What is Six Sigma?
Six Sigma is a breakthrough strategy, which focuses on helping organisations produce products and services better, faster and cheaper by improving the capability of processes to efficiently meet customer requirements. It identifies and eliminates costs, which add no value to customers. Unlike simple cost cutting programmes, Six Sigma delivers cost cuts whilst retaining or improving value to the customer. At the core of the Six Sigma strategy lays a disciplined methodology for improving organisations process capability through an approach based on extremely rigorous data gathering and statistical analysis to identify sources of variation and ways of reducing them.
The real power of Six Sigma comes through the empowerment of an organisations people through the mobilisation of a cadre of improvement champions, black belts, who are charged with delivering bottom-line results. Intensive training in a comprehensive range of quality and statistical tools is an integral part of this empowerment. Six Sigma is the philosophy and goal. The focus is on reducing variability to achieve the goal. It was developed in the 1980’s by Motorola. The name derives from the Greek letter used to denote population standard deviation. Motorola’s aim was to maintain the variation in their products to a level where the tolerance limits were at 6F – a defect rate of 3.4 parts per million.
The Six Sigma process
The Six Sigma breakthrough strategy involves a “define-measure-analyse-improve-control” (DMAIC) methodology. The strategy takes organization key business processes through five phases to deliver breakthroughs in performance:
Phase 1 – Define
This involves defining the scope and goals of the improvement project in terms of customer requirements and the process that delivers these requirements. The process to be improved is defined in terms of its inputs, outputs, controls and resources.
Phase 2 – Measure
This involves measuring the current process performance – input, output and process – and calculating the sigma metric for both short and longer-term process capability.
Phase 3 – Analyse
The analyse phase involves identifying the gap between the current and desired performance, prioritising problems and identifying root causes of problems. Benchmarking the process outputs, products or services, against recognised standards of performance may also be carried out. Depending upon the performance gap found, a decision will be made as to whether the existing process can be improved or whether it should be redesigned.
Phase 4 – Improve
This phase involves generating the improvement solutions to fix the problems and prevent them from recurring so that the required financial and other performance goals are met. Creativity will be required to find new ways to do things to the quality, cost and time standards required by the performance improvement goals.
Phase 5 – Control
This phase involves implementing the improved process in a way that “holds the gains”. Standards of operation will be documented in systems such as ISO9000 and standards of performance will be established using techniques such as statistical process control (SPC). After a “running-in” period, the process capability is calculated again to establish whether the performance gains are being sustained. The cycle is repeated, if further performance shortfalls are identified.
When to use Six Sigma?
Six Sigma is not an approach which should be undertaken lightly. It demands fundamental changes in culture and infrastructure. There are ten key features that characterise a successful Six Sigma culture:
- Committed leadership
The Six Sigma approach is essentially about achieving business transformation and not unsurprisingly, it requires specific leadership qualities to make it happen. Committed leaders with the clarity of purpose and drive to achieve breakthroughs in performance are a vital element in all Six Sigma programmes.
- Strategic alignment.
Six Sigma aims to achieve strategic breakthroughs in performance and organisations that have successfully embraced the approach ensure that the approach supports the organisations strategic objectives and key performance measures and is well integrated throughout the organisation
- A cadre of change leaders
Six Sigma is an intense approach to improvement and it requires the full mobilisation of a trained and dedicated cadre of practitioners. In Six Sigma, these are known as “black belts and “master black belts. The typical curriculum for black belts included four weeks of training in quality tools, delivered just in time as a team begins its improvement project. Massive investment in black belt training is required.
- Customer & market focus
A systematic approach to gathering customer & market intelligence is essential if Six Sigma efforts are to achieve breakthroughs in performance. It is vital to keep in touch with existing customers, track their satisfaction and changing needs as well keeping an eye on how the market is developing.
- Bottom-line benefits
A focus on delivering real savings and/or additional revenue is a vital element in Six Sigma. This focus is used to ensure that projects are selected on the basis of maximising their monetary return and customer satisfaction. The portfolio of improvement projects should include a mix of projects capable of delivering quick wins as well as longer-term projects.
- Process approach
Processes are the engine that delivers every organisation’s value proposition. The focus of Six Sigma is on understanding processes and reducing variability. Process understanding requires processes to be mapped, their operation fully understood & their capability to deliver customer requirements fully quantified —i.e. the concept of process capability.
- Obsession with measurement
Management and measurement are inseparably intertwined in Six Sigma programmes — you cannot manage what you cannot measure is the accepted philosophy.
- Continuous innovation
Six Sigma uses conventional quality tools but it encourages out of the box thinking. Breakthroughs are seldom achieved using common sense or conventional thinking.
- Organisational learning
Giving employees access to knowledge and information systems encourages organisational learning. Personal development and learning is also a key feature.
- Continuous reinforcement
Recognizing & rewarding leaders and improvement team’s contribution to improvement continually reinforce Six Sigma programmes. Incentive programmes must be designed to support Six Sigma and drive the desired behaviors.