SUMMARY
Successful business management is likened to successful bike riding, where both the CEO and the bike-rider follow a closed-loop system.
| Biking | 6 ? Management | |
|---|---|---|
| Vehicle: | Bike | Process |
| Performance: | Wobbling | Variation |
In biking, the vehicle is the bike, while in Six Sigma Management, it is the process. The performance in bike-riding is characterized by wobbling, during which the bike goes off track once in a while and steers back to the bike’s path. In 6 ? Management, the organization’s performance is beset by variations, which is referred to as a defect—-the instance in which the customer is dissatisfied with a service or product. The Six Sigma system lessens the “wobbling” and keeps the bike safely on the path to performance and success. It then takes over as process management or movement, and provides ways for creating, monitoring, and improving the closed-loop system.A result of this process management is system alignment. During this alignment, we determine the Xs and the Ys in our process. The Xs are indicators of change or performance, while the Ys are the measures of the performance of the business.
The formula here is Y=f(X) or Y is a function of X. This means that changes or variables in the inputs or processes of the system determine the final product, or how it will turn out.
Example:
| Y can mean: | X can mean: |
|---|---|
| strategic goal | essential actions to achieve strategic goals |
| customer requirement | quality of work done |
| profits | key influences on customer satisfaction |
This brings us to the Six Sigma Measurement. How do we measure the Xs and the Ys?
Initially, we need to understand the concept of sigma (?). A Greek alphabet, sigma is a symbol used in statistics to represent “standard deviation” of a population. A standard deviation is an indicator or the amount of “variation” or inconsistency in any group of items or processes.
Variations therefore help management assess the real performance of the business and its processes. In Six Sigma, these variations are also called defects. Six Sigma reduces or narrows variation, or standard deviation, to answer or satisfy the demands of the customer.
A few examples of defects are:
* typos in a document
* long hold times in a call center
* late deliveries
* medication errors
* power outages
In the path of satisfying customer demands, we need to consider the question, “What does the customer explicitly want?”
First, we establish the so-called “critical to quality characteristics,” or CTQs. This is also known as key results, Ys of the process or specification limits.
Second, we design a metric to count the defects.
Third, we calculate the yield, or the percentage of items without defects.
Fourth, we determine the sigma level using a conversion table. Sigma levels of performance are often expressed in defects per million opportunities, or DPMO.
| If your Yield is… | Then Your DPMO is… | And Your Sigma is… |
|---|---|---|
| 30.9% | 690,000 | 1.0 |
| 69.2% | 308,000 | 2.0 |
| 93.3% | 66,800 | 3.0 |
| 99.4% | 6,210 | 4.0 |
| 99.98% | 320 | 5.0 |
| 99.9997% | 3.4 | 6.0 |
The following are three Six Sigma strategies geared toward satisfying the customer:
1. Process improvement – is a strategy of developing focused solutions to eliminate the root causes of the problems of a business performance. It is also referred to as continuous improvement, incremental improvement, or Kaizen (Japanese term for continuous improvement).
2. Process design/redesign - aims to build a better business. Redesigning involves replacing a process, or a piece of a process, with a new one. Six Sigma Design uses Six Sigma principles to create new goods and services patterned after customer needs.
3. Process management - creates infrastructure for Six Sigma Leadership that facilitates processes. These processes are the flow of work that provides value to customers and shareholders.
To achieve maximum process improvement, we need to create a model—a Six Sigma improvement model. The model is a five-phase improvement cycle: Define-Measure-Analyze-Improve-Control (DMAIC). This model is grounded in the original Plan-Do-Check-Act (PDCA) cycle designed by W. Edwards Deming, which describes the basic logic of data-based process improvement.
The popular notion is that if we achieve all these, we deserve to be called a Six Sigma Organization. To be such, we need not achieve actual Six Sigma levels of performance (99.9997 percent perfect). A Four Sigma (99.37 percent yield) is an already an enormous achievement.
To be named a Six Sigma Organization is not that important - but the system, the methods, and the commitment are.
COMMENTARY
The most common problem with many past systems was that they only followed a straight-line horizontal flow of component or steps and always begin with a problem identification, and ends with formulation of solutions of the problem. It is therefore an open-ended system. And the drawback is that there is no formal way or system to measure whether the solution was effective or not. Also, whether there could be other improved ways to solve the problem.
In contrast, where its effectiveness lies, the Six Sigma system uses a closed-loop system where every step is being tracked and efforts are undertaken to keep the system aligned. In this system, with internal and external information, called feedback, advises the manager whether they stay on track… and if not, makes moves to stay on course. This cycle is repeated. Such an approach to creating, monitoring, and improving the system is called progress management.
The focus should always be to improve process management. Most of these improvement models were devised by leading quality guru Dr. W. Edwards Deming’s Plan-Do-Check-Act cycle (P-D-C-A). In Six Sigma, PDCA is further defined into DMAIC (Define, Measure, Analyze, Improve, and Control). Both models are equally effective.
Another misconception about Six Sigma and which sometimes becomes an obstacle in its early-stage implementation is the notion that it is a statistical and highly technical subject, and therefore understandable only to technical people like engineers. True enough, Six Sigma derived its name from the Greek letter sigma.
In Statistics, it means standard deviation, an indication of amount of variation or inconsistency in any group of items or process. Here, sigma simply represents the number of defects per million population of items. Where 1-Sigma means 690,000 defective items, Six Sigma is 3.4 defects per million products or items. And if this is converted to cost, you’ll be amazed at how much savings you could save, and how far you could get in achieving competitiveness and customer satisfaction. These are the key concepts of Six Sigma.
