What is Six Sigma?
- As per Jack welch “Six Sigma is a quality program that, when all is said and done, improves your customer’s experience, lowers your costs, and builds better leaders.”
- Six Sigma is simply a method of efficiently solving a problem. Using Six Sigma reduces the amount of defective products manufactured or services provided, resulting in increased revenue and greater customer satisfaction.
- Six Sigma is a method that provides organizations tools to improve the capability of their business processes. This increase in performance and decrease in process variation lead to defect reduction and improvement in profits, employee morale, and quality of products or services. Six Sigma quality is a term generally used to indicate a process is well controlled (within process limits ±3s from the center line in a control chart, and requirements/tolerance limits ±6s from the center line). Different definitions have been proposed for Six Sigma, but they all share some common threads:
- Use of teams that are assigned well-defined projects that have direct impact on the organization’s bottom line.
- Training in “statistical thinking” at all levels and providing key people with extensive training in advanced statistics and project management. These key people are designated “Black Belts.” Review the different Six Sigma belts, levels and roles.
- Emphasis on the DMAIC approach to problem solving: define, measure, analyze, improve, and control.
- A management environment that supports these initiatives as a business strategy.
Six Sigma offers six major benefits that attract companies:
- Generates sustained success
- Sets a performance goal for everyone
- Enhances value to customers
- Accelerates the rate of improvement
- Promotes learning and cross-pollination
- Executes strategic change
What exactly does “Six Sigma” mean?
Six Sigma is named after a statistical concept where a process only produces 3.4 defects per million opportunities (DPMO). Six Sigma can therefore be also thought of as a goal, where processes not only encounter less defects, but do so consistently (low variability). Basically, Six Sigma reduces variation, so products or services can be delivered as expected reliably.
Six sigma: Statistically visualized
Differing opinions on the definition of Six Sigma:
- Philosophy — The philosophical perspective views all work as processes that can be defined, measured, analyzed, improved and controlled. Processes require inputs (x) and produce outputs (y). If you control the inputs, you will control the outputs. This is generally expressed as y = f(x).
- Set of tools — The Six Sigma expert uses qualitative and quantitative techniques to drive process improvement. A few such tools include statistical process control (SPC), control charts, failure mode and effects analysis, and process mapping. Six Sigma professionals do not totally agree as to exactly which tools constitute the set.
- Methodology — This view of Six Sigma recognizes the underlying and rigorous approach known as DMAIC (define, measure, analyze, improve and control). DMAIC defines the steps a Six Sigma practitioner is expected to follow, starting with identifying the problem and ending with the implementation of long-lasting solutions. While DMAIC is not the only Six Sigma methodology in use, it is certainly the most widely adopted and recognized.
- Metrics – In simple terms, Six Sigma quality performance means 3.4 defects per million opportunities (accounting for a 1.5-sigma shift in the mean).
Features of Six Sigma
Six Sigma’s aim is to eliminate waste and inefficiency, thereby increasing customer satisfaction by delivering what the customer is expecting. Six Sigma follows a structured methodology and has defined roles for the participants. Six Sigma is a data driven methodology and requires accurate data collection for the processes being analyzed. Six Sigma is about putting results on Financial Statements. Six Sigma is a business-driven, multi-dimensional structured approach for:
- Improving Processes
- Lowering Defects
- Reducing process variability
- Reducing costs
- Increasing customer satisfaction
- Increased profits
The word Sigma is a statistical term that measures how far a given process deviates from perfection. The central idea behind Six Sigma: If you can measure how many “defects” you have in a process, you can systematically figure out how to eliminate them and get as close to “zero defects” as possible and specifically it means a failure rate of 3.4 parts per million or 99.9997% perfect.
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. Process sigma can easily be calculated using a Six Sigma calculator. 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 two Six Sigma sub-methodologies: 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. The Six Sigma 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. According to the Six Sigma Academy, Black Belts save companies approximately $230,000 per project and can complete four to six projects per year. (Given that the average Black Belt salary is $80,000 in the United States, that is a fantastic return on investment.) 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. Many frameworks exist for implementing the Six Sigma methodology. Six Sigma Consultants all over the world have developed proprietary methodologies for implementing Six Sigma quality, based on the similar change management philosophies and applications of tools.
Key Concepts of Six Sigma
At its core, Six Sigma revolves around a few key concepts.
- Critical to Quality: Attributes most important to the customer.
- Defect: Failing to deliver what the customer wants.
- Process Capability: What your process can deliver.
- Variation: What the customer sees and feels.
- Stable Operations: Ensuring consistent, predictable processes to improve what the customer sees and feels.
- Design for Six Sigma: Designing to meet customer needs and process capability.
Our Customers Feel the Variance, Not the Mean. So Six Sigma focuses first on reducing process variation and then on improving the process capability.
Myths about Six Sigma
There are several myths and misunderstandings surrounding Six Sigma. Some of them are given below:
- Six Sigma is only concerned with reducing defects.
- Six Sigma is a process for production or engineering.
- Six Sigma cannot be applied to engineering activities.
- Six Sigma uses difficult-to-understand statistics.
- Six Sigma is just training.
Origin of Six Sigma
- Six Sigma originated at Motorola in the early 1980s, in response to achieving 10X reduction in product-failure levels in 5 years.
- Engineer Bill Smith invented Six Sigma, but died of a heart attack in the Motorola cafeteria in 1993, never knowing the scope of the craze and controversy he had touched off.
- Six Sigma is based on various quality management theories (e.g. Deming’s 14 point for management, Juran’s 10 steps on achieving quality).
Benefits of using Six Sigma
Organizations face rising costs and increasing competition every day. Six Sigma allows you to combat these problems and grow their businesses the following ways:
1. Increases revenue
- Lean Six Sigma increases your organization’s revenue by streamlining processes.
- Streamlined processes result in products or services that are completed faster and more efficiently at no cost to quality.
- Simply put, Lean Six Sigma increases revenue by enabling your organization to do more with less – Sell, manufacture and provide more products or services using fewer resources.
Six Sigma decreases your organization’s costs by:
- Removing “Waste” from a process. Waste is any activity within a process that isn’t required to manufacture a product or provide a service that is up to specification.
- Solving problems caused by a process. Problems are defects in a product or service that cost your organization money.
Basically, Six Sigma enables you to fix processes that cost your organization valuable resources.
3. Improves efficiency
Six Sigma improves the efficiency of your organization by:
- Maximizing your organization’s efforts toward delivering a satisfactory product or service to your customers
- Allowing your organization to allocate resources/revenue produced from your newly improved processes towards growing your business
Simply put, Six Sigma enables you to create efficient processes so that your organization can deliver more products or services, with more satisfied customers than ever before.
4. Develops effective people/employees
Six Sigma develops effective employees within your organization by:
- Involving employees in the improvement process. This promotes active participation and results in an engaged, accountable team.
- Building trust. Transparency throughout all levels of the organization promotes a shared understanding of how each person is important to the organization’s success.
Basically, Six Sigma develops a sense of ownership and accountability for your employees. This increases their effectiveness at delivering results for any improvement project they are involved in. Quite often, this benefit is overlooked by organizations who implement Six Sigma, but it’s underlying advantages dramatically increase the chances of continued success of Six Sigma, and your business.
Who Benefits From Using Six Sigma?
1.Small- and medium- sized businesses
- A new product or service
- Other improvement projects
- Expanding your sales force
2. People & Morale
Six Sigma not only increases revenue and reduces costs; it positively affects people by engaging them in improving the way they work. Since employees are the closest to the actual work (production of a product or delivery of a service) of any organization, they become the best resources to understand how to improve the efficiency and effectiveness of business processes.
Key elements of Six Sigma
There are three key elements of Six Sigma Process Improvement:
1. The Customers
Customers define quality. They expect performance, reliability, competitive prices, on-time delivery, service, clear and correct transaction processing and more. This means it is important to provide what the customers need to gain customer delight.
2. The Processes
Defining processes as well as defining their metrics and measures is the central aspect of Six Sigma. In a business, the quality should be looked from the customer’s perspective and so we must look at a defined process from the outside-in. By understanding the transaction lifecycle from the customer’s needs and processes, we can discover what they are seeing and feeling. This gives a chance to identify weak areas within a process and then we can improve them.
3. The Employees
A company must involve all its employees in the Six Sigma program. Company must provide opportunities and incentives for employees to focus their talents and ability to satisfy customers. It is important to Six Sigma that all the team members should have a well-defined role with measurable objectives.
Organizational Roles in Six Sigma
Under a Six Sigma program, the members of an organization are assigned specific roles to play, each with a title. This highly structured format is necessary in order to implement Six Sigma throughout the organization. There are seven specific responsibilities or “role areas” in a Six Sigma program, which are as follows.
- Defines the purpose of the Six Sigma program.
- Explains how the result is going to benefit the customer
- Sets a schedule for work and interim deadlines
- Develops a mean for review and oversight
- Support team members and defend established positions
Extended Definitions of Roles – Belt Colors
The assignment of belt colors to various roles is derived from the obvious source, the martial arts. Based on experience and expertise, following roles have evolved over the years.
Note: The belt names are a tool for defining levels of expertise and experience. They do not change or replace the organizational roles in the Six Sigma process.
1. Black Belt
Assessing readiness for Six Sigma.
The starting point in gearing up for Six Sigma is to verify if you are ready to embrace a change that says, “There is a better way to run your organization.” There are a number of essential questions and facts that you need to consider in making a readiness assessment:
- Is the strategic course clear for the company?
- Is the business healthy enough to meet the expectations of analysts and investors?
- Is there a strong theme or vision for the future of the organization that is well understood and consistently communicated?
- Is the organization good at responding effectively and efficiently to new circumstances?
- Evaluating current overall business results.
- Evaluating how effectively do we focus on and meet customers’ requirements.
- Evaluating how effectively are we operating.
- How effective are your current improvement and change management systems?
- How well are your cross-functional processes managed?
- What other change efforts or activities might conflict with or support Six Sigma initiative?
- Six Sigma demands investments. If you cannot make a solid case for future or current return, then it may be better to stay away.
- If you already have in place a strong, effective, performance and process improvement offer, then why do you need Six Sigma?
There could be many questions to be answered to have an extensive assessment before deciding if you should go for Six Sigma or not. This may need time and a thorough consultation with Six Sigma Experts to take a better decision.
The Cost of Six Sigma Implementation
Some of the most important Six Sigma budget items can include the following:
- Direct Payroll for the individuals dedicated to the effort full time.
- Indirect Payroll for the time devoted by executives, team members, process owners and others, involved in activities like data gathering and measurement.
- Training and Consultation fee to teach Six Sigma Skills and getting advice on how to make efforts successful.
Improvement Implementation Cost.
Six Sigma Start-up
Now you have decided to go for Six Sigma. So what is next? Deploying Six Sigma within an organization is a big step and involves many activities including define, measure, analyze, improve, and control phases. Here are some steps, which are required for an organization at the time of starting Six Sigma implementation.
- Plan your own route: There may be many paths to Six Sigma, but the best is the one that works for your organization.
- Define your objective: It is important to decide what you want to achieve, and priorities are important.
- Stick to what is feasible: Set up your plans so that they can match your influences, resources and scope.
- Preparing Leaders: They are required to launch and guide the Six Sigma Effort.
- Creating Six Sigma organization: This includes preparing Black Belts and other roles and assigning them their responsibilities.
- Training the organization: Apart from having black belts, it is required to impart training of Six Sigma to all the employees in the organization.
- Piloting Six Sigma effort: Piloting can be applied to any aspect of Six Sigma including solutions derived from process improvement or design redesign projects.
Project Selection for Six Sigma
One of the most difficult challenges in Six Sigma is the selection of the most appropriate problem to attack. There are generally two ways to generate projects:
- Top-down: This approach is generally tied to business strategy and is aligned with customer needs. The major weakness is they are too broad in scope to be completed in a timely manner (most six sigma projects are expected to be completed in 3-6 months).
- Bottom-up: In this approach, Black Belts choose the projects that are well suited for the capabilities of teams. A major drawback of this approach is that, projects may not be tied directly to strategic concerns of the management thereby, receiving little support and low recognition from the top.
Six Sigma has two key methodologies:
- DMAIC: It refers to a data-driven quality strategy for improving processes. This methodology is used to improve an existing business process.
- DMADV: It refers to a data-driven quality strategy for designing products and processes. This methodology is used to create new product designs or process designs in such a way that it results in a more predictable, mature and defect free performance.
There is one more methodology called DFSS – Design For Six Sigma. DFSS is a data driven quality strategy for designing or redesigning a product or service from the ground up. Sometimes a DMAIC project may turn into a DFSS project because the process in question requires complete redesign to bring about the desired degree of improvement.
This methodology consists of the following five steps.
Define –> Measure –> Analyze –> Improve –> Control
- Define: Define the problem or project goal that needs to be addressed.
- Measure: Measure the problem and process from which it was produced.
- Analyze: Analyze data and process to determine root cause of defects and opportunities.
- Improve: Improve the process by finding solutions to fix, diminish, and prevent future problems.
- Control: Implement, control, and sustain the improvement solutions to keep the process on the new course.
This methodology consists of five steps:
Define –> Measure –> Analyze –> Design –>Verify
- Define: Define the Problem or Project Goal that needs to be addressed.
- Measure: Measure and determine customers’ needs and specifications.
- Analyze: Analyze the process to meet the customer needs.
- Design: Design a process that will meet customers’ needs.
- Verify: Verify the design performance and ability to meet customer needs.
DFSS is a separate and emerging discipline related to Six Sigma quality processes. This is a systematic methodology utilizing tools, training, and measurements to enable us to design products and processes that meet customer expectations and can be produced at Six Sigma Quality levels.
This methodology can have the following five steps.
Define –> Identify –> Design –> Optimize –> Verify
- Define: Define what the customers want, or what they do not want.
- Identify: Identify the customer and the project.
- Design: Design a process that meets customers’ needs
- .Optimize: Determine process capability and optimize the design.
- Verify: Test, verify, and validate the design.
There are five high-level steps in the application of Six Sigma to improve the quality of output. The first step is Define. During the Define phase, four major tasks are undertaken.
1. Project Team Formation
Determine who needs to be on the team. What roles will each person perform?
Picking the right team members can be a difficult decision, especially if a project involves a large number of departments. In such projects, it could be wise to break them down into smaller pieces and work towards completion of a series of phased projects.
2.Document Customers Core Business Processes
3. Develop a Project Charter
This is a document that names the project, summarizes the project by explaining the business case in a brief statement, and lists the project scope and goals. A project charter has the following components:
- Project name
- Business case
- Project scope
- Project goals
- Special requirements
- Special assumptions
- Roles and responsibilities of the project team
4. Develop the SIPOC Process Map
Suppliers Input Process Output Customers The SIPOC process map is essential for identifying:
- The way processes occur currently.
- How those processes should be modified and improved throughout the remaining phases of DMAIC.
At the conclusion of the design phase, you should know who the customer or end user is, their resistance issues, and requirements. You should also have a clear understanding of goals and the scope of the project including budget, time constraints, and deadlines.
During the Measure Phase, the overall performance of the Core Business Process is measured. There are two important parts of Measure Phase.
1.Data Collection Plan and Data Collection
- The input source is where the process is generated.
- Process data refers to tests of efficiency: the time requirements, cost, value, defects or errors, and labor spent on the process.
- Output is a measurement of efficiency.
2. Data Evaluation
A Six Sigma defect is defined as anything outside of customer specifications.
A Six Sigma opportunity is the total quantity of chances for a defect.
First, we calculate Defects Per Million Opportunities (DPMO), and based on that a Sigma is decided from a predefined table:
- As stated above, Number of defects is the total number of defects found, Number of Units is the number of units produced, and number of opportunities means the number of ways to generate defects.
- For example, the food ordering delivery project team examines 50 deliveries and finds out the following: Delivery is not on time (13) Ordered food is not according to the order (3) Food is not fresh (0)
So now, DPMO will be as follows:
Six Sigma aims to define the causes of defects, measure those defects, and analyze them so that they can be reduced. We consider five specific types of analyses that help to promote the goals of the project. These are source, process, data, resource, and communication analysis. Now we will see them in detail.
This is also called root cause analysis. It attempts to find defects that are derived from the sources of information or work generation. After finding the root cause of the problem, attempts are made to resolve the problem before we expect to eliminate defects from the product.
Three Steps to Root Cause Analysis
- The open step: During this phase, the project team brainstorms all the possible explanations for current sigma performance.
- The narrow step: During this phase, the project team narrows the list of possible explanations for current sigma performance.
- The close step: During this phase, the project team validates the narrowed list of explanations that explain sigma performance.
- Process Analysis
Analyze the numbers to find out how well or poorly the processes are working, compared to what’s possible and what the competition is doing. Process analysis includes creating a more detailed process map, and analyzing the more detailed map, where the greatest inefficiencies exist. The source analysis is often difficult to distinguish from process analysis. The process refers to the precise movement of materials, information, or requests from one place to another.
- Data Analysis
Use of measures and data (those already collected or new data gathered in the analyze phase) to discern patterns, tendencies or other factors about the problem that either suggest or prove/disprove possible cause of the problem. The data itself may have defect. There may be a case when products or deliverables do not provide all the needed information. Hence data is analyzed to find out defects and attempts are made to resolve the problem before we expect to eliminate defects from the product.
- Resource Analysis
We also need to ensure that employees are properly trained in all departments that affect the process. If training is inadequate, you want to identify that as a cause of defects. Other resources include raw materials needed to manufacture, process, and deliver the goods. For example, if the Accounting Department is not paying vendor bills on time and, consequently, the vendor holds up a shipment of shipping supplies, it becomes a resource problem.
- Communication Analysis
One problem common to most processes high in defects is poor communication. The classic interaction between a customer and a retail store is worth studying because many of the common communication problems are apparent in this case. The same types of problems occur with internal customers as well, even though we may not recognize the sequence of events as a customer service problem. The exercise of looking at issues from both points of view is instructive. A vendor wants payment according to agreed-upon terms, but the Accounting Department wants to make its batch processing uniform and efficient. Between these types of groups, such disconnects demonstrate the importance of communication analysis.
Analysis can take several forms. Some Six Sigma programs tend to use a lot of diagrams and worksheets, and others prefer discussion and list making. There are many tools that can be used to perform analysis like Box Plot, Cause and Effect Diagram, Progressive Analysis, Ranking, Pareto Analysis, Prioritization Matrix, Value Analysis, etc. The proper procedure is the one that works best for your team, provided that the end result is successful.
If the project team does a thorough job in the root causation phase of analysis, the Improve Phase of DMAIC can be quick, easy, and satisfying work. The objective of Improve Phase is to identify improvement breakthroughs, identify high gain alternatives, select preferred approach, design the future state, determine the new Sigma level, perform cost/benefit analysis, design dashboards/scorecards, and create a preliminary implementation plan.
- Identify Improvement Breakthroughs:
- Apply idea-generating tools and techniques to identify potential solutions that eliminate root causes.
- Identify/Select High Gain Alternatives:
- Develop criteria to evaluate candidate improvement solutions.
- Think systematically and holistically.
- Prioritize and evaluate the candidate solutions against the solution evaluation criteria.
- Conduct a feasibility assessment for the highest value solutions.
- Develop preliminary solution timelines and cost-benefit analysis to aid in recommendation presentation and future implementation planning.
Improvement can involve a simple fix once we discover the causes of defects. However, in some cases, we may need to employ additional tools as well. These include:
- Solution alternatives
- Experiments with solution alternatives
- Planning for future change
The last phase of DMAIC is control, which is the phase where we ensure that the processes continue to work well, produce desired output results, and maintain quality levels. You will be concerned with four specific aspects of control, which are as follows.
1. Quality Control
The project team determines how to technically control the newly improved process and creates a response plan to ensure the new process, and also maintains the improved sigma performance.
Topics covered in Six sigma
I have covered the following topics under six sigma, though different authors and consultants may follow different structure. Hope browsing through the following pages will help you in clarify the concepts of Six Sigma.
- Statistics in Quality
- Common used Distribution in Quality
- Business Process Management
- Kaoru Ishikawa’s Basic Seven QC Tools
- The Seven New Management And Planning Tools
- Voice Of The Customer.
- VOC Data collecting tools
- Project Charter
- Quality Function Deployment
- Using Benchmarking to achieve Process Improvement
- Team Management in improvement Projects
- Team Management Skills
- Team Management Tools
- Process Analysis Tools
- Measurement Systems in Quality
- Measurement System Analysis
- Statistical Process Control using control chart
- Failure Mode and Effects Analysis
- Lean Enterprise
- 5S or Visual Management
- Total Productive Maintenance
- Error Proofing
- The Kanban System
- The Kaizen Event
- One Piece Flow
- Process Capability
- Regression Analysis
- Hypothesis Testing
- Analysis of Variance – ANOVA
- Multivariate Tools
- Nonparametric Tests
- Design of Experiments
- Design for Six Sigma
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