC, and DMADV. The Six Sigma DMAIC process (define, measure, analyze, improve, control) is an improvement system for existing processes falling below specification and looking for incremental improvement. Design For Six Sigma (DFSS) employs the DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels. It can also be employed if a current process requires more than just incremental improvement. Both Six Sigma processes are executed by Six Sigma Green Belts and Six Sigma Black Belts and are overseen by Six Sigma Master Black Belts.

Six Sigma is compiled of a powerful set of tools and techniques that follow strict guidelines to ensure the correct causes of difficulties are identified and the best solutions developed and implemented.

According to the Six Sigma users, Black Belts save companies approximately $230,000 per project and can complete four to 6 projects per year. General Electric, one of the most successful companies implementing Six Sigma, has estimated benefits on the order of $10 billion during the first five years of implementation. GE first began Six Sigma in 1995 after Motorola and Allied Signal blazed the Six Sigma trail. Since then, thousands of companies around the world have discovered the far-reaching benefits of Six Sigma.

Six Sigma Philosophy

Six Sigma is more than a proven business improvement and qualitative methodology. Six Sigma is a philosophy, a doctrine of excellence that permeates a corporate or organizational culture. Six Sigma is an attitude that is embraced throughout the organization.

Six Sigma goes right to the heart of any organization. Leadership’s role is critical, especially at the outset since any plan attempting to alter the way an organization operates needs strong and committed leaders. The quality culture offered by Six Sigma encompass:

  • Focus on the customer/client;
  • Data driven decision making;
  • Process focused improvement;
  • Project management;
  • Cross organisational team collaboration;
  • Proactive management, Tolerant of failure; and
  • Drive for perfection.

Brief History of Six Sigma

In the late 1980s, Motorola gave birth to Six Sigma in answer to the question “How do we stay in business?”. Six Sigma leads to the business’ turnaround and the establishment of a strong organization. Motorola reduced manufacturing costs by $1.4 billion from 1987-1994

Honeywell (Allied Signal) adopted Six Sigma in the early 1990s, which saw the methodology begin its next phase of evolution. The company credits Six Sigma for its 6% productivity increase and 13% profit margin improvement achieved in 1998. Honeywell recorded more than $800 million in savings

General Electric, under the leadership of Jack Welch, launched Six Sigma as a company philosophy in 1995. GE saved $10 billion over five years and added $1 to its earnings per share. GE produces annual benefits of over $2.5 billion across the organization from Six Sigma

How different is Six Sigma?

The truth is, much of Six Sigma is a compilation of tried and tested tools, techniques, and principles that have gone before. Techniques have been taken from BPR, TQM, etc. and a few new twists added. They are:

  • Top-level support with a difference;
  • Team leader Stars result to better use of teams;
  • Develop problem-solving experts throughout an organization;
  • Intense training of an entire organization;
  • New Metrics;
  • Structured process;
  • Align processes behind the Voice of the Customer;
  • Sustained yet adaptive control of new or improved processes;
  • A new level of process comparison; and
  • New organizational attitude/culture

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