Six Sigma

Six Sigma

Six Sigma is a business management strategy, originally developed by Motorola, that today enjoys wide-spread application in many sectors of industry.

Six Sigma seeks to identify and remove the causes of defects and errors in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization ("Black Belts" etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase).

Historical overview

Six Sigma was originally developed as a set of practices designed to improve manufacturing processes and eliminate defects, but its application was subsequently extended to other types of business processes as well. In Six Sigma, a defect is defined as anything that could lead to customer dissatisfaction.

The particulars of the methodology were first formulated by Bill Smith at Motorola in 1986. Six Sigma was heavily inspired by six preceding decades of quality improvement methodologies such as quality control, TQM, and Zero Defects, based on the work of pioneers such as Shewhart, Deming, Juran, Ishikawa, Taguchi and others.

Like its predecessors, Six Sigma asserts that –

  • Continuous efforts to achieve stable and predictable process results (i.e. reduce process variation) are of vital importance to business success.
  • Manufacturing and business processes have characteristics that can be measured, analyzed, improved and controlled.
  • Achieving sustained quality improvement requires commitment from the entire organization, particularly from top-level management.

Features that set Six Sigma apart from previous quality improvement initiatives include –

  • A clear focus on achieving measurable and quantifiable financial returns from any Six Sigma project.
  • An increased emphasis on strong and passionate management leadership and support.
  • A special infrastructure of "Champions," "Master Black Belts," "Black Belts," etc. to lead and implement the Six Sigma approach.
  • A clear commitment to making decisions on the basis of verifiable data, rather than assumptions and guesswork.

The term "Six Sigma" is derived from a field of statistics known as process capability studies. Originally, it referred to the ability of manufacturing processes to produce a very high proportion of output within specification. Processes that operate with "six sigma quality" over the short term are assumed to produce long-term defect levels below 3.4 defects per million opportunities (DPMO). Six Sigma's implicit goal is to improve all processes to that level of quality or better.

Six Sigma is a registered service mark and trademark of Motorola, Inc. Motorola has reported over US$17 billion in savings from Six Sigma as of 2006.

Other early adopters of Six Sigma who achieved well-publicized success include Honeywell International (previously known as Allied Signal) and General Electric, where the method was introduced by Jack Welch. By the late 1990s, about two-thirds of the Fortune 500 organizations had begun Six Sigma initiatives with the aim of reducing costs and improving quality.

In recent years, Six Sigma has sometimes been combined with lean manufacturing to yield a methodology named Lean Six Sigma.

Origin and meaning of the term "six sigma process"

The following outlines the statistical background of the term Six Sigma.

Sigma (the lower-case Greek letter σ) is used to represent the standard deviation (a measure of variation) of a statistical population. The term "six sigma process" comes from the notion that if one has six standard deviations between the mean of a process and the nearest specification limit, there will be practically no items that fail to meet the specifications. This is based on the calculation method employed in a process capability study.

In a capability study, the number of standard deviations between the process mean and the nearest specification limit is given 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.

The role of the 1.5 sigma shift

Experience has shown that in the long term, processes usually do not perform as well as they do in the short. As a result, the number of sigmas that will fit between the process mean and the nearest specification limit is likely to drop over time, compared to an initial short-term study. To account for this real-life increase in process variation over time, an empirically-based 1.5 sigma shift is introduced into the calculation. According to this idea, a process that fits six sigmas between the process mean and the nearest specification limit in a short-term study will in the long term only fit 4.5 sigmas – either because the process mean will move over time, or because the long-term standard deviation of the process will be greater than that observed in the short term, or both.

Hence the widely accepted definition of a six sigma process is one that produces 3.4 defective parts per million opportunities (DPMO). This is based on the fact that a process that is normally distributed will have 3.4 parts per million beyond a point that is 4.5 standard deviations above or below the mean (one-sided capability study). So the 3.4 DPMO of a "Six Sigma" process in fact corresponds to 4.5 sigmas, namely 6 sigmas minus the 1.5 sigma shift introduced to account for long-term variation. This is designed to prevent underestimation of the defect levels likely to be encountered in real-life operation.

Sigma levels

Taking the 1.5 sigma shift into account, short-term sigma levels correspond to the following long-term DPMO values (one-sided):

  • One Sigma = 690,000 DPMO = 31% efficiency
  • Two Sigma = 308,000 DPMO = 69.2% efficiency
  • Three Sigma = 66,800 DPMO = 93.32% efficiency
  • Four Sigma = 6,210 DPMO = 99.379% efficiency
  • Five Sigma = 230 DPMO = 99.977% efficiency
  • Six Sigma = 3.4 DPMO = 99.9997% efficiency

Methodology

Six Sigma has two key methodologies: DMAIC and DMADV, both inspired by Deming's Plan-Do-Check-Act Cycle. DMAIC is used to improve an existing business process; DMADV is used to create new product or process designs.

DMAIC

The basic methodology consists of the following five steps:

  • Define process improvement goals that are consistent with customer demands and the enterprise strategy.
  • Measure key aspects of the current process and collect relevant data.
  • Analyze the data to verify cause-and-effect relationships. Determine what the relationships are, and attempt to ensure that all factors have been considered.
  • Improve or optimize the process based upon data analysis using techniques like Design of Experiments.
  • Control to ensure that any deviations from target are corrected before they result in defects. Set up pilot runs to establish process capability, move on to production, set up control mechanisms and continuously monitor the process.

DMADV

The basic methodology consists of the following five steps:

  • Define design goals that are consistent with customer demands and the enterprise strategy.
  • Measure and identify CTQs (characteristics that are Critical To Quality), product capabilities, production process capability, and risks.
  • Analyze to develop and design alternatives, create a high-level design and evaluate design capability to select the best design.
  • Design details, optimize the design, and plan for design verification. This phase may require simulations.
  • Verify the design, set up pilot runs, implement the production process and hand it over to the process owners.

DMADV is also known as DFSS, an abbreviation of "Design For Six Sigma".

Implementation roles

One of the key innovations of Six Sigma is the professionalizing of quality management functions. Prior to Six Sigma, quality management in practice was largely relegated to the production floor and to statisticians in a separate quality department. Six Sigma borrows martial arts ranking terminology to define a hierarchy (and career path) that cuts across all business functions and a promotion path straight into the executive suite.

Six Sigma identifies several key roles for its successful implementation.

  • Executive Leadership includes the CEO and other members of top management. They are responsible for setting up a vision for Six Sigma implementation. They also empower the other role holders with the freedom and resources to explore new ideas for breakthrough improvements.
  • Champions are responsible for Six Sigma implementation across the organization in an integrated manner. The Executive Leadership draws them from upper management. Champions also act as mentors to Black Belts.
  • Master Black Belts, identified by champions, act as in-house coaches on Six Sigma. They devote 100% of their time to Six Sigma. They assist champions and guide Black Belts and Green Belts. Apart from statistical tasks, their time is spent on ensuring consistent application of Six Sigma across various functions and departments.
  • Black Belts operate under Master Black Belts to apply Six Sigma methodology to specific projects. They devote 100% of their time to Six Sigma. They primarily focus on Six Sigma project execution, whereas Champions and Master Black Belts focus on identifying projects/functions for Six Sigma.
  • Green Belts are the employees who take up Six Sigma implementation along with their other job responsibilities. They operate under the guidance of Black Belts.

Quality management tools and methodologies used in Six Sigma

Six Sigma makes use of a great number of established quality management methods that are also used outside of Six Sigma. The following table shows an overview of the main methods used.

Software used for Six Sigma

List of Six Sigma companies

Reception

Six Sigma has made a huge impact on industry and is widely employed as a business strategy for achieving and sustaining operational and service excellence. However, there have also been various criticisms of Six Sigma.

Lack of originality

Noted quality expert Joseph Juran has described Six Sigma as "a basic version of quality improvement," stating that "[t]here 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.

Role of consultants

The use of "Black Belts" as itinerant change agents is controversial as it has created a cottage industry of training and certification. Six Sigma is often oversold by consulting firms that claim expertise in Six Sigma when they in fact only have a rudimentary understanding of the tools and techniques and the Six Sigma approach.

The expansion of the various "Belts" to include "Green Belts," "Master Black Belts" and "Gold Belts" is commonly seen as a parallel to the various "belt factories" that exist in martial arts.

Studies that indicate negative effects caused by Six Sigma

A Fortune article stated that "of 58 large companies that have announced Six Sigma programs, 91 percent have trailed the S&P 500 since." The statement is attributed to "an analysis by Charles Holland of consulting firm Qualpro (which espouses a competing quality-improvement process). The gist of the article is that Six Sigma is effective at what it is intended to do, but that it is "narrowly designed to fix an existing process" and does not help in "coming up with new products or disruptive technologies." Many of these claims have been argued as being in error or ill-informed.

A Business Week article says that James McNerney's introduction of Six Sigma at 3M may have had the effect of stifling creativity. It cites two Wharton School professors who say that Six Sigma leads to incremental innovation at the expense of blue-sky work.

Based on arbitrary standards

While 3.4 defects per million opportunities might work well for certain products/processes, it might not be ideal or cost-effective for others. A pacemaker process might need higher standards, for example, whereas a direct mail advertising campaign might need lower ones. The basis and justification for choosing 6 as the number of standard deviations is not clearly explained. In addition, the Six Sigma model assumes that the process data always conform to the normal distribution. The calculation of defect rates for situations where the normal distribution model does not apply is not properly addressed in the current Six Sigma literature.

Criticism of the 1.5 sigma shift

Because of its arbitrary nature, the 1.5 sigma shift has been dismissed as "goofy" by the statistician Donald J. Wheeler. Its universal applicability is seen as doubtful.

The 1.5 sigma shift has also been contentious because it results in stated "sigma levels" that reflect short-term rather than long-term performance: a process that has long-term defect levels corresponding to 4.5 sigma performance is, by Six Sigma convention, described as a "6 sigma process." The accepted Six Sigma scoring system thus cannot be equated to actual normal distribution probabilities for the stated number of standard deviations, and this has been a key bone of contention about how Six Sigma measures are defined. The fact that it is rarely explained that a "6 sigma" process will have long-term defect rates corresponding to 4.5 sigma performance rather than actual 6 sigma performance has led several commentators to express the opinion that Six Sigma is a confidence trick.

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