Six Sigma-Understanding Made Easy
One of the
frequently-used buzzwords in today’s business jargon is digital transformation.
Thanks to technological boom in the 20th century information age
era, emerging smart gadgets and tools are aiding the companies, irrespective of
their size, to pursue the transformation path to claim a big pie of business in
a fast paced and cut-throat business arena. However, there are some pressing
questions demanding immediate answers. Is it sufficient to streamline the
transformation process of an organization to grow? Can the digital
transformation be a panacea of an enterprise for its growth and success? Can
the implementation of latest technological tools be a guarantee of flawless
production process, zero waste, curtailed expenses and enhanced revenue? The
single word answer to all these questions is a big NO.
Here comes the
unavoidable and irresistible concept of latest management tools of quality
control and business re-engineering. Fully cognizant of evolving market
dynamics and processes, the American multinational telecommunication giant
Motorola pioneered a new idea of quality management and control process in
1986. It was so powerful and ground breaking idea that even Jack Welch made it
mandatory for all his business strategies at General Electric in 1995. Over the
years, this idea was tested, deliberated, improved, refined and further refined
that today we know it by the name of Six
Sigma.
What is Six Sigma?
In layman’s terms, Six
Sigma refers to the management’s set of tools and guidelines specifically
considered to achieve a zero or near zero defects in business processes. It
focuses on developing strategies for improving the value of a business process
by first recognizing and later eliminating the roots of imperfections and
reducing brunt inconsistency in production and business process. Six Sigma uses
a variety of quality management tools including but not limited to empirical
and statistical analysis packages, which include well-trained human resources.
The term i.e. Six
Sigma is derived from the 18th letter of Greek alphabet-Sigma, which
also denotes “sum” or “deviation” in mathematical or statistical sense.
Statistically speaking, “6” is that stage of deviation that we aim to achieve
as anything better than that is considered not feasible at least in statistical
sense. Full set of Sigma breakdown can be observed in below table.
Sigma Level
Defects per
Million
Yield
6
3.4
99.99966%
5
230
99.977%
4
6210
99.38%
3
66,800
93.32%
2
308,000
69.15%
1
690,000
30.85%
The Fundamental Six Sigma Principals
Irrespective of
whether you are engaged in a manufacturing process or delivering services, the
ultimate objective of Six Sigma is the same-delivering a zero or near-zero
defect goods or services for maximum customer satisfaction with a view to
enhancing your organization’s values. Some of the cardinal Six Sigma principals
are discussed below.
Maintain
your focus on the customer: Customer is the reason for a business
success or failure. Customers can make or break any business. The age-old
mantra of “Customer is king” is still true and valid even today. The prime
objective of every business, irrespective of its size and scale of process, is
to ensure maximum customer satisfaction at the minimum of costs. It is
imperative that a business aspires for a higher standard of its output to
attract and maintain a large customer base.
Be aware of
the work flow: Improving a system without first understanding it is nonsensical,
illogical and waste of time. It is essential that first we understand the
existing process flow completely, identify its drawbacks and later suggest its
redressal.
Ensure
smooth work flow: A key underlying understanding of Six Sigma is that nothing is left
on chance. Each and every process, be it the smallest, is process-driven. It is
not uncommon to experience hurdles or bottlenecks in the way of smooth work
flow. For a big organization, there is software like The Automated Business
Process Discovery tools which can identify or highlight bottlenecks in a smooth
process. For small enterprises, asking 5 Whys questions prove a powerful method
for problem identification. The crux is that after asking 5 Whys question, one
can easily gauge the root cause of a bottleneck.
Always aim
for zero waste and adding value: If you focus on adding value to your
business process, you must identify and remove all those steps, components or
sub-processes, which do not add any value. It simply boils down to the concept
of elimination of waste or wasteful. Rene T. Domingo, in his paper “Identifying and Eliminating The Seven
Wastes or Muda” for the Asian Institute of Management, presents the five
steps he believes are important for reducing waste:
1.
Make waste visible by everyone involved.
2.
Be aware of the waste.
3.
Feel a sense of responsibility for the waste.
4.
Estimate the waste.
5.
Abolish or reduce the waste.
End flaws
through absence of variation: This is undoubtedly the crux of Six
Sigma. By replicating a process of getting it execute flawless every time,
defects or waste can be controlled massively. Here comes the concept of
standardizing your processes. Absence of variation at the optimal level of
process ensures a zero or near zero defective output.
Team work through
collaboration: Collaboration is the key to success. This is true not only on
individual level but also on organizational level. While executive management
and analysts make excellent strategies and plans, it is equally important to
get the feedback from or involve those who are at the helm of day to day processes.
Create
systematic and scientific efforts: One
of the reasons why Six Sigma is a successful and popular concept for process
improvement is that it is based on scientific quality control and statistical
tools. It works on collecting data, analyzing and leveraging that data to
conceive and sustain improvement in the systems.
The Six Sigma Methodologies
The two main Six
Sigma methodologies are DMAIC and DMADV. Both are inspired by the renowned
management consultant Dr William Edwards Deming’s Plan-Do-Check-Act (PDCA)
cycle. DMAIC is usually used for projects executed for improving an existing
business process. DMADV, on the other hand, has its utility for creating new
product or process plan. DMAIC project methodology has five steps i.e. Define the system, Measure key aspects, Analyze
the data, Improve the existing
process and Control the future path.
DMADV is used when
existing processes do not meet customer expectations. The five steps of DMADV
are D-Define the objectives, M-Measure and recognize product
capabilities, A-Analyze and
replicate design alternate, D-Design
an enhanced alternative and V-Validate
the plan.
Difference between Lean Management and Six Sigma
Never confuse lean
management with Six Sigma. This is an easy mistake to make. Lean management and
Six Sigma share similar concepts and philosophies, but they are not the same.
Lean management focuses delivering value, abolishing waste by using
pre-determined standard procedures and constant perfection, while Six Sigma
concentrates on killing defects and ensuring no variation.
What critics say about Six Sigma
Despite having
universal acceptability, Six Sigma is not without its fair share of criticisms.
There are two main points of objections over Six Sigma. First, it is argued
that Six Sigma does not offer anything, which can be termed as new or unique.
True that its foundation are built over old school of thoughts, however it is a
more refined and polished concept of zero or near zero defects in business
processes. Second, some critics say that Six Sigma emphasizes more on appraisal
or corrective action systems instead of taking proactive approach towards
problem solving. It is tantamount to belittling the importance of appraisal or
corrective action systems. Some other criticisms are more technical in nature.
Conclusion
To sum up, Six
Sigma proved to be an excellent strategy that focuses on achieving
standardization and minimizing defects. It has been proved time and again a
better and more productive tool for quality assurance than earlier concepts and
practices. CEOs of leading US and European firms admire the remarkable
accomplishments of their Six Sigma initiatives. High-powered professionals and
industry statisticians are satisfied with and willing to implement Six Sigma
practices in their organizations.
Contributed by:
Nadeem Akhtar (M.Sc, MBA). The writer is an investment banker and blogger.
References
https://www.greycampus.com/blog/quality-management/dmaic-a-six-sigma-process-improvement-methodology
