What Is Six Sigma And How Does It Work? (Guide)

"Six Sigma is a quality program that, when all is said and done, improves your customer’s experience, lowers your costs, and builds better leaders." — Jack Welch
Six Sigma (6σ) is a set of techniques and tools for process improvement. It was introduced by engineer Bill Smith while working at Motorola in 1986. Jack Welch made it central to his business strategy at General Electric in 1995.General Electric, one of the most successful companies implementing Six Sigma, has estimated benefits on the order of $10 billion during the first five years of implementation. 

Since GE first began Six Sigma in 1995 after Motorola and Allied Signal blazed the Six Sigma trail, thousands of companies around the world have discovered the far reaching benefits of Six Sigma.

Six Sigma at many organizations simply means a measure of quality that strives for near perfection. It is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process – from manufacturing to transactional and from product to service.

Originated from terminology associated with statistical modeling of manufacturing processes. The maturity of a manufacturing process can be described by a sigma rating indicating its yield or the percentage of defect-free products it creates. A six sigma process is one in which 99.99966% of all opportunities to produce some feature of a part are statistically expected to be free of defects (3.4 defective features per million opportunities). 

Motorola set a goal of "six sigma" for all of its manufacturing. Many frameworks exist for implementing the Six Sigma methodology. Six Sigma Consultants all over the world have developed proprietary methodologies for implementing Six Sigma quality, based on the similar change management philosophies and applications of tools.

The fundamental objective of the Six Sigma methodology is the implementation of a measurement-based strategy that focuses on process improvement and variation reduction through the application of Six Sigma improvement projects. This is accomplished through the use of two Six Sigma sub-methodologies: DMAIC and DMADV.

The Six Sigma DMAIC process (define, measure, analyze, improve, control) is an improvement system for existing processes falling below specification and looking for incremental improvement. The Six Sigma DMADV process (define, measure, analyze, design, verify) is an improvement system used to develop new processes or products at Six Sigma quality levels.

It can also be employed if a current process requires more than just incremental improvement. Six Sigma strategies seek to improve the quality of the output of a process by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes.It uses a set of quality management methods, mainly empirical, statistical methods, and creates a special infrastructure of people within the organization who are experts in these methods.

Each Six Sigma project carried out within an organization follows a defined sequence of steps and has specific value targets, for example: reduce process cycle time, reduce pollution, reduce costs, increase customer satisfaction, and increase profits.

How Does The Two Six Sigma Methods Work?

Six Sigma DMAIC: The Six Sigma DMAIC approach is typically used to improve an existing process. DMAIC is an acronym that stands for:
  • Define the problem and desired outcome.
  • Measure the ability of the process.
  • Analyze the data and identify the root cause of variations (defects).
  • Improve or modify the process so that fewer variations (defects) are produced.
  • Control the process. Prevent and correct variations before they result in defects.

Six Sigma DMADV: When designing a new process, the Six Sigma DMADV is used. It is also known as DFSS (Design for Six Sigma). The DMADV acronym stands for:
  • Define design standards that align with the product or process goals.
  • Measure and identify characteristics of the product or process that are critical to quality.
  • Analyze the data, and identify possible sources of defects.
  • Design changes that will eliminate the source of defects or errors.
  • Verify that the design will meet the requirements.

The Success Of Six Sigma Is Based On These Core Principles:

Focusing on customer requirements: Using extensive measurement and statistical analysis to understand how work gets done and to identify the root cause of problems (variations). Being proactive in eliminating variation and continually improving the process; Involving people in Six Sigma cross-functional teams; Being thorough and being flexible.

Customer Focus: Six Sigma is about improving quality. The first step in that process is defining what “quality” means, from the perspective of the people whose opinions matter most: the customers. A business needs to measure quality the same way its customers do. By focusing on the customer, a business can improve its products’ quality.

Identify Root Causes: To correctly identify a root cause, a complete understanding of the process is necessary. This does not mean just understanding how a process was designed to work. It means understanding how the process is actually working. To accomplish this you need to:
  • Have clearly defined goals for data collection
  • Identify the data that needs to be collected
  • Have a defined reason for the data being collected
  • Establish what insights are expected from the data
  • Ensure accurate communication by clearly defining terms
  • Ensure that measurements are accurate and repeatable
  • Establish a standardized data collection system/process

Once the data is collected, determine whether it is providing the required insight and is meeting the goals that were established. If not, refine the data collection plan and collect additional information. Six Sigma data collection involves interviewing people, making observations, and asking questions until the answers are found. Ask the questions such as:

Why do we do things this way?
What would make your job easier?
What things do you do that seem to be a waste of time?

Once the data is collected, use it to look for ways to improve or optimize the process by identifying the root cause of variation.

Eliminate Variation: Be proactive in identifying variation and eliminating it. Don't wait for signs of variation to become obvious. Collect data, talk with people, and study the data to find variations in the process that may have become accepted because “that's the way we've always done things.”

Teamwork: Six Sigma involves teams and leaders who take responsibility for the Six Sigma processes. The people on the teams need to be trained in Six Sigma's methods, including the Six Sigma measurement methods and improvement tools that will be used. In addition, they need communication skills so that they can involve, serve, and communicate clearly with both coworkers and customers.

Putting together teams that have members with a variety of skills and backgrounds related to a process will help the team spot variations. For a manufacturing process for example, people from operations, maintenance, engineering, and purchasing should be included.

Be Flexible And Thorough: Six Sigma requires flexibility in many ways. The business’s management system needs to accept positive changes as well as empower change. Employees should be motivated to adapt to change. In the beginning, the benefits of the changes should be made clear to workers. This will help to create an environment where change is more readily accepted.

The key to Six Sigma is the ability to change or adapt procedures as needed. The process required for change should not be so complex that workers and management would rather work with a broken process than fix it. Six Sigma also requires problem-solving to be thorough. Making sure to understand every aspect of a process—the steps, people, and departments involved—will help to ensure that any new or updated process works.

Six Sigma Quality Management Tools

A variety of tools can be used to support Six Sigma, including Value Stream Mapping (VSM), Capability Analysis, 5 Whys, Plan-Do-Check-Act (PDCA), and Statistical Process Control (SPC). VSMs are visual maps or flowcharts that enable businesses to understand every aspect of a process and define potential problems. Unlike standard flow charts, 

VSMs include the internal (departments and workers) and external (customers and shipping) factors that affect a process. By completely mapping out a process, it is much easier to define potential problems.
Capability Analyses measure the ability of a process to meet a business’s needs. This tool allows businesses to quantify the relationship between the customers’ needs and the current process’s ability to meet those needs, allowing businesses to make processes that are customer-focused.

5 whys on the other hand, enable businesses to hone in on a problem’s root cause and fix it, rather than addressing surface-level issues that temporarily improve a situation. Doing what its name suggests, 5 Whys requires workers to ask “why” until the root cause of a problem is identified.

PDCA is another, six sigma quality management tool is a lean tool that solves problems using four steps: Plan, Do, Check, Act. Once a root cause is identified, this tool allows it to be addressed systematically by creating a solution, testing it, reviewing its success, and finally implementing it.

SPC is also quality control tool that monitors and controls a process by tracking its metrics. A common way to implement SPC is to use a control chart, which records information and allows businesses to see when a process stops working. Once an issue is discovered, the process can be altered to solve any new problems that occur.

Six Sigma involves change, and change requires effective on-going communication. Old habits need to be broken and new habits established.

Lean Methodologies That Can Support Six Sigma

Lean Six Sigma is a methodology that relies on a collaborative team effort to improve performance by systematically removing waste and reducing variation. Waste is defined by Mr. Fujio Cho of Toyota as “Anything other than the minimum amount of equipment, materials, parts, space, and workers time, which are absolutely essential to add value to the product.” It combines lean manufacturing/lean enterprise and Six Sigma to eliminate the eight kinds of waste:
  • Defects
  • Over-Production
  • Waiting
  • Non-Utilized Talent
  • Transportation
  • Inventory
  • Motion
  • Extra-Processing

When it comes to waste, over production is excess amount of product that is produced. Idle time waste, or wait time waste, is down time that is spent waiting for a product to be created. The delivery waste, or transportation waste, is the time spent getting the product shipped to the recipient. Waste in the work, inventory, and operations is time spent loosely and does not make money. 

Waste in the work is also known as extra-processing waste, and waste in operations is also known as motion waste. Rejected parts waste, or defects waste, is when certain pieces should be thrown out or reworked because they are not within tolerance. Lastly, we have non-utilized talent waste which is when a person that is untrained for a position is put there to try and complete work.

Amazon founder, Jeff Bezos for instance, has been totally customer-centric. He knew that customers would not pay for waste—and that focus on waste prevention is a fundamental concept of lean. The company’s information technology was always very good at understanding what the customer wanted and passing the right signal down. 

For example, the selection of the transportation method for a given package is driven, first, by the promised delivery date to the customer. Lower-cost options enter the equation only if they provide an equal probability of on-time delivery. That’s basically a lean principle.

Given the business evolution of Amazon from a bookstore to the store for everything, Amazon had to reinvent automation, following the lean principle of “autonomation”: keep the humans for high-value, complex work and use machines to support those tasks. Humans are extremely creative and flexible. The challenge of course is that sometimes human are tired or angry, and they make mistakes.

From a Six Sigma perspective, all humans are considered to be at about a Three Sigma Level, meaning that they perform a task with about 93 percent accuracy and 7 percent defects. Autonomation helps human beings perform tasks in a defect-free and safe way by only automating the basic, repetitive, low-value steps in a process.

The result is the best of both worlds: a very flexible human being assisted by a machine that brings the process up from Three Sigma to Six Sigma. Another major dimension of the deployment of lean was the enforcement of “standard work.” The problem at many companies, is that workers’ assigned tasks are very vague; it’s up to the worker to figure things out.

So consider improving workers’ performance, by taking a detailed look at their assigned tasks. In most cases, the reality is quite different from what is written down—and it is riddled with abnormalities. Therefore, set a very well-defined standard process, tracked all abnormalities, and assigned experts to eliminate them.

So What Is Standardized Work?

Standardized work is a simple concept. It refers to the process of documenting methods, processes, materials, tools, processing times and more. At its core, it is about ensuring your operations run as smoothly as possible and your process improvement strategy is constantly evolving and being adopted by your employees.
  • Benefits of standardized work:
  • Best practices are followed
  • Process improvement never ends
  • Reduces waste
  • Improves scaling efforts
  • Makes abnormalities more visible
  • Less time spent on guesswork

For standardizing work, ensuring that your employees are using the best practices. This is one of the best ways to increase efficiency. If you want to promote a working environment characterized by standardized work, you need to ensure that your standardization requirements are reasonable and have scope for improvement.

Today's competitive environment leaves no room for error. One must delight customers and relentlessly look for new ways to exceed their expectations. Globalization and instant access to information, products and services continue to change the way customers conduct business.

A lean approach will help your company eliminate activities that are devoid of value. A major benefit of lean is that you will deliver the same value to your customers but with less effort. If lean is about streamlining processes, Six Sigma is about improving the quality of what your business delivers, ensuring that variation is kept to a minimum.

At the end of the day, the goal of Lean and Six Sigma is to eliminate waste, optimize processes, foster business process management and improve the quality of your product or service. Lean Six Sigma is a must for businesses of every size as it makes quality a quantifiable statistic.

Here Is A List Of Some Of The Great Six Sigma Companies:
  • 3M
  • Amazon.com
  • Bank of America
  • Boeing
  • Dell
  • Eastman Kodak Company
  • Ford Motor Company
  • General Electric
  • Maersk
  • Shop Direct Group
  • The Vanguard Group
  • Wipro

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