Around the Word Six Sigma

Hiren Kakkad, Consultant, Concept Business Excellence Pvt. Ltd.

Around the Word Six Sigma

Abstract

Quality has become the buzzword in every walk of life. Slackness in maintaining quality has been proved to results in definite failure. It has become imperative that every individual acquires a fairly good knowledge on quality improvement methodologies to be successful in life. Continuous improvement is a vital component of an effective performance of any organization. Simply measuring the performance will not result in system improvements. Getting improvement in any service/program requires an institutionalized strategy for linking performance of measurement to the implementation of specific system improvement. Many methods for improvement in quality available like Plan Do Check Act (PDCA), Total Quality Management (TQM), Statistical Quality Control (SQC), Statistical Process Control (SPC), Quality Circle (QC) etc.

In this article, the importance of Six Sigma methodology and how can be it useful to organization for financial gain and many intangible benefits. Six Sigma is a business management strategy originally developed by Motorola, USA in 1986. As of 2010, it is widely used in many sectors of industry. It helps to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.

Lack of originality

Noted quality expert Joseph M. Juran has described Six Sigma as "a basic version of quality improvement", stating that "there is nothing new there. It includes what we used to call facilitators. They've adopted more flamboyant terms, like belts with different colors. I think that concept has merit to set apart, to create specialists who can be very helpful. Again, that's not a new idea. The American Society for Quality long ago established certificates, such as for reliability engineers."

Origin and meaning of the term "SIX SIGMA PROCESS"

Capability studies measure the number of standard deviations between the process mean and the nearest specification limit in sigma units. As process standard deviation goes up, or the mean of the process moves away from the center of the tolerance, fewer standard deviations will fit between the mean and the nearest specification limit, decreasing the sigma number and increasing the likelihood of items outside specification.

Sigma level DPMO Percent defective Percentage yield Short-term Cpk Long-term Cpk
1 691,462 69% 31% 0.33 –0.17
2 308,538 31% 69% 0.67 0.17
3 66,807 6.7% 93.3% 1.00 0.5
4 6,210 0.62% 99.38% 1.33 0.83
5 233 0.023% 99.977% 1.67 1.17
6 3.4 0.00034% 99.99966% 2.00 1.5
7 0.019 0.0000019% 99.9999981% 2.33 1.83

Lean Six Sigma

In recent years, some practitioners have combined Six Sigma ideas with lean manufacturing to yield a methodology named Lean Six Sigma. Lean manufacturing – addressing process flow and waste issues – Six Sigma, with its focus on variation and design, are viewed as complementary disciplines in Lean Six Sigma, aimed at promoting "business and operational excellence". This is used in companies such as IBM to focus transformation efforts not just on efficiency but also on growth. It serves as a foundation for innovation throughout the organization, from manufacturing and software development to sales and service delivery functions.

Six Sigma is about data and facts, and not about thinking, feeling, or believing what you conceive to be the solution to the problem.

Defect

Part of the Six Sigma methodology includes measuring a process in terms of defects. Six Sigma helps you eliminate those defects so you can consistently and profitably produce and deliver products or services that meet and exceed your customers’ expectations. It’s not unusual for a small business to have a minimum of 10 percent of its net income being wasted by process defects. In other words, those defects are dollars wasted!

Examples of Defects

  • Pricing errors at your local retail store
  • Shipping damage
  • Incorrect invoices
  • Waiting too long to get the restaurant bill
  • Not getting paid on time
  • Bank statement errors
  • Telephone bill errors
  • E-mail errors
  • Car wash not completely cleaning your car
  • Dry cleaning spots on your clothes
  • Hardware store out of the single item you need
  • Hardware store out of the single item you need
  • Waiting for more than five minutes in the fast food drive-through line
  • Product defects making you return items back to retailer or manufacturer
  • Your spouse not remembering your anniversary
    (or was that you?)

Real World Performance Level

Situation/Example In 1 Sigma World In 3 Sigma World In 6 Sigma World
Pieces of your mail lost per year [1,600 opportunities per year] 1,106 107 Less than 1
Number of empty coffee pots at work (who didn't fill the coffee pot again?) [680 opportunities per year] 470 45 Less than 1
Number of telephone disconnections [7,000 talk minutes] 4,839 467 0.02
Erroneous business orders [250,000 opportunities per year] 16,694 6.7% 0.9

Read Last decision twice and understand. How it is possible to Renovate without destroying the old? In same manner how it is possible to establish a new system without changing in old system.

Selecting a Six Sigma project can be a challenging, even daunting task. It takes time and patience to identify those projects that will provide the highest impact for the least amount of effort. But again, taking the time to carefully consider your organization’s objectives and your customers’ expectations will bring you the greatest results. Make sure that everyone in your organization is involved—remember, Six Sigma is a team effort.

Around the Word Six Sigma

Myths About The Six Sigma

Over the years, the survey was conducted by putting business leaders in the centre, and it was found that there are numbers of misconceptions exist about Six Sigma. However, here are some of the most common myths about Six Sigma:

  • It applies only to large companies.
  • It only works in manufacturing settings. Although it’s true that Six Sigma started in manufacturing, it has been applied successfully in all segments of business—banking, healthcare, the military, fast-food chains, airlines, hotels, retail stores, and on and on and on. If there’s a repetitive process with a problem, you can apply Six Sigma!
  • Six Sigma is a complicated, statistical methodology that the ordinary person is incapable of understanding.
  • Six Sigma doesn’t include customer requirements. That’s totally false. Every Six Sigma project starts with the customers, with determining the factors that are critical to the customer. Those factors focus the project.
  • Six Sigma is an accounting game without real savings.
  • Six Sigma is just training.
  • Six Sigma is a “magic pill” to fix problems with little effort.

Common Concerns about Implementing the Six Sigma

Let’s address some of the concerns that everyone might have before implementing Six Sigma and get them out of the way - they are roadblocks on the journey to Six Sigma success.

  • Fear of Change
  • Fear of Commitment
  • Fear of Disruption
  • Increased Cost
  • Wasted Time Without Result

Linking Six Sigma To Finance

In the world of Six Sigma quality, the saying holds true: it takes money to save money using the Six Sigma quality methodology. You can't expect to significantly reduce costs and increase sales using Six Sigma without investing in training, organizational infrastructure and culture evolution.GE saved $12 billion over five years and added $1 to its earnings per share while Honeywell (AlliedSignal) recorded more than $800 million in savings.

GE produces annual benefits of over $2.5 billion across the organization from Six Sigma whereas Motorola reduced manufacturing costs by $1.4 billion from 1987-1994.

Six Sigma reportedly saved Motorola $15 billion over the last 11 years. Six-Sigma mostly finds application in large organizations. An important factor in the spread of Six Sigma was GE's 1998 announcement of $350 million in savings thanks to Six Sigma.

I often used to tell one little story to our client about any implementation project. The story is like; there was an old church which was in very dilapidated Condition. Father of church was also doing Worship from outside of the Church only. All devotees are also doing prayer from outside.

One meeting of Management of the Church has been held for renovation of the church. Some of the decisions were taken in the Management Meeting as,

  • We have to build new building for a church
  • We will build the new building at the same place where old one is located
  • Whatever scrap/ material will gain from the Old church we will use only that scrap/ material