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Why Six Sigma?
In the
mid 1980s, Motorola's CEO at the time, Bob Galvin, started the company on
Six Sigma which is about helping the organization make more money. Six Sigma
focuses on improving quality (i.e., reducing waste) by helping
organizations produce products and services better, faster and cheaper. In
more traditional terms, Six Sigma focuses on defect prevention, cycle time
reduction, and cost savings. Unlike mindless cost-cutting programs which
reduce value and quality, Six Sigma identifies and eliminates costs which
provide no value to customers: waste costs.
For
non-Six Sigma companies, these costs are often extremely high. Companies
operating at three or four sigma typically spend between 25 and 40 percent
of their revenues fixing problems. This is known as the cost of quality, or
more accurately the cost of poor quality. Companies operating at Six Sigma
typically spend less than 5 percent of their revenues fixing problems
(Figure 1). The dollar cost of this gap can be huge. General Electric
estimates that the gap between three or four sigma and Six Sigma was
costing them between $8 billion and $12 billion per year.
Figure 1: Cost of Poor Quality versus Sigma Level
What is Six Sigma?
Six Sigma is a rigorous, focused and highly
effective implementation of proven quality principles and techniques. Incorporating
elements from the work of many quality pioneers, Six Sigma aims for
virtually error free business performance. Sigma,
is a letter in the Greek alphabet used by statisticians to measure the
variability in any process. A company's performance is measured by the
sigma level of their business processes. Traditionally companies accepted
three or four sigma performance levels as the norm, despite the fact that
these processes created between 6,200 and 67,000 problems per million
opportunities! The Six Sigma standard of 3.4 problems per million
opportunities is a response to the increasing expectations of customers and
the increased complexity of modern products and processes.
Six Sigma takes a handful of proven methods and
trains a small cadre of in-house technical leaders, known as Six Sigma
Black Belts, to a high level of proficiency in the application of these
techniques. To be sure, some of the methods used by Black Belts are highly
advanced, including the use of up-to-date computer technology. But the
tools are applied within a simple performance improvement model known as
DMAIC, or Define-Measure-Analyze-Improve-Control. DMAIC can be described as
follows:
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D
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Define the goals of the improvement activity. At
the top level the goals will be the strategic objectives of the
organization, such as a higher ROI or market share. At the operations
level, a goal might be to increase the throughput of a production
department. At the project level goals might be to reduce the defect
level and increase throughput. Apply data mining methods to identify
potential improvement opportunities.
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M
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Measure the existing system. Establish valid and
reliable metrics to help monitor progress towards the goal(s) defined at the
previous step. Begin by determining the current baseline. Use exploratory
and descriptive data analysis to help you understand the data.
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A
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Analyze the system to identify ways to eliminate
the gap between the current performance of the system or process and the
desired goal. Apply statistical tools to guide the analysis.
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I
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Improve the system. Be creative in finding new
ways to do things better, cheaper, or faster. Use project management and
other planning and management tools to implement the new approach. Use
statistical methods to validate the improvement.
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C
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Control the new system. Institutionalize the
improved system by modifying compensation and incentive systems,
policies, procedures, MRP, budgets, operating instructions and other
management systems. You may wish to utilize systems such as ISO 9000 to
assure that documentation is correct.
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Leadership
Six Sigma is the means by which the organization's
strategic goals are to be achieved. This effort has to be led by the CEO,
who is responsible for the performance of the organization as a top-down
model.
Champions and
Sponsors
Six
Sigma champions are high-level individuals who understand Six Sigma and are
committed to its success. In larger organizations Six Sigma will be led by
a full time, high level champion, such as an Executive Vice-President. In
all organizations, champions also include informal leaders who use Six
Sigma in their day-to-day work and communicate the Six Sigma message at
every opportunity. Sponsors are owners of processes and systems who help initiate and coordinate Six Sigma improvement
activities in their areas of responsibilities.
Master Black Belt
This is
the highest level of technical and organizational proficiency. Master Black Belts provide technical
leadership of the Six Sigma program.
Thus, they must know everything the Black Belts know, as well as
understand the mathematical theory on which the statistical methods are
based. Master Black Belts must be
able to assist Black Belts in applying the methods correctly in unusual
situations. Whenever possible,
statistical training should be conducted only by Master Black Belts. Otherwise the familiar "propagation
of error" phenomenon will occur, i.e., Black Belts pass on errors to
green belts, who pass on greater errors to team members. If it becomes necessary for Black Belts
and Green Belts to provide training, they should do only so under the
guidance of Master Black Belts. For
example, Black Belts may be asked to provide assistance to the Master
during class discussions and exercises.
Because of the nature of the Master's duties, communications and
teaching skills are as important as technical competence.
Black Belt
Candidates
for Black Belt status are technically oriented individuals held in high
regard by their peers. They should
be actively involved in the process of organizational change and
development. Candidates may come from a wide range of disciplines and need
not be formally trained statisticians or engineers. However, because they are expected to
master a wide variety of technical tools in a relatively short period of
time, Black Belt candidates will probably possess a background including
college-level mathematics and the basic tool of quantitative analysis. Coursework in statistical methods may be
considered a strong plus or even a prerequisite. As part of their training,
Black Belts receive 160 hours of classroom instruction, plus one-on-one
project coaching from Master Black Belts or consultants. As part of their
training they will be required to become proficient in the use of one or
more advanced statistical analysis software packages.
Green Belt
Green
Belts are Six Sigma project leaders capable of forming and facilitating Six
Sigma teams and managing Six Sigma projects from concept to
completion. Green Belt training
consists of five days of classroom training and is conducted in conjunction
with Six Sigma projects. Training
covers project management, quality management tools, quality control tools,
problem solving, and descriptive data analysis. Six Sigma champions should attend Green
Belt training. Usually, Six Sigma Black Belts help Green Belts define their
projects prior to the training, attend training with their Green Belts, and
assist them with their projects after the training.
Staffing Levels and Expected Returns
As
stated earlier, the number of full time personnel devoted to Six Sigma is
not large. Mature Six Sigma programs, such as those of Motorola, General
Electric, Johnson & Johnson, AlliedSignal, and others average about
one-percent of their workforce as Black Belts. There is
usually about one Master Black Belts for every ten Black Belts, or about 1
Master Black Belt per 1,000 employees. A Black Belt will typically complete
5 to 7 projects per year. Project teams are led by Green Belts, who, unlike
Black Belts and Master Black Belts, are not employed full time in the Six
Sigma program. Black Belts are highly prized employees and are often
recruited for key management positions elsewhere in the company.
Estimated
savings per project varies from organization to organization. Reported
results average about US$150,000 to US$243,000. Note that these are not the
huge mega-projects pursued by Re-engineering. Yet, by completing 5 to 7
projects per year per Black Belt, the company will add in excess of US$1
million per year per Black Belt to its bottom line. For a company with
1,000 employees the numbers would look something like this:
Master
Black Belts: 1
Black
Belts: 10
Projects:
= 50 to 70 (5 to 7 per Black Belt)
Estimated
saving: US$9 million to US$14.6 million (US$14,580 per employee)
Do the
math for your organization and see what Six Sigma could do for you. Because
Six Sigma savings impact only non-value added costs, they flow directly to
your company's bottom li
Implementation of Six Sigma
Successful
deployment of Six Sigma involves focusing on a small number of
high-leverage items. The steps required to successfully implement Six Sigma
are well-documented.
1. Successful
performance improvement must begin with senior leadership. Start by
providing senior leadership with training in the principles and tools they
need to prepare their organization for success. Using their newly acquired
knowledge, senior leaders direct the development of a management
infrastructure to support Six Sigma. This involves reducing levels of
organizational hierarchy, removing procedural barriers to experimentation
and change, and a variety of other changes designed to make it easier to
try new things without fear of reprisal.
2. Systems
are developed for establishing close communication with customers,
employees, and suppliers. This includes developing rigorous methods
of obtaining and evaluating customer, employee and supplier input. Base
line studies are conducted to determine the starting point and to identify
cultural, policy, and procedural obstacles to success.
3.
Training needs are rigorously assessed. Remedial skills education is
provided to assure that adequate levels of literacy and numeracy are
possessed by all employees. Top-to-bottom training is conducted in systems
improvement tools, techniques, and philosophies.
4.
A framework for continuous process improvement is developed, along with a
system of indicators for monitoring progress and success. Six Sigma metrics
focus on the organization's strategic goals, drivers, and key business
processes.
5.
Business processes to be improved are chosen by management, and by people
with intimate process knowledge at all levels of the organization. Six
Sigma projects are conducted to improve business performance linked to
measurable financial results. This requires knowledge of the organization's
constraints.
6.
Six Sigma projects are conducted by individual employees and teams led by
Green Belts and assisted by Black Belts.
Value World Edge:
Value World is a value
cent entered organization consisting of hard-core industry professionals.
The methods used by Value World include adequate theory with plenty of
examples and case studies. The real emphasis is on hands on practice
whereby the participants can apply the techniques to live case studies and
achieve results for their organization.
Directed by Shyam B. Gupta, a graduate in
mechanical engineering of I.T., B.H.U. and M.Tech.
from I.I.T. Kharagpur,
has more than 30 years of experience in research and development, Quality
Systems, manufacturing, training and problem solving. He has organized
innumerable problem solving workshops and trained several line managers to
become team leaders. He has conducted similar training programs for several
other companies with excellent results. There are other consultants who are
specialized in their own field and are drawn from time to time as required.
Duration of
Training:
Awareness Course: Two Days
Implementation: It is scheduled over 23 working days, but
practically will take about 30 days.
Black Belt and Green
Belt Certification: -
Four Black belts and 8-10 Green Belt will be prepared for
certification, which takes about three months, after the training.
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