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Why Six Sigma?

Tyrone Butler, Service Management Center Quality Leader, EDS

Can the Six Sigma methodology, so long known to be an invaluable resource for large manufacturers, be used by a small, entrepreneurial manufacturing business? Will it achieve goals and improve the bottom line? The answer, of course, is “Yes!” But that’s only the beginning.

Six Sigma is not the flavor-of-the-month solution for all business problems. It is a method proven to improve a company’s operations. This article is an overview to encourage entrepreneurs to explore and seriously consider the advantages this exceptional quality-improvement concept.

Companies that recognize the differences among feasibility analysis, pure business decision-making, and Six Sigma opportunity can optimize their business performance. Today, the Industrial Age is ending, and the Information Age is well under way. Six Sigma has become a key enabling skill of knowledge-based businesses, guiding companies to achieve specific goals and objectives. Six Sigma is a valid alternative to gut feeling and veteran subject-matter experts, which have at times led to inconsistent results and diminishing profit margins.

Six Sigma is the careful, analytical thought process of solving problems using data. It is perceived as a breakthrough methodology, similar to the high-level skill a martial art expert employs. Many of the world’s top corporations have used Six Sigma to increase profits by more than $100 billion in the past few years. Well-known leaders are GE, DuPont, Dell, Sun Microsystems, Bank of America, NEC, Hitachi, and EDS.

As in martial arts, different levels of “belts,” or training certifications, identify roles and responsibilities of Six Sigma resources in a company. Titles can vary from company to company, but the intent is the same. Traditionally, the belts rank in order from lowest to highest as yellow, green, black, and master. The belts are trained individuals who engage in improvement projects based on their complexity, scope, tool knowledge, and experience. Company leaders are sponsors and supporters available to remove barriers and gain access to resources the belts need. Subject-matter experts provide the intellectual horsepower to identify the root causes of manufacturing problems. The belts, sponsors, and subject-matter experts work together to provide sustained business results.

Depending on the company, savings can range from $150,000 to $250,000 per green-belt project to more than $1 million per black-belt project. Under Six Sigma, cost is a leading indicator of improvement. But the numerous qualitative business benefits impact customer satisfaction.

Two Methodologies

There are two basic methodologies employed in Six Sigma: DMAIC and DMADV.

DMAIC stands for Define, Measure, Analyze, Improve, and Control. It focuses on improving existing processes that have not reached process “entitlement,” or an optimal state.

DMADV stands for Define, Measure, Analyze, Design, and Verify. It focuses on ensuring that new proposed processes or those that have reached entitlement are implemented with minimal defects.

The following actions are important to the success of Six Sigma:

  • Clear top-management support of Six Sigma as the organization’s process-improvement methodology.
  • Commitment to using experienced Six Sigma professionals, including the development of internal resources and sponsors.
  • Linking company business goals and objectives to performance goals and metrics that can be measured wherever needed.
  • Using Six Sigma consistently to meet the goals that optimize shareholder values and lead to delighted customers.

Why use the phrase “Six Sigma methods of performance?” What does it mean? Following is a discussion designed to ensure an understanding of the intent of Six Sigma if not its technical aspects.

Six Sigma is a problem-solving methodology originally conceptualized by Bill Smith at Motorola and later pioneered by Mikel Harry in the early 1980s. This groundbreaking work helped develop the Six Sigma recipe for success using known statistical tools and methods. Most of the methods were developed by luminaries like Shewart, Deming, Juran, Shingo, and Taguchi in the early 1990s. Six Sigma’s power lies in using the methodology consistently to improve confidence in predicting the expected output of processes, such as cost, quality, and delivery. Six Sigma “deployment” is the rollout plan of the Six Sigma methodology across an organization.

Statistically, Six Sigma performance defines a process that produces fewer than 3.4 defects per million opportunities for an error or defect. That’s a 99.999 percent on-target capability. (Short- and long-term sigma levels and 1.5-sigma shift won’t be discussed here.) Operationally, Six Sigma defines the continuous effort to reduce variation, improve the predictability of process outputs, and sustain improvements.

What is the statistical significance of the “six” and the “sigma?” A common measurement of variation, the Greek sigma symbol is used to represent “standard deviation” in a group. The practical notion is that “if a process can contain six standard deviations between the mean (average) and the nearest specification limit,” then the process has little chance of creating out-of-specification results. Most processes cannot sustain a Six Sigma state. Over time, 4.5 sigma above or below the mean has been considered a reasonable, sustainable goal.

Six Sigma and Your Company

How can you use Six Sigma methodology?

First, determine whether your business processes need to improve. Do they all perform optimally in cost, quality, and delivery? If the answer is yes, you may need to complete a “measurement system analysis” to determine if the metrics your company uses are accurate. Almost every business process can be improved using Six Sigma methods.

Once you’ve established a need, you develop a “deployment strategy,” most often with the help of trained Six Sigma professionals on staff, as consultants, or both. Deployment follows these general steps:

  • Perform a self-assessment to determine whether your business infrastructure enables the use of the standard consistent metrics and key process indicators needed to establish a baseline of current performance.
  • Then, define gaps between current performance and the performance your customers expect. Modify or create new metrics, targets, and specifications as required.
  • Build a strategy map using tools such as the Balanced Scorecard, which link business processes to strategic direction.
  • Use a Six Sigma consulting team to assist in deployment. Poor deployments usually result in poor performance.
  • Develop internal resources using Six Sigma training and ensure the methodology becomes your company’s standard business process to “sustain the gains.”

Summary

What is your business risk without Six Sigma? Small and medium entrepreneurial businesses are very sensitive to defective parts or services. Although a larger company might weather a few defects, they can destroy a small company's reputation and customer base. Small companies are also more sensitive to idle inventory and capital equipment, rework, absenteeism, and machine breakdowns.

As an entrepreneur, your first step is to make sure your senior management team members understand that the company needs better performance and to gain their support. You can then begin your Six Sigma journey, basing its destinations on profit and growth objectives. Identify a team of Six Sigma consultants to help with the process. Keep in mind that your strategic focus should not be on improving your bottom line and growth, but on enabling Six Sigma methodology to become your company’s route to “overachieving” your goals and exceeding customer expectations. If deployed well, Six Sigma will become part of your company’s DNA. Improved profits and growth will follow.

For more information on Six Sigma, see the Related Media titled " Six Sigma References." It's in the right-hand column of this Web page.

© 2007 Tyrone Butler. All rights reserved.

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