The History To Six Sigma

Published Date: 02 Nov 2017

The enthusiasm on quality improvement in America businesses started in the late 1950 when prominent quality gurus (Edwards Deming, Joseph Juran and other) returned from Japan. Their assistance there had helped in the rebuilding of the industry by teaching quality techniques and methodologies, with the aim of enhancing industrial output (Goldman, 2005:217). A few years later, Japanese manufacturing output began to pick up both in quality and quantity. This eventually attracted the attention of global consumers mainly because of its already mentioned characteristics and low prices (Raisinghani, Ette, Pierce, Cannon, & Airplay, 2005:492). In response to the threat of the Japanese reputation for excellence in manufacturing output, American manufacturers started to develop and implement many quality initiatives such as: Quality circle, Zero defects, Management by objectives, Management by Commitment, Zero Based Budget, Total Quality Management, Malcolm Baldrige Award, and Six Sigma to improve product and service quality which are fundamental for customer satisfaction (Goldman, 2005:208; Raisinghani et al., 2005:492).

HISTORY TO SIX SIGMA

Antony and Banuelas (2002:26), point out that the Six Sigma quality management was first pioneered at Motorola Corporation (US Electronic manufacturer) in the late 1980s as a mechanism to streamline organizational performance with emphasis on minimizing quality cost by means of defects reduction. This view is supported by Schroeder, linderman, Liedtke and Choo (2008:537), as well as Kumar, Nowicki, Marquez, and Verma (2008:456), who are of the opinion that Six Sigma was initiated at Motorola to down scale variations in order to create a process that is less likely to produce defects. Coronado and Antony (2002:92), point out that a defect can be classified as an imperfection that causes a shortfall or failure of a process that triggers customer complaints. It was Bill Smith who crafted the original statistics and formulas that were the beginning of the Six Sigma culture. Jack Germaine a Senior Vice President at Motorola was named quality director and charged with the implementing of Six Sigma throughout the corporation. In 1988, Motorola was awarded the Malcolm Baldrige National Quality Award.

As Motorola‟s success became popular, Six Sigma was registered as its trademark and many companies in the USA (General Electric, Raytheon, Allied Signal, Honeywell, ony, Caterpillar, American express, Ford, and Johnson) adopted this concept, and consequently returned incredible results (Breyfolgle, 2003:5; Senapati, 2004: 683; & Schroeder et al., & Schroeder et al., 2007:536-537).

Antony (2009:274), found that currently companies across the world ranging from 29 small businesses, private and public to large organizations have adopted this philosophy to substantially improve:

Quality level,

Customer satisfaction,

Market share,

Employees moral,

Organizational culture,

People development,

Return on investment, and

Much more.

SIX SIGMA DEFINED

Six Sigma has various perspectives and is defined in literature and by people in different ways. According to Raisinghani et al., (2005:491), defining Six Sigma in simple terms is not possible because it consists of problem solving methodology and focuses on optimisations of financial returns, including culture change within an organization. Furthermore, the researches of Kwak and Anbari (2006:708-709), and Antony and Banuelas (2002:21), returned that Six Sigma definitions can be categorized in two segments which cover business and statistical explanation.

Six Sigma business definitions

According to Antony and Banuelas (2002:21), Six Sigma is a strategic business improvement mechanism used to optimize profitability, remove waste, reduce cost of quality and to go beyond customers requirements and expectations. Kwak and Anbari (2006:708), portray Six Sigma as a business tactic that emphasis the need to improve the understanding of customer requirements, business system, productivity, and financial performance. Chou and Su (2008:2694), are of the opinion that Six Sigma is a top down initiative led by top management and the hierarchy of trained personnel, who work on projects that are aimed to scale down waste and mistake proof processes that create value and yield to the improvement of products and services quality and tremendous customer satisfaction. Antony (2004:1006), describes Six Sigma as an inexorable and rigorous quest of the elimination of non-value added activities and variations in core business processes to achieve continuous and breakthrough improvement in organizational performance that impact on the bottom line result. The study of Black and Revere 32 (2006:260), refer to Six Sigma as a breakthrough strategy that combines improvement metrics and new management philosophy to significantly reduce defects by the mean of designing, improving, and monitoring business activities that result in strengthening a market place position, customer satisfaction and improved financial profit. Six Sigma is a systematic, highly disciplined and profit driven approach that brings together management, financial and methodological elements to improve process and product concurrently, resulting in customer satisfaction and financial results (Antony & Desai, 2009:413 cited in Tang et al., 2007). Ditahardiyani, Ractnayani and Angwar (2008:178), note that Six Sigma is a business management process for continuous process and product quality improvement that provides tangible business results to the bottom line and operational excellence. Miguel and Andrietta (2009:125), see Six Sigma as a management practice that seeks to maximize company financial earnings in any sector of activity of any size for the aim of raising market share, optimizing customer satisfaction, downscaling defects and reducing cost of manufacturing or service activities. Six Sigma is a business strategy known as an imperative for operations and business excellence (Antony, 2006:234).

Statistical definition of Six Sigma

Black and Revere (2006:259), describes Six Sigma as a methodology used to assess a process capability in terms its abilities to deliver outputs that meet or exceed customer requirements. Six Sigma is a quality oriented philosophy that seeks a process of ± 6 sigma variation even if a process mean shifts by ±1.5 sigma that results tin a maximum of 3.4 DPMO (Motwani, Kumar, and Antony, 2004:273). Antony (2008:107), is of the opinion that Six Sigma is a concept that relies on statistical techniques to identify, analyze, and solve problems that results in a noticeable down turn of nonconformities in all aspect of business organization. Eckes (2001:11), advocates that Six Sigma is a concept that provides a statistical measurement of a product or service performance by identifying problems, establishing root causes, formulating hypotheses, testing them and maintaining progressions that hunt or improve customer satisfaction. The Study of 33 Chou and Su (2008:2694), proposes that Six Sigma uses numerous statistical applications to improve the sigma level of a process performance to reflect or exceed customer needs. Antony and Banuelas (2002:21), define the Six Sigma statistical viewpoint as a rigorous quality control concept that monitors and improves a process of an organization that operate at 3 Sigma level to a 6 sigma level and therefore achieves a reduction of process variation so that it will result in no more than 3.4 DPMO in a long term. Six Sigma is a quality improvement methodology that incorporates management philosophies and statistical techniques in a well structured fashion to optimize business activities, thereby focusing on variation reduction in all processes, involving top management and operating force to work closely in the hunt of customer satisfaction and financial return.

SIX SIGMA BENEFITS

Antony (2008:107), advocates that the Six Sigma usage has been gaining ground with impressive results over the last 20 years and the benefits generated from its implementation worldwide can be classified as under:

Defects reduction.

Operational cost reduction.

Increased customer satisfaction and other shareholders.

The research of the Servicebazaar (2005: online), suggests that Six Sigma focuses on the reduction of process variation as well as enhancing its capability, which leads to the following:

Productivity improvement.

Higher throughput.

Higher level of quality.

Cycle time reduction.

Defects reduction.

Greater customer satisfaction.

Standardized improvement methodology in the organisation.

Drastic improvement in the bottom line.

Chou and Su (2008:2693 citing Maleyeft and Kaminsky, 2002), present a different perspective on Six Sigma benefits by saying: "The main benefit of a Six Sigma program is the elimination of subjectivity in decision making by creating a system where everyone in the organization collects, analyses, and displays data in a consistent way‟‟. As a result, Six Sigma is a concept that provides an opportunity to everyone in the value chain to actively participate in the journey to quality excellence. The significant impact of Six Sigma implementation on organizational performance really boosts exuberant financial returns on a balance sheet which 39 could not be obtained by other means (Antony & Banuelas, 2002:21). In the manufacturing sector, Six Sigma was first implemented successfully at Motorola and thereafter many other manufacturing organisations fruitfully followed its footsteps (Kwak & Anbari, 2006:710).

Antony (2006:236 citing Yilmaz and Chatterjee, 2000), found that most of the service processes operate at a sigma quality level below 3.5 which generates 23000 DPMO and by improving the above sigma quality level to just four sigma, the defects rate will go down significantly to 6210 DPMO. This will in turn generate impressive financial results due to an improved service delivery and customer satisfaction. Kwak and Anbari (2006:710-711), highlight that most service organizations remain skeptical about the effectiveness of Six Sigma in this particular sector. Antony (2006:236), however presents a different view in that the best way to convince a service orientated company to initiate, develop, implement and maintain Six Sigma strategy, is through the three rudimentary principles of statistical thinking. These principles include:

All work occurs in a system of interconnected processes.

All processes exhibit variability.

All processes create data that explains variability.

TOOLS AND TECHNIQUES FOR SIX SIGMA PROCESS IMPROVEMENT

McQuater, Scurr, Dale, and Hallmal (1995:38), propose a comprehensible definition regarding quality tools and techniques are as follows:

Tools and techniques are ways or mechanisms by which a particular problem can be solved.

A tool is a devise having a clear function and is used on its own.

A technique (set of tools) requires more thought, complexity, skill and training for effective use.

SIX SIGMA DMAIC MODEL

DMAIC model is a closed loop process that eliminates unproductive stages which allows the improvement process to be more efficient (Kwak and Anbari, 2006:706). The letter (D) represents the definition of the problem, (M) measures the problem, (A) analysis of data, (I) improvement of the process by removing root causes of defects and (C controlling or monitoring process to prevent problems. Various phases of model are as under:

Define phase

This is the first phase of any Six Sigma project and consists of three stages: a charter, customer needs and requirements, and process map (Eckes, 2003:30). Stages are as under:

The charter: A charter is a set of documents that illustrates the objectives and motivation for a Six Sigma team to perform its workload effectively.

Customer needs and requirements: A customer can be seen as someone who receives a product or service (need), from a process that transforms its requirements into characteristics or needs, that will play a critical role in its satisfaction (Eckes, 2003:32).

Process map: A process is a series of activities that transforms inputs (raw materials) into outputs (product, service or information) for a customer (Anjard, 1996:223).

Measure Phase

The creations of the data collection plan and implementation plan are the two major steps in this phase, which are as under:

Creation of the data collection plan: A data collection plan outlines the necessary key areas that will lead to the final calculation of the Sigma level. According to Eckes 2003:36-40), it consists of the following:

What to measure: Requirements obtained during the define phase.

The type of measure: Input, process or output measurement.

The type of data: Discrete or continuous data.

Operational definition: Have an agreement with all relevant people involved in the process in order to avoid contrasting ideas over what is being described.

Target specification: Measure the performance of the product or service to meet customer needs.

Data collection forms: Tools used to collect data.

Sampling: Taking a portion of the total population when measuring the entire population in order to minimize cost and time.

Implementation of the data collection plan: This step consists of taking the data collection plan and implementing it in order to generate the current sigma level of the process (Eckes, 2003:41).

Analysis Phase

Many authors consider this phase as the most crucial because more often, people seem to omit it and jump straight to improvement phase (Eckes, 2003:42-43). This phase consists of three steps: data, process, and root cause analysis of the current performance, which are as under:

Data analysis: In order to improve the effectiveness and efficiency of a process in such a way that it can create a product or service that meets customer requirements, the data obtained at the measure phase must be analyzed (Eckes, 2003:43).

Process analysis: A process analysis consists of an in-depth process mapping and a detailed analysis of the spot where the greatest inefficiency occurs.

Root cause analysis: This is the most important step of the analysis phase. Eckes (2003:54), advocates that it covers the stages listed below:

The open step: brainstorming session with all project team members aiming to unearth all causes of inefficiency.

The narrow steps: downscaling the reasons of inefficiency.

The closed steps: validation of all narrowed reasons of inefficiency.

Improve Phase

This phase involves generating and selecting solutions for implementation of doing things better, cheaper or faster and thereafter calculating the new sigma level (Eckes, 2003:61).

Control Phase

A tracking mechanism of measurements has to be put in place in order to sustain the newly implemented solution to ensure that growth is not lost over time (Anbari & Kwak, 2004:6).

KEY ELEMENTS FOR SIX SIGMA IMPLEMENTATION

Companies embarking on Six Sigma implementation programmes have shown contrasting results due to the complexity of this methodology and therefore, attention must be drawn to the key elements of Six Sigma to make it possible (Coronado & Antony, 2002:92-93). According to Coronado and Antony( 2002:93 citing Rockart, 1979) Critical Success Factors are those factors which are critical to the success of any organization. Therefore, the importance given to key input variables for the successful management of a process output can be attributed to Six Sigma critical success factors for an effective completion of a Six Sigma programme (Antony & Banuelas, 2002:21).The research of Antony and Banuelas (2002:21-23), Coronado and Antony (2002:93-98), Pyzdek (2000: online), Antony (2006:242-243), and Henderson and Evans (2000:269-277), identified the following key elements for the successful introduction and implementation of Six Sigma programme in an organization:

Management involvement and commitment.

Culture change.

Communication.

Organization infrastructure.

Training.

Project management skill.

Project prioritization and selection, reviews and tracking.

Understanding the Six Sigma methodology, tools and techniques.

Linking Six Sigma to business strategy.

Linking Six Sigma to human resource.

Linking Six Sigma to customer.

Linking Six Sigma to supplier.

1) Management involvement and commitment

Henderson and Evans (2000:269), noted that those who implemented Six Sigma have all agreed that a top management involvement is the most critical factor for a Six Sigma programme. Kwak and Anbari (2006: 712), propose that a Six Sigma implementation requires top management involvement, dedication, project selection and review, resource provision and training. Furthermore, the research of Antony and Banuelas (2002:21) and Pyzdek (2000: online), suggests that senior management should be taught Six Sigma principles needed for the preparation of their organization on the brink of adopting this concept. At GE, the Six Sigma initiatives were endorsed by Jack Welch (a former CEO)

who restructured the business setting to that of Six Sigma entity, by personally spending time in every Six Sigma training, completing a weekly and monthly Six Sigma review, making factory visits, and monitoring Six Sigma project progress (Henderson & Evans, 2000:269-270). Moreover, Antony and Banuelas (2002:21), found that a lack of top management support and commitment toward the Six Sigma implementation will simply jeopardise the time, energy, resources and enthusiasm behind this concept.

2) Culture change

Coronado and Antony (2002:93), contend that as a breakthrough management strategy, Six Sigma involves changing an organizations traditional culture to enable its welcoming. A successful introduction of Six Sigma implementation requires a total organization culture shift, where a transfer of the responsibility regarding product process quality is given to employees (Antony and Banuelas, 2002:21). The research of Kwak and Anbari (2006:713), assert that factors such as: communication channel, overcoming resistance to chance, and education of senior management, employees, and customers on Six Sigma benefits are required for the cultural change of individuals reluctant to the Six Sigma implementation programme.

3) Communication

Henderson and Evens (2000:277), propose that the cultural change that requires Six Sigma introduction and its implementation brings two fundamentals fears: fear of change and fear of not keeping up with the new standard. A good communication plan addressing Six Sigma methodology, the benefits of it and how it is related to people’s reluctance to change (Banuelas & Antony, 2002: 94). Banuelas and Antony (2002: 94) citing Air Academy Associates (1998), state the following: "When Six Sigma was launched in Sony Electronics, as a part of the communication plan, slogans such as „show me the data were frequently seen on internal magazines and pins worn by employees. The idea was to communicate a new management style based on facts and data as Six Sigma claims". Communicating or publishing the success and Six Sigma setbacks project implementation will help a business project team to identify best practices and avoid mistakes during future projects (Antony & Banuelas, 2002:22; Coronado & Antony, 2002 94; Kwak & Anbari, 2006:712-713).

4) Organizational infrastructure

The main reason why only 10% of TQM implementation succeeded, was the lack of tangible infrastructure to support its introduction. On the other hand, Six Sigma provides an adequate organizational structure with a clear role and responsibility to ensure success when implementing this approach. Refer to 3.9 for a detailed analysis regarding the Six Sigma organizational infrastructure.

5) Training

According to Coronado and Antony (2002:94), one can become more knowledgeable by learning that is one of the critical factors to ensure the success of Six Sigma Implementation. Pyzdek (2000: online), proposes that basis skills should be provided to all employees to ensure that relevant literacy and numeric skills are processed by everyone. Literacy and numeric skills will allow employees to grasp the fundamental principle behind the tools and techniques of Six Sigma during training sessions (Kwak & Anbari, 2006:713). There is usually a hierarchy of experts denoted by the belt systems (refer to 3.9) who receive special training on Six Sigma principles and thereafter spread this within an organization to ensure that everyone speaks the same language during projects selection, execution, completion and implementation (Antony & Banuelas, 2002:22).

6) Project management skills

Due to the fact that most of the Six Sigma projects failed as a result of a poor project management knowledge and a lack of meeting roles and responsibilities, it would be wise for a project team to possess project management skills that will allow them to meet the milestones of different project phases (Antony & Banuelas, 2002:22).

7) Project prioritization and selection, reviews and tracking

The selection of the Six Sigma project has to be a well thought of and careful process because a wrong selecting approach will delay results and increase time, money and frustration (Antony, 2006:243; Antony & Banuelas, 2002:22). For an effective completion of a Six Sigma project, champions, BB, GB, and project managers have to look at some critical elements of project management such as: Time, Cost, and Quality because these elements will help them to identify the project scope, objectives, and resources needed to accomplish a project at a very competitive cost, in order to meet specific business objectives (Banuelas & Antony, 2002:98).

Moreover, a tracking mechanism of projects and documentation should be put in place to ensure that all completed, accepted and implemented projects can be tracked for further references in terms of projects constrains and best practices (Antony & Banuelas, 2002:23; Kwak & Anbari, 2006:712).

8) Understanding the Six Sigma methodology, tools and techniques

According to Antony and Banuelas (2002:23), most of the Six Sigma training involves the rationale behind the DMAIC methodology, the tools and techniques for process improvement. Refer to 3.7 and 3.8 for a detailed analysis regarding these critical success factors of Six Sigma implementation.

10) Linking Six Sigma to business strategy

The overall goal of every business organization is to make profit and this can be achieved by substantial cost saving generated from the reduction of process variation which implies 3.4 DPMO. This means fewer customer complaints, lower quality and production costs, and finally higher income (Coronado & Antony, 2002: 95-96). This is what Six Sigma is striving to achieve (Ingle & Roe, 2002:274). Six Sigma cannot be treated as another isolated activity; therefore the link between Six Sigma project and business has to be obvious so that the result illustrates a fully integrated philosophy into a business culture rather than just a limited usage of few tools and techniques (Antony & Banuelas, 2002:23 cited by Dale, 2002). This has to be demonstrated in monetary terms and how it can be used to strengthen the business strategy (Coronado & Antony 2002:96).

11) Linking Six Sigma to the customer

Customer satisfaction is an ultimate goal for business survival, and Six Sigma is revolves around the concept of critical to quality characteristics (most important attributes to customer) (Servicebazaar, 2005: online). Critical to Customer characteristics can be quantified by the means of a tool called QDF, which translates the needs and customer requirements into engineering language that lead to customer satisfaction (Antony & Banuelas, 2002:43). Antony and Banuelas 2002:23), put forward that one of the key elements for Six Sigma project success is the ability to link this to customer needs.

12) Linking Six Sigma to Human Resources

A human resource based action is needed to be put in place in order to promote desired actions and results, thereby ensuring the long term requirement of Six Sigma goal (Henderson & Evens, 2000:275). The study of Antony and Banuelas (2002:23) citing Harry and Schroeder (2000), states that 61% of top Six Sigma companies have linked reward schemes to business strategy while underperforming organization did not emphasize this linkage too much.

Adding a specific Six Sigma section to the annual performance evaluation form and awarding executive compensation based on Six Sigma goals attainment are two other reasons for linking Six Sigma to human resources (Henderson & Evans, 2002:276-277).

13) Linking Six Sigma to suppliers

Most business organizations using Six Sigma cannot operate without outsourcing some raw materials or services that will be used in the processing of products or services. With regard to this, extending Six Sigma to suppliers becomes a necessity to ensure that variability will be reduced, in order to fulfill the needs of customer requirements (Coronado & Antony, 2002:97). To achieve this, Six Sigma companies must ensure the following:

Supplier must actively participate in the dynamic of culture change that comes with Six Sigma, by getting upfront support from their leadership (Antony & Banuelas, 2002:23).

A criteria selection of suppliers based on an acceptable Six Sigma performance capability level will make certain that only those with a Six Sigma culture can be part of the value chain, and for that reason deliver raw materials (Coronado & Antony, 2002:97 cited by Pande et al,. 2000); (Antony & Banuelas, 2002:23). Given the interdependence between an organization and its suppliers, a solid mutually beneficial relationship will enhance the ability of both to create value that will lead to a bottom line of customer satisfaction.