Chennai: The city-based Omnex Quality and Management Consultants (www.omnex.com), a wholly owned subsidiary of Omnex Inc, has launched its Six Sigma consulting division here. The US company is an international consulting, training and software outfit, specialising in business and quality improvement methodologies.
So what is Six Sigma, and how is it different from other quality systems like ISO 9000 series, Deming, Malcolm Baldrige, Toyota Production System, and Lean Manufacturing? Says director Omnex (6 Sigma) Gregory F Gruska: "It is a systematic and holistic approach to reduce defects and wastes by beefing up the bottomline and returns on investments."
The process involves use of statistical tools to observe process variables and manage the variances and characteristics with active involvement of the top management, as it is a company-wide activity. The other basic tenets are: focussing on projects that will provide immediate tangible returns and dedicating fulltime resources for project works.
"The Six Sigma process involves recognising and defining the problem by the 'champion' - the management representative. Then the 'black belt' - consultant - takes over and will measure (identify the key process inputs and outputs and evaluate the ability to control them), analyse (arriving at the key inputs that influence the key process outputs), improve (find out the process changes that will bring about the most improvement) and control (establishment of mechanisms to lock in the improvements)," says Gruska.
"Six Sigma does not compete with other quality initiatives. It is one more approach towards increasing profitability," says Omnex country manager (India operations) Arun Kumar. "It is not a problem-solving tool, but a systematic technique to improve profitability."
Gruska says companies wanting to reduce its internal and external costs (scrap, warranty, rework, repair, retrofits, downtime, service calls, redesign, recalls, excess inspection and lost sales) should have Six Sigma initiatives.
"Six Sigma was developed by Bill Smith at Motorola where it was implemented in 1987. The next year, Motorola won the Malcolm Baldrige quality award (America's Deming). Since then several companies have adopted the process," Gruska traces the history.
According to him, there is immense potential to cut costs and wastes to increase profits. A company is said to have achieved Six Sigma level (final stage) when the defective product level is just 3.4 parts per million (ppm) or, as Gruska puts it, 3.4 defects per million opportunities.
"Companies with the cost of poor quality ranging between 30 and 40 per cent of their sales are not competitive. The industry average is around 15 to 20 per cent and these companies are in the level of 4 Sigma with 6,210 ppm/defects per million of opportunities."
The next higher-level companies suffer poor quality cost ranging between 10 and 15 per cent of their sales, which translates into 233 ppm. "The world-class is the next stage, that is where the cost of poor quality is less than 10 per cent of the sales, and the production defect is 3.4 ppm. There is an opportunity to bridge the quality gap between 4 and 6 Sigma levels."
Referring to the price pressures faced by global auto companies, which in turn impacts the component suppliers, Gruska says the only way a company can protect or show growth in the bottomline is by cutting down its costs. The one cost that is within the reach of a company to cut is waste and defects.
The Six Sigma approach is applicable for all industries and not particularly to the auto sector alone, though Omnex's Indian subsidiary is more associated with Indian auto players.