Six Sigma

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Six Sigma was pioneered by Bill Smith at Motorola in 1986. Originally, it was defined as a metric for measuring defects and improving quality; and a methodology to reduce defect levels below 3.4 Defects Per (one) Million Opportunities (DPMO). Six Sigma is a registered service mark and trademark of Motorola, Inc. Motorola has reported over US$17 billion savings from Six Sigma to date.

GE became one of the early adopters of Six Sigma and reported benefits of over US$300 million during its first year of application. It played a vital role in popularizing Six Sigma. Other major organizations who claim to have benefited from Six Sigma implementation are Ford, Caterpillar, Microsoft, Raytheon, Quest Diagnostics, Seagate Technology, Siemens, Merrill Lynch, Lear, 3M and many more.

Definition

Six Sigma has now grown beyond defect control. It can be defined as a methodology to manage process variations that cause defects, defined as unacceptable deviation from the mean or target; and to systematically work towards managing variation to eliminate those defects. The objective of Six Sigma is to deliver world-class performance, reliability, and value to the end customer.

Application & Success

Starting with manufacturing, today Six Sigma is being widely used across a wide range of industries like banking, business process outsourcing (BPO), telecommunications, insurance, construction, healthcare, and software. Some non-manufacturing examples are given below:

Healthcare

North Carolina Baptist Hospital says, "The Six Sigma process improvement deployment at North Carolina Baptist Hospital is starting to show the kind of results that convert skeptics to believers." and "A Six Sigma process improvement team charged with getting heart attack patients from the Emergency Department into the cardiac catheterization lab for treatment faster slashed 41 minutes off the hospital's mean time"

Banking

Bank of America has used Six Sigma for credit risk assessment reduction, fraud prevention, and customer satisfaction improvement, etc. Bank of America’s Six Sigma initiative resulted in benefits of more than US$2 billion; and increased customer delight by 25%.

Insurance

Insurance companies have used Six Sigma for various critical tasks like premium outstanding reduction and various cycle time reductions. For example, CIGNA Dental reports pending claim volume reduction by over 50% .

Construction

In Engineering and Construction, on the Channel Tunnel Rail Link project in the UK, the Bechtel’s project team uncovered a way to save hundreds of job hours on one of the tunneling jobs.

The Institute of Quality Assurance has interesting success stories on Wipro, Citibank, and Motorola.

Methodology

Six Sigma has two key methodologies – DMAIC and DMADV. DMAIC is used to improve an existing business process. DMADV is used to create new product designs or process designs in such a way that it results in a more predictable, mature and defect free performance. Sometimes a DMAIC project may turn into a DFSS project because the process in question requires complete re-design to bring about the desired degree of improvement.

DMAIC

Basic methodology consists of the following five phases:

• Define formally define the process improvement goals that are consistent with customer demands and enterprise strategy.
• Measure to define baseline measurements on current process for future comparison. Map and measure process in question and collect required process data.
• Analyze to verify relationship and causality of factors. What is the relationship? Are there other factors that have not been considered?
• Improve optimize the process based upon the analysis using techniques like Design of Experiments.
• Control setup pilot runs to establish process capability, transition to production and thereafter continuously measure the process and institute control mechanisms to ensure that variances are corrected before they result in defects.

DMADV

Basic methodology consists of the following five phases:

• Define formally define the goals of the design activity that are consistent with customer demands and enterprise strategy.
• Measure identify CTQs, product capabilities, production process capability, risk assessment, etc.
• Analyze develop design alternatives, create high-level design and evaluate design capability to select the best design.
• Design develop detail design, optimize design, and plan for design verification. This phase may require simulations.
• Verify verify design, setup pilot runs, implement production process and handover to process owners. This phase may also require simulations.

Also see Design for Six Sigma quality.

Roles Required for Implementation

Six Sigma identifies five key roles for its successful implementation.

• Executive Leadership includes CEO and other key top management team members. They are responsible for setting up a vision for Six Sigma implementation. They also empower the other role holders with the freedom and resources to explore new ideas for breakthrough improvements.
• Champions are responsible for the Six Sigma implementation across the organization in an integrated manner. The Executive Leadership draws them from the upper management. Champions also act as mentor to Black Belts.
• Master Black Belts, identified by champions, act as in-house expert coach for the organization on Six Sigma. They devote 100% of their time to Six Sigma. They assist champions and guide Black Belts and Green Belts. Apart from the usual rigor of statistics, their time is spent on ensuring integrated deployment of Six Sigma across various functions and departments.
• Black Belts operate under Master Black Belts to apply Six Sigma methodology to specific projects. They devote 100% of their time to Six Sigma. They primarily focus on Six Sigma project execution, whereas Champions and Master Black Belts focus on identifying projects/functions for Six Sigma.
• Green Belts are the employees who take up Six Sigma implementation along with their other job responsibilities. They operate under the guidance of Black Belts and support them in achieving the overall results.

Specific training programs are available to train people to take up these roles.

The old Harry/Shroeder model cited above is rife with problems, so many successful programs have moved away from it. It frequently causes resentment among managers who have outside Black Belts parachuted into their area, it corrupts and divides managers' control of their areas of responsibility, it leads to 40-50% turnover when a Black Belt's 2-3 year tour of duty is over, and it very frequently drives bad behaviors by the Black Belts.

It is now very common to have Master Black Belts conducting and providing daily management for the program, with both Black Belts and Green Belts managing projects in their existing area of responsibility, and reporting to their existing managers.

See Directing Six Sigma, Promontory Management Group, page 27, www.pmg.cc.

Examples of Some Key Tools Used

• Failure Modes Effects Analysis
• Cost Benefit Analysis
• Customer Output Process Input Supplier Maps
• Process Maps
• Run Charts
• Histograms
• Stratification
• ANOVA Gage R&R
• Cause & Effects Diagram (a.k.a. Fishbone or Ishikawa Diagram)
• Homogeneity of Variance
• ANOVA
• Chi-Square Test of Independence and Fits
• General Linear Model
• Regression
• Correlation
• Design of Experiments
• Taguchi
• Control Charts

Criticisms of Six Sigma

Of its origin

Some argue that Robert Galvin and Bill Smith did not really "invent" Six Sigma in the 1980s, but rather applied methodologies that had been available since the 1920s and were developed by luminaries like Shewhart, Deming, Juran, Ishikawa, Ohno, Shingo, Taguchi and Shainin[1].

In truth, there is very little that is new within six sigma. However, it does use the old tools in concert, for far greater effect. The telephone, the internal combustion engine, and the computer were all made from existing technology, used in a new way. The same is true of six sigma.

The use of "Black Belts" as itinerant change agents is controversial as it has created a cottage industry of training and certification which arguably relieves management of accountability for change; pre-Six Sigma implementations, exemplified by the Toyota Production System and Japan's industrial ascension, simply used the technical talent at hand — Design, Manufacturing and Quality Engineers, Toolmakers, Maintenance and Production workers — to optimize the processes.

Of the term: Six Sigma

"Sigma" (the lower case Greek letter) is used to represent standard deviation, a measure of variation. The term "six sigma" comes from the notion that if you have six standard deviations between the mean of a process and the nearest specification limit, you will make practically no items that exceed the specifications. This is the basis for the process capability study, often used by quality professionals, and the term “six sigma” has its roots in this tool. Criticism of the tool itself, and the way that the term was derived from the tool often sparks criticism of six sigma.

It is often said that a six sigma process produces 3.4 defective parts per million. A process that is normally distributed will have 3.4 parts per million beyond a point that is 4.5 standard deviations above the mean. A Capability Study on normally distributed data, mean 0, standard deviation 1, with an upper specification limit of 4.5 will confirm this. Some six sigma practitioners call this 4.5 sigma process a 6 sigma process by invoking the 1.5 sigma shift. This is a notion that has existed since before Motorola’s program, and which gets little acceptance from professional statisticians. Donald Wheeler, one of the most respected workers in statistics, dismisses it as "goofy".

As sample size increases, the error in the estimate of standard deviation converges much more slowly than the estimate of the mean (see confidence interval). With even a few dozen samples, the estimate of standard deviation often drags an alarming amount of uncertainty into the Capability Study calculations. It follows that estimates of defect rates can be very greatly influenced by uncertainty in the estimate of standard deviation

Estimates for the number of defective parts per million produced depend on knowing something about the shape of the distribution from which the samples are drawn. Unfortunately, we have no means for proving that data belong to any particular distribution. We only assume normality, based on finding no evidence to the contrary. Estimating defective parts per million down into the 100’s or 10’s of units based on such an assumption is wishful thinking, since actual defects are often deviations from normality, which have been assumed to not exist.

In summary, the term “six sigma” has its roots in a quality tool that can easily be misapplied by a naïve user and is a discredited notion.

Of statistics

Six Sigma is controversial with the statistics profession. Some teachers of statistics are critical of the standard of statistical teaching found in Six Sigma materials. Others object to the idea that a single universal standard can be appropriate across all domains of application. They argue that quality standards should be set on a case-by-case basis using decision theory or cost-benefit analysis.

The 1.5 sigma shift theory is often criticized by statisticans that the sample size is too small to make mathematically justified predictions.

In addition, there are things that are taught that are annoying, such as clinging to the outdated model of "attribute" and "variable" data, rather than the much more widely accepted "nominal", "ordinal", "interval", and "ratio" model. There is also the problem that the widely used Capability Study drags an alarmingly high level of uncertainty into its calculations, and is often given credit for more than it can usually do.

Of methods

Others suggest that Six Sigma, rather than being a true methodology, is more often implemented to start an unending cycle of improvement and use of better tools on the industry day to day practices rather than to use advanced statistical theories that cannot be daily applied.

Of effects

There has been some controversy over the level of Six Sigma's effects, with some believing that its benefits have been vastly overstated. In addition, in companies not solely devoted to manufacturing (with GE, the owner of NBC & Universal Studios, being the prime example), the spillover effects of Six Sigma have been troubling. Executives trained in the ways of Six Sigma often clash with the "creative types" who must be a part of such companies.

See also

• Michael Hammer
• Process Improvement
• Business Process
• Business Process Improvement
• Business Process Improvement Pattern

External links

• GE Six Sigma
• Motorola University
• TreQna - Open Source Six Sigma; requires free registration for Six Sigma Manual Download.
• Discover 6 Sigma
• isixsigma.com
• Management and Strategy Institute

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