CHAPTER 4 – Applying Six Sigma to Service and Manufacturing

SUMMARY

The Six Sigma strategy may give the impression that it is applicable only to manufacturing companies. In reality however it can be integrated into both manufacturing and service-based organizations.

Service-based companies are those that concern themselves with activities not directly involved in designing or producing tangible products. These services may involve transactional, commercial, nontechnical, support and administrative activities. They have to do with sales, finance, marketing, procurement, customer support, logistics, or human resources.

Manufacturing companies are those that develop and produce tangible products. These processes are also called plant floor, production, fab, or engineering product development.

In the 1990s, the face of manufacturing companies changed when Qualcomm sold all its manufacturing and product businesses and focused their processes on research and technology development and licensing. The company’s stock-prices soon surged to more than 1000 percent.

Applying Six Sigma to service-based companies is tougher for the following reasons:

1. Their processes are invisible. Work products such as information, requests, orders, proposals, presentations among others are intangible.
2. Their workflows and procedures are evolving. Responsibilities can be shifted, forms revised, or guidelines altered without involving too much work or money.
3. They lack facts and data. Hard facts about the performance of service processes are unclear, and dates are narrowly focused and subjective. These make the processes difficult to measure. The processes take the form of backlogs, reworks, delays, and the cost of working to improve them.
4. They lack a headstart. Quality engineers have been focusing their efforts on manufacturing process for the longest time.

Here are tips to make Six Sigma work in service-based organizations.

1. Investigate the processes. Find out what’s really going on in the organization.
2. Fine-tune the problems or issues once they are identified. Take into account the processes and customer requirements and the issues surrounding them.
3. Use facts and data carefully to reduce ambiguity. Describe and define the processes or issues, and translate unclear information into clear performance factors and measures.
4. Make sure not to overemphasize statistics. Do not make Six Sigma too technical to the point that people will not see the value of the strategy. In other words, “Timing is everything.” Use basic measurement data-analysis methods. When people easily understand the simple tools, they begin to ask for more advanced data-gathering and analysis tools.

Six Sigma application in manufacturing companies also faces certain challenges, namely:

1. Adopting a broader perspective. See to it that groups integrate their roles into the entire business, or mix product design and manufacturing. Projects therefore become the kind that demands cross-functional cooperation.
2. Working beyond “certification” to a real improvement effort. Putting too much emphasis on a step by step process can jeopardize the real purpose of the process itself.
3. Using Six Sigma tools on your own manufacturing process. Bear in mind that not all manufacturing companies have the same needs. Making auto engine parts is a very different process from assembling an SUV.

A good example would be what happened to Applied Materials Quality Institute, the world’s leading manufacturer of equipment for semiconductor plants.

The challenge for the company was how to adopt Six Sigma using the DPMO.

Dave Boenitz, head of Applied Materials, explains, “We deal in hundreds of units, not millions. Each unit is comprised of eight, ten, twelve, fifteen thousand parts. So if you were to look at a Sigma level per unit, it would be very difficult comparing apples to apples. You could definitely look at a million opportunities in one of our systems, but it’s a matter of finding out which million opportunities you’re going to measure.”

What Applied Materials did instead was to use the strategy which they called “Mistake Proofing”—a diligent effort to find and prevent all kinds of mistakes and errors in a process. The company may not have followed the DPMO strategy to the letter, but the quality efforts are just as valid.

So if you ask “Is Six Sigma perfect for my organization?” the answer will be “It depends.” You must carefully select, apply, and adapt Six Sigma methods and ideas to fit your organization’s needs and readiness.

COMMENTARY

It is just as well that Six Sigma is a flexible system, thus you can adapt your approach depending on the specific needs of your industry. This flexibility is what gives Six Sigma superiority over other management or quality systems tied to fixed strategies.

In the past, quality management systems have often been connected to manufacturing. Thus, quality has often been referred to as quality of the product and non-conforming items to defective products. Since Six Sigma is applicable in both manufacturing and service industries. Both can actually be measured qualitatively.

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