The Value of Six Sigma

The value of Six Sigma can be seen in all types and sizes of organizations.

The big myth is that Six Sigma is about quality control and statistics. It is that –but it is a helluva lot more. Ultimately, it drives leadership to be better by providing tools to think through tough issues. ” - Jack Welsh, from his book Jack

Jack Welsh undeniably demonstrated the value that Six Sigma brought, and continues to bring, GE. In 1998 Six Sigma projects resulted in savings at GE of $750 million and $1.5 billion the following year. Welsh explained that at the core of Six Sigma is an idea that can turn a company inside out, focusing the organisation outwards on the customer.

What is Six Sigma

Although Six Sigma started life as a quality improvement toolset it has evolved into a methodology that adds value to a business and all its stakeholders. Six Sigma is about value creation.

The value of Six Sigma can be defined and understood at three distinct levels: metric, methodology and philosophy. It offers a powerful methodology, or rather set of methodologies, that brings business improvement and innovation solutions to every level of the organisation and across the organisation. It is a methodology that is equally well suited to transactional and operational processes.

Six Sigma is a rigorous and disciplined methodology that uses data and statistical analysis to measure and improve a company's operational performance by identifying and eliminating variability, defects and waste in processes.

Six Sigma is compiled of a numerous tools and techniques that follow proven guidelines to ensure the correct causes of a challenge are identified and the best solutions developed and implemented.

The aim of the value of Six Sigma is to reach a state of near perfection. This state is commonly defined as 3.4 defects per million opportunities. It is this measure from which Six Sigma derives its name – three standard deviations (also known as sigma) either side of the mean which equates to a success rate of no less than 99.73%.

Three Methodologies

At the simplest level the Six Sigma methodology phases can be described as follows: 1. A practical problem is experienced. 2. The problem is proven statistically to be significant. 3. Solutions are develop and proven statistically to have improved the situation. 4. Finally, the solution is practically implemented.

Three methodologies are offered by Six Sigma. These include LEAN, DMAIC and DFSS.

LEAN is based on the premise that anywhere work is being done, waste is being generated. The LEAN tool set helps manage a process to its optimal level, through relentless focus on the identification and elimination of waste and promoting continuous flow.

DMAIC is the acronym derived from the process improvement phases. These are: – Define – Measure – Analyse – Improve – Control. DMAIC is the most commonly employed Six Sigma methodology and produces good results when employed to improve existing process.

DFSS or Design for Six Sigma is used to further the innovation capabilities of a company. DFSS promotes close interaction between operations and commercial functions. DFSS begins with identifying opportunities, developing those opportunities into viable offerings and on to successful commercialisation thereof. The most commonly used DFSS methodology is DMADV derived from the methodology’s process steps Define – Measure – Analyze – Design – Verify.

Before deploying any one, or combination, of the above methodologies, opportunities for waste reduction, improvement or innovation need to be identified and the opportunity quantified. This process in itself has a statistical base.

Once opportunities have been prioritised project charters are compiled and farmed out to Six Sigma trained experts called Black Belts, Green Belts and even Yellow Belts for implementation. These experts gather a cross functional team that are familiar with the process or situation being worked upon and facilitates the project through the various phases of the chosen methodology.

Philosophy and Principals

Six Sigma was developed in the 1980’s within Motorola by Dr. Mikel Harry and his team. It is a methodology that continues to evolve and produce success after success.

Apart from the strong change management and statistical foundation, Six Sigma is built upon a few core principals that ensures its longevity. These include:

  • A real focus on the customer’s changing and evolving needs.
  • Data driven decision making.
  • Process focused improvement. Action is squarely focussed on achieving outcomes while improving those variables that influence it the most.
  • Proven project management techniques and strong project leadership.
  • Cross organisational – cross functional and cross hierarchy - team collaboration

There exists no doubt that Six Sigma delivers the most gains / benefits when deployed thought an enterprise or an independent business unit. It alters the way business is done and promotes the use of a common language throughout the business.

In order to maximise the value of Six Sigma investment several key success factors should be borne in mind. These include:

  • The organisations leadership must visibly champion the initiative.
  • Like anything else in business, Six Sigma must be aligned behind the business strategy
  • Project selection must be lead by the Voice of the Customer
  • All Six Sigma activity must demonstrate a quantifiable benefits
  • A deployment and project tracking and measurement mechanism must be installed and used by all
  • A clearly defined performance management system should be in place.
  • Six Sigma promotes a learning organisation. Information gathered during a project must be stored in a central repository and successes replicated to similar areas within the organisation.

Current Trends

In its early life, Six Sigma was principally employed in the manufacturing and operational environment. As it proved its worth, those same organisations employed the methodology to improve or redesign transactional process. During the last decade, and particularly the last few years, it is startling to observe the rate at wish the service industry is adopting Six Sigma and achieving tremendous results.

It was at the turn of the millennium that Six Sigma really began to get a foot hold as local subsidiaries and multinationals started using it. There were certainly the odd view early adopters that implemented before then. Today, most large organisations have implemented some form of Six Sigma or are seriously considering it. These businesses vary from mining to finance, automotive to IT and many others.

The value of Six Sigma helps organisations compete in a global market that is becoming exponentially more competitive year after year, companies are desperately seeking ways of balancing profitable grow and cost, of optimising resources while maximising the right opportunities, and while delivering innovative offerings faster. Although Six Sigma is not a silver bullet, it most definitely offers a competitive advantage when employed correctly. 

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