Six Sigma Methodology Overview

Six Sigma began as a set of tools to reduce product defects and improve quality. Over the years, however, it has become a system for driving improvement at every level of the business. The list of companies that have used Six Sigma is enormous and spans every industry from manufacturing to healthcare, utilities to service-based organizations.

Large, global companies such as General Electric, MasterCard, Hess and Hitachi use Six Sigma, as do smaller organizations including regional healthcare providers, utility providers, retailers and government entities. Six Sigma has helped each of these organizations cut costs while improving quality. Consider these real-world results:

• A large city government saves $10 MM and improves service to its citizens byimproving processes in virtually every department, from fire, community development and water pollution control, to human resources, streets and solid waste.

• An airline improves utilization of its new self-service airport kiosks, which make check-in more convenient for passengers, and reduces labor costs by $2.8 MM annually.

• A hospital improves care by weaning patients off ventilators sooner, and saves $650k a year by reducing ICU length of stay.

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What is Six Sigma?

Since its inception, Six Sigma has grown from a process improvement methodology to a management system for ensuring quality at the organizational level. In many companies, Six Sigma permeates the organization as a way of thinking and doing business. Every employee is trained in at least the basics of Six Sigma, and they all have an understanding of their role in contributing to organizational excellence.

On a more tactical level, Six Sigma is a problem-solving methodology that leverages data and statistical analysis to solve business problems related to product and service quality. The problems can be customer-driven, such as complaints about a frequent product malfunction or poor service. Or they can be internal to the organization, such as an HR recruiting process that doesn’t produce the best candidates for the job or a persistent shortage of office supplies.

Six Sigma seeks to solve such problems at the process level. Six Sigma practitioners are trained to examine the underlying process and determine the root cause of the problem. To do this, they use the formula Y = f(x), which means that process output is a function of process inputs. You’ve heard the phrase, “Garbage in, garbage out”? Six Sigma helps you uncover “garbage” inputs, (poor materials, untrained employees, faulty equipment, etc.) that result in a poor quality output.

In addition to uncovering the source of the problem, Six Sigma helps you solve the problem and put systems in place to ensure that it stays solved. All of this is accomplished using the Six Sigma DMAIC project methodology. DMAIC stands for Define, Measure, Analyze, Improve and Control. Using DMAIC to manage Six Sigma improvement efforts provides a consistent and effective way of perfecting your products and services one process at a time.

Literally speaking, a Six Sigma process is 99.99966 percent as good as it can be given its current capability. Another way of looking at Six Sigma quality is producing no more than 3.4 defects per million opportunities. Why is Six Sigma so stringent? Isn’t 99 percent good enough? It’s not when you consider that, for example, a 6 Sigma water treatment process might result in one minute of unsafe drinking water every seven months; but the same process running at 3.8 Sigma (99%) could produce contaminated water for 15 minutes each day! Six Sigma quality can be a matter of life and death, but mostly it’s about producing higher quality products and services than the competition so your business can continue to grow.

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Benefits of Six Sigma

• Reduces defects, resulting in higher quality products and services.
• Makes product and service performance more reliable and consistent.
• Lowers operating costs by increasing process capability and yield.
• Improves customer satisfaction through quality and reliability.
• Leverages data to help the business make sound decisions.
• Solves difficult business problems using statistical analysis.

History of Six Sigma

Many trace the beginnings of Six Sigma back to earlier quality efforts and pioneers, such as Walter Shewhart, who developed theoretical concepts of quality control in the 1930s, including the Plan-Do-Check-Act (PDCA) cycle. Shewhart’s assistant, Dr. Edward Deming proposed the radical notion that as quality goes up, the cost of business goes down (fewer defects = less rework = lower costs).

Deming later worked with Dr. Joseph Juran to help Japan rebuild its economy after World War II. The results of their work became a system known as Total Quality Control (TQC). This approach was so successful that Japanese manufacturers began to outperform other manufacturers around the world. In the 1980s, the United States jumped on the quality bandwagon and many companies instituted a similar system to TQC called TQM (Total Quality Management).

Six Sigma was a natural outgrowth of the modern quality philosophy. It was invented by Dr. Mikel Harry and Bill Smith, engineers who worked for the American manufacturer Motorola. The methodology was applied with great success at Motorola, and soon adopted and refined by Honeywell (then AllliedSignal). Six Sigma gained worldwide notoriety, however, when Jack Welsh, then CEO of General Electric (GE), deployed the methodology throughout his company. Welsh used Six Sigma not only to improve GE’s offerings, but also to transform the company into an organization driven by the pursuit of excellence in all endeavors. Six Sigma has since become a term that is synonymous with high quality, and to strategically reduce the cost of doing business in every industry.

Today, many organizations combine Six Sigma techniques with Lean tools in the form of Lean Six Sigma.

Find out how Lean Six Sigma can cut costs and enable operational innovation in your organization, email us or call +971 4 319 7645.

Additional Reading

The Six Sigma Way: How GE, Motorola, and Other Top Companies are Honing Their Performance - Peter S. Pande, Robert P. Neuman, and Roland R. Cavanagh

Six Sigma for Dummies - Craig Gygi, Neil DeCarlo, Bruce Williams

The Six Sigma Handbook: The Complete Guide for Greenbelts, Blackbelts, and Managers at All Levels, Revised and Expanded Edition - Thomas Pyzdek

Six Sigma for Green Belts and Champions: Foundations, DMAIC, Tools, Cases, and Certification - Howard S. Gitlow and David M. Levine