UNDERSTANDING SIX SIGMA
Mrs. Ritu Mathur

The world that we live in today is a different and much more complex place than we were used to two decades back. In today’s environment change is the only permanent and predictable phenomenon. Moreover the pace of change has accelerated. With globalization of economy, companies face greater number of competitors. Due to this increased competition, the dominant force in the Seller- Customer relationship has shifted from Sellers to Customers. Customers are more aware of what they want, when they want and what they will pay. Due to this changed equation, companies are trying to lure their customers by all the marketing tricks. But in the long run, only one trick is going to work and the name of the trick is – Quality. The Quality of a product is going to determine the future of the companies.
Easier said than done, how can a company achieve and ensure that it gives the best quality to the customers? The answer lies in Change – Change the way people work in organization. Thankfully, many tools of change are available in form of various Change models. The most prominent one are:

1) TQM (Total Quality Management)
2) BPR (Business Process Reengineering)
3) Six Sigma

DIFFERENCE BETWEEN TQM, BPR AND SIX SIGMA:

All the three approaches aim at improving customer satisfaction through improvement of Quality. But they differ in the approach towards achieving it.

Total Quality Management (TQM) is basically a Human Asset approach and can be termed as People Centric. According to this approach, quality can be improved by Commitment of leadership and CEO and Change in Culture. This approach makes Quality as a “People Movement”.

Business Process Reengineering (BPR) on the other hand is a Process centric approach and the philosophy of this approach is that through redesigned rules and processes, dramatic change can be brought in the organization.

Six Sigma approach integrates the Human and Process elements of improvement to produce breakthrough results.

WHAT IS SIGMA?

The term ‘Sigma’ is taken from the Greek alphabet “sigma” and is used to designate the distribution or spread about the mean (average) of any parameter of product, process or procedure.

In the context of business or manufacturing process, Sigma capability is a metric that indicates how the process is behaving. Higher the Sigma value, better the capability of the process to produce defect free work and vice versa.

ORIGIN OF SIX SIGMA APPROACH

Initially developed in Motorola, this approach was greatly refined during its application in General Electric.
Six Sigma is a high performance data driven approach focused on analyzing the root causes of business problems and solving them. It ties the outputs of a business directly to marketplace. Six Sigma places a clear focus on getting the bottom line results along with the time frame. No Six Sigma project is approved until the bottom line or the success factors are clearly spelt out. Each project must be completed within a given time frame that is usually 3-6 months.

The six sigma approach redefines the term Quality in a much more competitive manner.

Past concepts of quality focused on “conformance to standards”. This definition assumed that as long as the company produced quality products and services, their performance standard was correct regardless of how those standards were met. Moreover, setting of standards and measurement of performance was mainly confined to the production areas and the commercial and other service functions were managed through command and control.

In Six Sigma, Quality is a state in which Value enrichment is realized for the customer and provider in every aspect of business relationship. Quality also encompasses manufacturing; commercial and other service functions of an organization because all these functions directly or indirectly affect products/service quality & customer satisfaction.  It also embodies a structured system of capturing all types of errors and their quantified measurement for subsequent analysis and improvement.

Value enrichment for the company and the customer is done by measurement based approach of Six Sigma, which enables us to find: -

At this point, one may ask that what are these most valuable areas that the companies are not aware of? The answer lies in “Hidden Costs””. Apart from Visible costs like Scrap, Rework and Warranty costs there are many hidden costs involved in a product like
 
• Conversion efficiency of materials
• Inadequate resource utilization
• Excessive use of material
• Cost of redesign and re-inspection
• Cost of resolving customer problems
• Lost customers / Goodwill
• High inventory

Six Sigma aims at cutting these hidden costs and this lead to greater quality and more profits

STEPS OF SIX SIGMA :

There are 6 fundamental steps involved in applying strategy for achieving Six Sigma. these are: -

Define phase
This phase defines the project. It identifies critical customer requirements and links them to business needs. It also defines a project charter and the business processes to be undertaken for Six Sigma.

Measurement phase
This phase involves selecting product characteristic, mapping respective process, making necessary measurements and recording the results of the process. This is essentially a data collection phase.

Analysis phase
In this phase an action plan is created to close the “gap” between how things currently work and how the organization would like them to work in order to meet the goals for a particular product or service. This phase also requires organizations to estimate their short term and long term process capabilities.

Improvement phase
This phase involves improving processes/product performance characteristics for achieving desired results and goals. This phase involves application of scientific tools and techniques for making tangible improvements in profitability and customer satisfaction.

Control phase
This phase requires the process conditions to be properly documented and monitored through statistical process control methods. After a “settling in” period, the process capability should be reassessed. Depending upon the results of such a follow-up analysis, it may be sometimes necessary to revisit one or more of the preceding phases.

Standardization phase
This phase requires institutionalizing Six Sigma into day to day working of the organization. In this phase the Six Sigma gains derived by certain specific projects are applied to the other projects as well for optimum business results.

An Example of Business perspective of Six Sigma is given below:


 

The Six Sigma strategy affects the following five fundamental areas of business at two Levels – Strategic and Operational.
 

1. Process improvement

2. Product & service improvement

3. Customer satisfaction

4. Design methodology
5. Supplier improvement
 

> At the strategic level, the goal of Six Sigma is to align an organization to its marketplace and deliver real improvements (in terms of rupees/dollars) to the bottom line.

> At the operational level, the Six Sigma goal is to move the business product or service attributes within the zone of customer specifications and to significantly shrink process variation.          

> Executives at the business level can use Six Sigma for improving market share, increasing profitability and organizations long-term viability.

> Managers at operations level can use Six Sigma to improve yield and reduce the labor and material cost.

> At the process level engineers can use Six Sigma to reduce defects and variation and improve process capability leading to better customer satisfaction

It is extremely important that Six Sigma is understood and integrated at every level.

WHAT DOES A COMPANY ACHIEVE BY IMPLEMENTING SIX SIGMA?

In the past, quality programs adopted by organizations focused on meeting customer’s needs without due consideration of visible and invisible costs. Thus, many organizations managed to produce high quality goods, but at a comparatively high cost.
However, today in the fiercely competitive market, the organizations have no choice but to offer the best quality products and services at the minimum cost - which is the purpose and objective of Six Sigma.

The following table explains the difference this approach brings in profitability.

*Parts per Million

Prerequisites of successful implementation

• Highly visible top down management commitment to the initiatives.

• A proper measurement system to track the progress. This weaves accountability into six sigma initiatives and provides tangible picture of the organization’s efforts.

• Internal and external benchmarking of the organization's products, services and processes.

• Stretch goals to focus on changing the processes.

• Appointment and training of champions and black belts to promote initiatives. The champions must be able to provide necessary planning, teaching, coaching and consulting at all levels in the organization.

• Training and development at all levels.

After implementing Six Sigma, the organization must assess the impact of the program on overall business results. Since six sigma has an impact on all the business functions, the organization must measure all the functions through quantifiable measures of excellence.

RESPONSIBILITY OF SIX SIGMA

The CEO should be the main driver of the Six Sigma program. Under him departmental / functional heads such as vice president or director manufacturing or marketing have to take charge in implementing the program. The champions must have complete hands-on experience with sound knowledge of advanced statistical tools. The success of Six Sigma to a very large extent depends upon selection of right people. The CEO must therefore ensure that the selected experts have suitable qualification, mental attitude to challenge the status-quo and a missionary zeal to implement change. These experts are also known as “Black Belts”.

Champions - Responsibilities
• Create the vision of Six Sigma for the organization.
• Define the road map to implement Six Sigma across the organization.
• Select the right people.
• Develop a training plan for implementing breakthrough strategy.
• Carefully select high impact projects.
• Support development of statistical thinking.
• Realize the gains by supporting Six Sigma projects through allocation of resources and removal of roadblocks.
• Recognize and reward people.

Master Black Belts
They are usually Chief Engineers or Head of departments / functional heads. They must posses a technical degree and have sound knowledge of statistical tools.
The master Black Belts should take the main responsibility of implementing Six Sigma program. They must assist the organization in identifying Six Sigma projects and also develop and train Black Belts under them.
• Take on leadership of major programs.
• Participate in project reviews to offer technical expertise.
• Organize training and development programs for Six Sigma team members/black belts.
• Facilitate sharing of best practices across the organization.
• Ensure successful implementation of Six Sigma projects from start to end.

Characteristics and Responsibilities of Six Sigma Black Belt
They must posses a technical degree or must have minimum 5 years of relevant experience. They must have good knowledge of statistical tools. Their main responsibilities and characteristics are

Characteristics
• Understands the “big picture” of the business.
• Focuses on results and understands the importance of the bottom line.
• Speaks the language of money, time, and organizational objectives.
• Capable of consulting, mentoring and coaching.
• Drives change by challenging conventional wisdom.
• Anticipates and confronts problems proactively and solves them.

Responsibilities
• Act as a breakthrough strategy expert.
• Identify barriers or roadblocks.
• Lead and direct teams in project execution.
• Report progress to management.
• Determine the most effective tools to apply.
• Prepare detailed project report in all the phases.
• Get inputs from operators, first line supervisors and team leaders.
• Train others.
• Ensure that the results are sustained.

After implementing Six Sigma, the organization must assess the impact of the program on overall business results. Since six sigma has an impact on all the business functions, the organization must measure all the functions through quantifiable measures of excellence.

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Mrs Ritu Mathur
Faculty (HR), Aurora's P. G. College,
Chikkadapally, Hyderabad - 500020.
ritu_nigam2000@yahoo.com