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Six Sigma is a quality management programme that everyone has heard about, but know very little about. In this article, part of a three-part article, Sanjay Matai explains the nuts and bolts of this operational performance improvement tool. The topic of discussion on a typical day in any company's top management would invariably revolve around two topics - costs and the customer. The business exists for the customer, and it is the company's business to meet the customers' needs to their satisfaction. Second, the more efficiently a company can manage its costs, the more competitive and profitable its business becomes. It is in these two critical components of any business that Six Sigma has proven to be a successful process improvement and management tool. A quality management programme, Six Sigma is essentially a rigorous and disciplined approach that utilises data and statistical analysis tools to improve the operational efficiencies of critical processes, practices and systems aimed at reducing variations and eliminating defects in the company's processes and products. It is based on a 'statistical thinking' paradigm: that everything is a process, that all processes have an inherent variability and that data can be used to understand and reduce variability through process improvement. On the face of it, Six Sigma is all about achieving - consistently - a quality level where the defects are less than the statistical number of '6 sigma'. As the company moves towards achieving these quality levels, there is a profound impact on the 'customer' and the 'cost'. The statistical number
Sigma is a Greek alphabet ( ? ) used by statisticians to measure the variability in any number about a mean. Say the mean was a desired customer specification. Then a process with +/- 3 tolerance would result in 67,000 defects per million; a +/- 4 tolerance would result in 6,200 defects per million. Traditionally companies have been following a standard of 3-4 sigma performance levels. However, it was observed that with time, most processes also showed a shift in the mean from the target value. This was primarily owing to normal wear and tear, and increasing process complexities. Hence even 3-4 sigma processes resulted in significantly higher number of defects. This shift was empirically taken as an average of 1.5 sigma. The 6-sigma tolerance levels, together with the mean shift, results in the defects reducing to just 3.4 per million, which means near-perfection quality levels of 99.9997 per cent. Today, however, Six Sigma is often interpreted to mean producing a product that satisfies the customer and minimises supplier losses to the point at which it is not cost effective to pursue a higher quality. The methodology
While the objective is to reduce defects, the route that the Six Sigma methodology proposes is one of 'process improvement' rather than 'quality supervision'. The focus shifts from 'product specifications' to 'operational procedures'. The processes have to be so designed, that errors and defects are automatically eliminated or reduced. Six Sigma advocates a broad and flexible framework: define - measure - analyse - improve - control (DMAIC). Each company has to suitably fit its processes into this framework, to work towards achieving the quality levels it seeks. The real benefits of a Six Sigma programme are likely to be realised if the focus is on a few high-potential processes. The Six Sigma methodology employs advanced statistical tools and, therefore, needs experts to conceptualise, implement and guide the programme. The DMAIC framework is suitable for improving existing process and systems. Variants of this basic framework, such as DMADV (define, measure, analyse, design and verify), DFSS (design for Six Sigma) and BPMS (business process management systems), are used for differing situations. Define
The first step is to define the critical (important) customer requirements. These would become the process improvement goals or benchmarks, and create a platform for measuring processes and identifying the ones critical to achieving higher sigma levels. For achieving excellence in operations to deliver a superior customer service and reducing wasteful costs, it is important to: Objectives could be varied - from a higher ROI or market share for the top management, increasing the production throughput at the operational level, developing newer technologies for the R&D department or reducing the attrition rate in the company for the HR department. It is important at this stage to involve the people who are a part of the process day-to-day. As they deal with the actual processes day-in and day-out, they often are the best persons to find meaningful solutions. Also, as they become part of the search for the solutions, the implementation becomes voluntary and, therefore, more effective and long-lasting. Some of the tools adopted to identify key processes include process mapping, capability study and measurement systems analysis. Measure
Once the key processes have been identified, the 'measure' phase is about gathering information on defects involved in the targeted processes. Valid and reliable metrics are established and used to obtain basic data on process performance, and to help identify problem areas. The emphasis, again, is on the customer; measurement and data collection has to be from the customer's perspective. Tools used include sampling techniques, gauge repeatability and reproducibility studies, variance components analysis, pareto analysis, etc. Analyse
Analysis of this data gives an idea about the difference between the desired levels and the actual process outputs, and determines the extent of improvement required. It also helps ascertain the root cause(s) of the variations through trends, the patterns and relationships that emerge. Accordingly, necessary corrective steps can be deduced. Techniques used in the analysis phase include cause and effect matrix, failure modes and effects analysis, reliability analysis, etc. Improve
The improvement phase is all about finding and implementing solutions that seek to eliminate or reduce the problems identified during the analysis phase. This is best achieved by a combination of the black belts (experts) and people at the workplace. Often, methods such as 5S, mistake-proofing, total productive maintenance, etc, have worked as potential solutions. Tools such as design of experiments, hypothesis testing and confidence intervals, etc, are used to assess improvements. It is often necessary to iterate through the measure-analyse-improve steps. Once the target level of performance is achieved, control measures are established to sustain the performance. Control
Having identified the necessary improvements, it is important to institutionalise the improved systems by modifying policies, procedures and other management systems. Process performance results are periodically monitored for any variations, so as to ensure that the productivity improvements are sustained. The data collected and the experience of process improvements, serve as an important input into new product and service design. Some companies use systems such as ISO 9000 to assure correct documentation. Various statistical tools (like control charts, time series methods, etc,) and non-statistical tools (procedural adherence, performance management, preventive activities, etc,) are employed in the control phase. The benefits
The biggest companies across the world have implemented Six Sigma, like Motorola, GE, 3M, Citicorp, Ford, Apple, Microsoft and many others. Their experience has been very encouraging; most say they have derived significant benefits:
A reduced number of defects has resulted in huge savings on the costs that companies incur in rectifying defects and compensating customers. This saving adds directly to the bottom-line of the company. -
A smaller number of products need to scrapped, lowering the consumption of raw materials, energy, labour, etc, that goes waste with the scrap.
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Better quality translates into the company having a 'larger number of satisfied customers'. This not only means more number of repeat customers (and we all are aware that cost of maintaining a customer is much less than acquiring one) but also new customers through 'free' positive word-of-mouth publicity
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Process improvements lead to increased product durability and reliability, and longer product life-spans.
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The programme is data driven, and decision-making is more scientific and focussed.
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Management vision becomes more effective, as it is aligned with more tangible benchmarks and achievements.
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Apart from the monetary rewards that flow in with better profitability, the employees develop a sense of purpose and ownership in their work, which is one of the best motivators. Six Sigma initiatives have helped companies to realise their vision and mission statements, and to achieve their strategic goals. Processes have become more flexible, enabling management to meet changes in market demands more effectively, both in terms of time and money. Six Sigma started as a process improvement tool in manufacturing companies and physical products. It has, however, subsequently been adapted for service-oriented companies and transactions.
also see : Service
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