Three Key Characteristics of Six Sigma

Posted by: meikah | 31 May 2005 | 5:35 am

Despite the reported good results of other companies adopting Six Sigma, most companies still operate at Three or Four Sigma. To be operating at Three or Four Sigma means dealing with 6,200 to 67,000 defective parts or transactions per million. That translates to 25% of their revenues being used up to fix defects or eliminate wastes. That’s too costly for a company.

Companies therefore will be better off adopting Six Sigma. The approach identifies and eliminates defects with a structured, data-driven, problem-solving method of using rigorous data-gathering and statistical analysis. It differs from traditional quality improvement programs, because it focuses on input variables.

Achieving Six Sigma however is not easy. Here are the three major factors that can make or break a company’s Six sigma programs.

First is leadership commitment. It requires serious commitment in the form of time, effort, and resources. For a company to be successful, such commitment must come first from the top executive leadership of the organization and must be practiced by everyone.

Second, decisions must be made based on data. It is not enough to run a business based on one’s experience or “tribal knowledge.” There’s no room for ?I think?, I feel?, or ?In my opinion.? With a modern information economy, data is available to virtually everyone in the organization, along with the tools for analyzing that data. It is important therefore to use these data properly to Measure, Analyze, Improve, and Control performance. These are the very foundations of Six Sigma methodology.

Third is the willingness and openness to training and cultural change within the organization. Improved performance does not and will not happen automatically. It needs high-caliber training followed by disciplined implementation. People at all levels have to change the way they go about doing their tasks. In short, new ways of thinking, communicating, and operating must pervade the entire organization. That requires a Six Sigma methodology. The DMAIC/DFSS provide a structured problem solving roadmap and tools towards obtaining an almost zero defect.

It sure sounds a lot of work. But the rewards are worth it. Using Six Sigma will steer your organization to:

(1) Improve Customer Satisfaction,
(2) Increase Profit Margins,
(3) Shorten Cycle Times, and
(4) Reduce Costs.

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Case Studies of Six Sigma

Posted by: meikah | 30 May 2005 | 5:33 am

Through the statistical representation of Six Sigma, we see quantitatively how a process is performing. We have known that to achieve Six Sigma, a process must not produce more than 3.4 defects per million opportunities. In Six Sigma, a defect is anything outside of customer specifications.

To someone who is not familiar with how quality systems work may doubt if this process is indeed achievable, or is even doable. However, case studies show that it is.

Motorola, for example, credits Six Sigma to helping them win the first Malcolm Baldrige National Quality Award. Also, the company continues to reap profits because of Six Sigma processes. General Electric (GE) cut invoice defects and disputes by 98%. The company’s business in medical systems used Six Sigma design techniques to reduce patient full-body scan from a few minutes to 30 seconds.

In 1999, Honeywell (AlliedSignal) saved more than $600 million when its employees implemented multiple Six Sigma projects. Twelve-billion-dollar giant Textron deployed 225 full-time Six Sigmaexperts in 2001 and appointed a corporate vice president of Six Sigma Transformation in 2003. This was in support of what they considered their “most important corporate process improvement initiative.”

Another high-tech manufacturer found the development unit of a cooling system having numerous and redundant inspection steps. These pushed millions of money down the drain. When it adopted Six Sigma, the number of inspection steps were reduced resulting in a $1,300,000 savings.

Clients of a mutual fund company were unable to make informed decisions because asset values on the website did not have timely updates. Six Sigma was applied, thereby improving processes, resulting in timely updates, retention of key clients, and a 20% reduction in operating costs.

A glass manufacturer was doing excessive rejects due to scratches and chips created by contaminate in a critical production process. With Six Sigma, the company was able to reduce rejects by 92% improving line up-time by 79% and realizing $840,000 in annual cost savings.

One accounting department’s delinquent accounts receivable had remained above $7,000,000 for the past 12 months. Six Sigma established new processes, improved cash flow and finance charges, and saved over $350,000 annually.

Yet again, a rubber manufacturer was unable to perform fast-mold changes. This greatly affected their delivery schedules and customer satisfaction. Six Sigma was applied, reducing mold change time by 53% and creating $525,000 in sales capacity.

With these testimonies, one would wonder why other companies are not jumping into the same strategy?

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The Six Sigma Methodology

Posted by: meikah | 27 May 2005 | 11:43 am

A clear definition of Six Sigma is that it is

a process-focused methodology designed to improve business performance through improving specific areas of a strategic business processes.

The term Sigma symbolizes how much deviation exists in a set of data – sometimes called a bell curve, or a standard normal distribution. In a standard normal distribution, 50% of the values lie above the mean (average) and 50% of the values lie below.

For example, your business is manufacturing carton boxes and you set a production target of 1 million carton boxes. If you reject 66,807 carton boxes then you’re running at 3 Sigma. If you reject an average if 3.4 carton boxes, then you are at 6 Sigma.

That is fundamentally how Six Sigma measures quality. It measures the Variance and does not rely on the Mean. The popular notion is that all too often businesses base their performance on a mean, or average-based measure, of the recent past. However, in reality customers DON’T judge businesses on averages. They actually experience the variance in each and every transaction or purchase. Moreoever, they also put value on products and services that deliver high levels of quality.

Six Sigma focuses first on reducing variation, and then on improving process capability. It is therefore a statistical unit of measurement reflective of two things: (1) process capability and (2) process performance, i.e., variation. In other words, the higher the Sigma value, the lesser the chance of a defect.

Below are the Levels of Six Sigma.

Six Sigma level ? produces less than 3.4 defects in a million opportunities.
Five Sigma level ? 233 defects in a million opportunities.
Four Sigma level ? 6,210 defects in a million opportunities.
Three Sigma level ? 66,807 defects in a million opportunities.
Two Sigma level ? 308,537 defects in a million opportunities.
One Sigma level ? 697,672 defects in a million opportunities.

Interesting? Click on the URL below for a Six Sigma Management Kit.

Six Sigma Management Kit

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Naming the Six Sigma Masters

Posted by: meikah | 26 May 2005 | 11:54 am

Motorola’s Six Sigma-driven success story has saved the company more than $16 billion for the past 15 years. Following this thriving defect-reduction process, many other companies in the manufacturing, transactional, and service sectors are experiencing increased profitability as well. Regardless of sector, size, or project, all businesses can achieve success through one criterion: the Black Belt.

Black Belts are project leaders, skilled in statistical methods and interpersonal communication. Green Belts require less training than Black Belts, thus take responsibility for fewer projects, while Master Black Belts spend nearly all of their time consulting, mentoring, and training Green Belts and Black Belts.

The term Black Belt is used to be associated with the martial arts. It has been claimed that proponents of Six Sigma use the term because, as in martial arts, the masters acquire discipline and intensive training and real-world experiences by practicing this quality program. Like a person skilled in the Oriental sport of karate, the Six Sigma Black Belt is self-assured and knowledgeable, disciplined, purposeful, and decisive.

Dr. Mikel Harry first thought of this Black Belt jargon. He was then helping Unisys Salt Lake Printed Circuit Facility solve a costly circuit board production problem. After the project, he was asked to train the people at Unisys. Harry called those he trained as process characterization experts. Brainstorming with Unisys facility manager, Clifford Ames, for a catchier term to call Six Sigma trainees, he thought of Black Belts.

Through the Motorola’s Six Sigma Research Institute, Harry nurtured the Black Belt model. The Institute was soon intensively training Black Belt candidates. By the end of 1992, the first half-dozen Six Sigma Black Belts had gained recognition in Asia and the United States.

Since then, the Black Belt jargon has stuck. The Green Belt/Black Belt/Master Black Belt designations have found their way to the business terminology.

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Assessing Six Sigma

Posted by: meikah | 25 May 2005 | 4:52 am

Six Sigma believes that if one can measure how many defects are in a process, one can figure out how to systematically eliminate them and get as close to perfection as possible. For a company to achieve Six Sigma, it cannot produce more than 3.4 defects per million operations or products.

There are two Six Sigma processes: Six Sigma DMAIC and Six Sigma DMADV. The terms are derived from the major steps in the process. Six Sigma DMAIC involves a procedure that defines, measures, analyzes, improves, and controls existing processes that fall below the Six Sigma specification. Six Sigma DMADV, on the other hand, defines, measures, analyzes, designs, and verifies new processes or products that are trying to achieve Six Sigma quality.

Let’s say you are running a pizza delivery business and you set a target of delivering pizzas within 25 minutes of receiving the order. If you achieve that 68% of the time, you are running at 1 Sigma. If you achieve it 99.9997% of the time then you are at 6 Sigma. It means you are late on average only 3.4 times out of every one million orders.

Motorola created two terms to assess Six Sigma processes: Six Sigma Green Belt and Six Sigma Black Belt. People who are certified either Green Belt or Black Belt can execute all Six Sigma processes. Using DMAIC as the basis for improvement, a Six Sigma Green Belt can basically demonstrate the use of techniques to measure and analyze processes, and demonstrate the use of techniques to improve and control processes. Practical experiments demonstrate how the selection of these tools impact on the success of a Six Sigma project.

A certified Six Sigma Black Belt is able to explain Six Sigma philosophies and principles, including supporting systems and tools. The Black Belt can demonstrate team leadership, understand team dynamics, and assign team member roles and responsibilities. They have a thorough understanding of and can use all aspects of the DMAIC model by following the Six Sigma principles. They have basic knowledge of lean enterprise concepts, are able to identify non-value-added elements and activities, and are able to use specific tools.

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Six Sigma-Today’s Solution to Survival

Posted by: meikah | 24 May 2005 | 11:45 am

In the face of stiff competition, companies and organizations scramble for ways to achieve a head start on others and survive. They design measurement standards to check on quality of their products and services.

Many measurement standards, namely, Cpk, Zero Defects, etc., started popping up. Nothing came off until a quality management program using statistical methods was applied to business processes. It improved operating efficiency, reduced variation, defects, and waste.

The concept of Six Sigma was then born. In the early 1980s, Mikel Harry and Richard Schroeder at Motorola created a process improvement strategy. Another Motorola engineer, however, took credit for coining the term “Six Sigma.” A letter in the Greek alphabet, “sigma” is used to assign the distribution about the mean or average of any process or procedure. As a process measure, it means 3.4 defects per million opportunities.

With Chairman Bob Galvin at the helm in the early and mid-1980s, Motorola engineers decided to standardize the way defects were counted. They wanted to measure the defects per million opportunities. Six Sigma provided the answer. It addressed quality concerns throughout the organization, from manufacturing to support functions. Consequently, Motorola posted more than $16 Billion in savings and went on to win the Malcolm Baldrige National Quality Award in 1988, the highest award given to companies that demonstrate excellence in Total Quality Management. Until today, Motorola continues to implement Six Sigma throughout its own enterprise. Through the Motorola University, the company has extended the benefit of its Six Sigma expertise to other organizations worldwide.

Six Sigma has evolved over time. It has become more than just a quality system like TQM or ISO. It is a way of doing business. As Geoff Tennant describes in his book Six Sigma: SPC and TQM in Manufacturing and Services, “…Six Sigma can be seen as a vision, a philosophy, a symbol, a metric, a goal, a methodology.”

It is not surprising then that more than a hundred other companies around the globe have adopted Six Sigma as a way of doing business. It also helps that many of America’s leaders openly praise the benefits of Six Sigma: Larry Bossidy of Allied Signal, now Honeywell, and Jack Welch of General Electric Company lead the pack. Rumor has it that Larry and Jack were playing golf when Jack bet Larry that he could implement Six Sigma faster and with greater results at GE than Larry did at Allied Signal. The results speak for themselves.

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