What Is Six Sigma And Its History

Published Date: 02 Nov 2017

Abstract

This term paper deals with overview of Six Sigma and its implementation in manufacturing and service industries. Also it deals with Methodology used for successful implementation and we will see benefits and its successful implementation in some companies. At the end we will see benefits of taking this topic as a master thesis topic for my future career.

Introduction

What is Six Sigma and its History

"Six Sigma is defined as a methodology that aims at a quasi-perfect production process. Some authors define it as a methodology that aims at a rate of 3.4 defects per million opportunities (DPMO). " (Bass 2007, p. 16)

Six sigma is a collection of strategies or a methodology followed by an organisation in order to achieve a nearly defect less products or services. This methodology states that it delivers 3.4 defects per million components or chances. This process is sometimes considered as a statistical quality control mechanism. In the twenties statistics played a very important role in producing and controlling quality goods. Finally after some developments, these statistics lead to six sigma. The aim of six sigma is to eliminate waste and to reduce inefficiency so that every costumer is delivered with quality goods as expected. (Sanjaya Kumar Saxena, p. 1)

Sigma (σ ) is a greek symbol that is used in statistics to represent standard deviation. This symbol has been related to industries to measure process variation and six is the number of such sigma's measured in the whole process. And so this methodology or approach is called SIX SIGMA. (Park 2003, p. 1)

Motorola is the company that developed the concepts of six sigma which lead to a comprehensive management system. There is a time in 1980s and early 1990s where this company cannot stay in business because of the competition given by Japanese companies. To overcome this situation, a new approach came out of Motorola’ Communication sector. This invention has been implemented by GE and achieved very good results and even today many of the industries are being able to achieve good results. (Pande et al. 2000, pp. 33–34)

Why is Six Sigma important?

The importance of Six Sigma in industries has been increasing day by day. It is very important as it creates an environment for continuous improvement and also opportunity to make improvements. It has an approach to meet customer satisfaction effectively and has a strategy to gather, analyze and solve problems of any kind within the company. It even handles the problems related to customer expectations where the purpose of the product or service is taken into consideration. Six Sigma utilizes Process mapping, Waste elimination, Reduction of defects and Continuous improvement environment to achieve effective results. (Morgan, p. 1)

DMAIC Process

Most significant methodology in six sigma management is characterized by DMAIC Process. DMAIC stands for Define-Measure-Analyze-Improve-Control. Every existing six sigma company applies this methodology and is the most common methodology in almost any company as it results in factual improvements and outcomes. It works equally on variation, design, yield, cycle time etc. This process is split into five phases as follows. (Park 2003, pp. 47–48)

(Pande et al. 2000, p. 64)

Six Sigma in manufacturing and service

The following table shows the key steps of Six Sigma using DMAIC process which applies to almost any company.

(Plečko et al. 2009, p. 4)

Any Six Sigma company in the world can follow these key steps to achieve great success either in service or manufacturing sector nevertheless the way of approach is different.

Even though the approach of Six Sigma in process improvement and quality is being used by manufacturing societies, it is gaining equal and exponential popularity even in service organisations particularly in banks, financial services, airline industries, hospitals and utility services etc. It is known that 20 per cent of price of the product is from direct manufacturing labour and the remaining 80 per cent of it is associated with design, human resources, finance, marketing and support. The objective of Six Sigma’s strategy in service sector is to understand the defects and improve the process to lower the chance of occurrence of the defects observed and this has to enhance customer satisfaction. In manufacturing organisations the effort of Six Sigma is built on well-established processes and quality programs besides a service industry struggles a lot to improve and apply quality measurements. One difference among these two types is that in service industries the decisions are made by the people than in manufacturing industries. (Antony et al. 2007, p. 2)

Most of the service industries like banking, public administration, insurance, and postal think that Six Sigma doesn’t apply well to their industries. But this is wrong. There are many companies like AIG Insurance, GE Capital Services, US Postal Service, American Express, Amazon services, Canada Post etc., who implemented Six Sigma very effectively in their industries. Compared to manufacturing processes it is often difficult to measure processes in service but it can be achieved possibly by determining the benchmark of the world’s best companies. (Park 2003, pp. 165–166)

Key Roles and Responsibilities of Six Sigma

The following table shows variations in generic roles and belts or titles.

(Pande et al. 2000, p. 148)

Green Belts (GB): They offer team support to Black Belts internally. They assist in collection of data, data input into computer, analyse data using software and report preparation for management.

Black Belts (BB): They stand as support for Six Sigma organization and sustained improvements. They form teams and try to solve problems by managing projects and then guiding the teams to solve the problem, which results in effective delivery of results.

Master Black Belts (MBB): MBB’s are technical leaders of Six Sigma. They offer assistance to operations and strategies for project champions and management regarding deployment and formation of Six Sigma program.

Project Champions: They select the projects and identify Green and Black Belt candidates. They also fix targets, provide resources and review the projects regularly and eliminate any obstacles that come in the way of programs success. (Sunil Thawani 2009, p. 3)

Benefits of Six Sigma

Six Sigma generates continuous achievement. It acts as a basis for the new culture and continuous renewal and this is called a closed loop.

Six Sigma targets each and every performance in an organisation. Each employee and each department has different set of ideas and objectives. It gives opportunity to understand customer requirements, which is a very important task to achieve a perfect Six Sigma objective rate of 99.9997 per cent.

Six Sigma delivers value to the customer. In today’s market only defect-free products along with long established company cannot give success. Six Sigma allows an organisation to find out the expectations and ideas of customers and plan to meet the customers efficiently and effectively. (Herr Christian Wirth, p. 1)

By adopting Six Sigma, there will be enhancement of product development cycles and process design. Also reduction in product lead times is possible by reducing the cycle time of overall manufacturing process.

By using Six Sigma root causes of a problem can be found and eliminated thereby reducing the variation in process to avoid occurrence of defects. (Tjahjono et al. 2010, p. 8)

Future perspectives of Six Sigma

"Six sigma is likely to remain as one of the key initiatives to improve the management process than just being remembered as one of the fads (Johnson and Swisher, 2003)." (Young Hoon Kwak 2006, p. 6)

Besides pointing out and counting the defects the main focus has to be on improving performance of total management. Still researchers and practitioners are finding solutions to integrate Six Sigma with other available management methods so that it becomes more attractive and useful for organisations that have not yet started or totally implemented the Six Sigma methodology. Incorporating and comparing characteristics and principles of Six Sigma with others like Human Resource Functions, ISO 9000, ISO 9001 and Total Quality Management may probably maximize the positive effect of Six Sigma. (Young Hoon Kwak 2006, pp. 6–7)

Publication bibliography

Antony, Jiju; Antony, Frenie Jiju; Kumar, Maneesh; Cho, Byung Rae (2007): Six sigma in service organisations: Benefits, challenges and difficulties, common myths, empirical observations and success factors. In International Journal of Quality & Reliability Management 24 (3), pp. 294–311.

Bass, Issa (2007): Six sigma statistics with Excel and Minitab. New York: McGraw-Hill (McGraw Hill professional).

Herr Christian Wirth: Six Sigma — TQM - Total Quality Management. Available online at http://www.tqm.com/beratung/six-sigma, checked on 21/04/2013.

Morgan, A. M.: Why Is Six Sigma Important? | eHow.com. Available online at http://www.ehow.com/about_6594909_six-sigma-important_.html, checked on 20/04/2013.

Pande, Peter S.; Neuman, Robert P.; Cavanagh, Roland R. (2000): The Six Sigma way. How GE, Motorola, and other top companies are honing their performance. New York: McGraw-Hill.

Park, Sung H. (2003): Six Sigma for quality and productivity promotion. [Tokyo]: Asian Productivity Organization (Productivity series, 32).

Plečko, Alenka; Vujica-Herzog, Nataša; Polajnar, Andrej (2009): An application of six sigma in manufacturing company. In Advances in production engineering & management, pp. 243–254.

Sanjaya Kumar Saxena: Introduction to Six Sigma - Discover 6 Sigma - Online Six Sigma Resources. Available online at http://www.discover6sigma.org/post/2005/10/introduction-to-six-sigma/, checked on 14/04/2013.

Sunil Thawani (2009): Microsoft Word - Six Sigma quality service.doc - Six Sigma in Service Industry.pdf. Available online at http://www.qualitywaves.com/articles%20six%20sigma/Six%20Sigma%20in%20Service%20Industry.pdf, updated on 6/09/2009, checked on 21/04/2013.

Tjahjono, B.; Ball, P.; Vitanov, V.I; Scorzafave, C.; Nogueira, J.; Calleja, J. et al. (2010): Six Sigma: a literature review. In International Journal of Lean Six Sigma 1 (3), pp. 216–233.

Young Hoon Kwak, Frank T. Anbari (2006): Benefits, obstacles, and future of six sigma approach. Available online at http://home.gwu.edu/~kwak/Six_Sigma_Kwak_Anbari.pdf, updated on 12/04/2006, checked on 21/04/2013.