Six Sigma Way

KEY CONCEPTS

*Six Sigma is a technical method for fine-tuning products and processes, used by many engineers, service guys and statisticians.

*This process-improvement strategy is customer focused. Leaders implementing Six Sigma practices keep customers’ needs foremost in an organization’s plans.

*Some of the tools and concepts employed by Six Sigma practitioners include Enterprise Resource Planning, lean manufacturing, strategic business partnerships, globalization, and just-in-time inventorying.

*Six Sigma’s management philosophy is driven by facts and data. It clarifies what measures are keys to a business’ success and works at applying data and analysis to optimize results.

*One of the core goals of Six Sigma is to reduce variation or deviation in a product or service. As a result, the product or service becomes more consistent and reliable.

*Process improvement is about eliminating the root causes of business performance problems. The goal is to resolve a problem without disrupting the basic structure of the work process.

AN EXECUTIVE OVERVIEW OF SIX SIGMA

A Powerful Strategy for Sustained Success

Peter S. Pande, Robert P. Neuman has written well in there book The Six Sigma way-Business leaders and managers need to be sure they are focusing on sustained success. In today’s business climate, many companies come and go, enjoying only brief periods of success before fading away. Six Sigma is a flexible system aimed at helping twenty-first-century businesses achieve this sustainable success. Some of the companies
 that have successfully implemented its methods include General Electric, Motorola, and Honeywell. Six Sigma benefits organizations by helping them set performance goals for everyone, enhance value for customers, accelerate improvement, promote learning, and execute strategic change.

The system’s crucial elements are not unique to Six Sigma, but they are brought together in a unique way. They are organized into six themes.

1. Focus on the customer: Many improvement strategies include a plan to meet and exceed the expectations of their customers, but Six Sigma places a unique emphasis on taking steps to better understand customers.

2. Data-and-fact-driven management: Six Sigma determines the exact measures that are most important for gauging business performance. It then applies data and analysis in order to achieve optimum results.

3. Process focus, management, and improvement: Process is recognized as the main driver of success. A mastery of process is finally being recognized by business leaders as a powerful way to establish competitive advantage.

4. Proactive management: This is another way of describing the development of good habits. Proactivity enables creativity and establishes control.

5. Change management: A business must break down old-fashioned barriers in order to open up communication and collaboration across the entire organization.

6. Drive for perfection; tolerance for failure: This may seem like a contradictory mindset. However, implementing new ideas and processes carries with it a necessary level of risk, and many organizations do not achieve their potential because they avoid risking failure.

Business leaders need to look over these six themes and honestly determine where their companies stand.

Key Concepts of the Six Sigma System

Six Sigma comprises several major components for improving business performance. One such component is creating a closed-loop system. In this system, a business uses internal and external data to determine how to stay on course, which promotes stability. Algebraic-type equations can be used to locate and define variables, and determine which have the greatest influence. For example, in Y=f(X), Y could represent something like a strategic goal or customer satisfaction, and X could mean actions, quality, efficiency, or influences. The Greek letter sigma is used to represent standard deviation or variation in a group. Variation is the enemy for businesses, so it needs to be tracked at all times. The objective is to reduce variation, or sigma, as much as possible.

Once effective measures are in place, the next step is to apply them to three key management strategies, which are all focused on process:

1. The goal of process improvement is to fix a problem without changing the basic structure of the actual work process.

2. Process design/redesign, on the other hand, seeks to replace part or all of a process.

3. Process management involves making a long-term change of focus from functions to processes. This is an evolutionary approach that is slow to develop.

Applying Six Sigma to Service and Manufacturing

The authors broadly define service as a business that does not design or produce goods, and manufacturing as a business that does. Many manufacturing businesses pay significant attention to quality, so they do not believe they could benefit further by adopting Six Sigma. However, these companies must acknowledge that there is no longer such a thing as a pure manufacturing company. Rather, manufacturers must also stay on top of technology, understand their customers’ changing needs, manage supplier networks, and so on. Studies have shown that the U.S. economy has been veering away from manufacturing and toward service since about 1990. Service metrics are far more difficult to manage and quantify, so many companies tend to minimize them. The first step in improving a service-based business is to investigate its processes. This tends to shine a light on many problems that otherwise might not be noticed. Then, once time has been taken to better define a problem, understand it, and select an improvement project, any remaining ambiguity should be translated into clear measures and performance factors. It is important to remember that Six Sigma guidelines are flexible and are meant to be adapted to the individual needs of businesses, not the other way around.

The Six Sigma Roadmap

The ideal roadmap for establishing a Six Sigma system consists of five steps. Followed in order, they create a foundation that sustains further improvement.

1. Identify core processes and key customers. As businesses grow and develop in complexity, they can lose track of the big picture. This can be avoided by keeping critical business activities in mind while navigating the rest of the roadmap.

2. Define customer requirements. Too many companies have a poor understanding of their own customers. Companies must determine what their customers really want by putting systems in place that gather actual customer input.

3. Measure current performance. How well is the company providing customers with what they want? Companies need to measure how effectively they are delivering on the information gathered in step two.

4. Prioritize, analyze, and implement improvements. Any improvements will be based on the statistics and measurements from steps two and three. The key is to carefully prioritize improvements.

5. Expand and integrate the Six Sigma system. A long-term commitment to the Six Sigma methods and theories is required for genuine performance improvement.

PART TWO: GEARING UP AND ADAPTING SIX SIGMA TO YOUR ORGANIZATION

Is Six Sigma Right for the Organization Now?

Adopting Six Sigma means being willing to undergo fundamental systematic change across the entire company. The first step, therefore, is to be ready for change. Additionally, those considering Six Sigma should review their organizations in terms of their short- and long-term goals. They should be using hard data to assess where they currently stand and how well they are doing, and from there examining where opportunities for improvement lie. Companies must also consider any and all existing improvement plans in place. Where are they meeting expectations? Where might they be falling short? Decision makers should keep in mind that sometimes Six Sigma is not right for an organization, or there may be times when a limited implementation is all that is needed. The costs of implementing Six Sigma, which include direct and indirect payroll, training and consulting, and installation of new process designs, may require some organizations to wait.

How and Where Should Efforts Begin?

Once the decision has been made to implement Six Sigma, a number of other questions need to be examined early on. The way a company should approach Six Sigma depends on three main factors:

1. A clear objective is a crucial first step, but too many executives fail to specify exactly what they wish to accomplish. It can be anything from simple problem solving to strategic improvement to transformation of an entire business.
2. Assessing scope means determining which parts of the organization should be brought in on Six Sigma. This depends on resources for, acceptance of, and attention to the coming changes, and every company will differ in this regard.

3. Time frame is dependent on how long leaders of a business are willing to wait to see results.

The answers to questions that arise from examining these three elements will determine where and how a company can begin to implement Six Sigma.

Preparing Leaders to Launch and Guide the Effort

The success of Six Sigma requires the support of company leadership. Top managers must be prepared to take on the following:

*Describe for themselves and for others why the business is adopting Six Sigma. This rationale must be specific to the organization.

*Play an active role in planning and implementing Six Sigma goals. This will in turn affect the overall theme of the project, as well as its promotion.

*Create a marketing strategy to minimize employee worry or cynicism. The plan should be challenging but realistic.

*Become advocates for the system. To do so, leaders must learn and understand it fully. However, advocates do not necessarily need to be top management; a ground-up approach can also be effective.

*Set clear objectives. Specific objectives, tailored to the specific organization, should be understood by all and be attainable.

*Hold themselves and others accountable. Accountability can be achieved by aligning the Six Sigma effort or results to compensation.

*Get solid measurements of results. A balance of hard and soft results may work best, rather than an overreliance on currency saved or anecdotal information.

Leaders are the ones who will set the tone and direction for any change within a company. Without their support, a Six Sigma initiative cannot properly succeed.

Preparing Black Belts and Other Key Roles

An important task of Six Sigma lies is defining key roles for the organization. The authors suggest many roles a company should consider, if they do not already exist.

*The leadership council serves as a forum where planning and discussion among managers takes place. They establish the infrastructure of the Six Sigma program and help quantify its impact.

*The sponsor, or champion, is a senior manager who oversees a particular improvement project. This individual sets broad goals and keeps them aligned with larger business priorities. He or she is responsible for securing resources for projects and providing coaching where needed.

*The implementation leader manages and supports the day-to-day progress of the project, and prepares training and documentation.

*The coach is a technical expert who provides advice and help to improvement teams.

*A team leader or project leader takes primary responsibility for the work of the Six Sigma project, as well as its results.

*Team members provide additional support and help to spread the word about the project.

*The process owner has a cross-functional responsibility of working with the improvement teams and owning the newly designed processes. This person may also be the sponsor.

Six Sigma has adopted the martial arts terminology of Master Black Belts, Black Belts, Green Belts, and Yellow Belts to signify a level of training and mastery. Black Belts should be selected carefully, as they have a significant impact on the success or failure of a project.

Training the Organization for Six Sigma

A Six Sigma organization is always picking up on new information from its customers and elsewhere. These organizations use this knowledge to develop new and improved products and services. There are several essentials to effectively training an organization in the Six Sigma System, such as emphasizing “hands-on” learning; providing relevant, “real-world” examples; building knowledge; and making training an ongoing process that caters to different learning styles. The Six Sigma curriculum can be tailored to the styles and skills of each individual, but there are some skills that can be developed with a broader plan. Some examples of training elements are “Leading and Sponsoring Six Sigma Efforts,” which teaches project selection and role requirements, and “Advanced Six Sigma Tools,” which teaches quality function deployment and advanced statistical analysis.

Selecting the Right Six Sigma Projects

Project selection is considered to be the most commonly mishandled aspect of a Six Sigma program. Four essential steps for ensuring effective project selection are:

1. Provide guidance to leaders. A working meeting in which a team of leaders can discuss possible issues is important.

2. Launch a reasonable number of projects. Many companies take on too many small projects at once rather than focusing on the most important ones first.

3. Scope projects properly. A company may assign a monumental task to a team, failing to account for its massive scope and thereby setting the team up for frustration or failure.

4. Focus on efficiency and customer benefits. Financial gains are just one part of the overall result; just as important are improved market strength and a better competitive position.

When selecting projects, certain criteria to keep in mind include the impact on customers or business strategy, the available resources or support, and the likelihood of success. In the end, a selected project should be described in terms of the issue, its value, and the expectations of the team assigned to it.

PART THREE: IMPLEMENTING SIX SIGMA: THE ROADMAP AND TOOLS

Step 1: Identifying Core Processes and Key Customers

There are three main activities associated with the first step in the Six Sigma Roadmap. The first is to identify the business’ core processes. A core process is defined here as “a chain of tasks — usually involving various departments or functions — that deliver value.” Examples include customer acquisition, order fulfillment, and new product development. The second step is to define the major outputs of these processes, as well as the key customers. Managers should be careful to only define the most crucial outputs. The final step is to create core process maps that identify the main steps in each core process. When defining the activities that make up these processes, the authors use the SIPOC process model (supplier, input, process, output, and customer). This helps to display cross-functional activities in a single diagram and to maintain focus on the big picture.

Step 2: Defining Customer Requirements

Understanding and anticipating the wants and expectations of customers should be considered the most important core competency of any modern business. The second step on the roadmap focuses on finding a system that tracks and updates customer requirements, measures performance standards as defined by customers, maintains measurable service standards, and analyzes all of the above based on their importance to customers. Listening to and understanding the “voice of the customer” must be an ongoing priority. Managers should remember to pay equal attention to service requirements (how the customer is treated) versus output requirements (what is delivered to the customer in the end), and to keep an open mind toward new information about what the customer wants. These requirements must then be analyzed and prioritized in order to be properly linked to the company’s strategy.

Step 3: Measuring Current Performance

Gathering data can be extremely simple or difficult, depending on what is being measured. Either way, measuring data is necessary to both plan and track Six Sigma. A resulting benefit is the ability to monitor change and respond quickly and effectively. Some of the major deliverables of this process include collecting and measuring data from the company’s current performance against the customer’s requirements and identifying relative strengths and weaknesses in company processes. This information gives business leaders what they need to determine priorities for improvement. In addition, this data lays the foundation for ongoing measurement systems and results in a more responsive organization.

Step 4A: Six Sigma Process Improvement

When working through the Six Sigma process improvement steps, an organization’s goal should be to match or exceed its initial gains. Step 4A of the process focuses on the phases of DMAIC:

*Define.

*Measure

*Analyze.

*Improve.

*Control.

In this instance, define means to clarify the problem, the goal, the customer being served, and the process being investigated. Measure refers to determining the focus and extent of the problem, and narrowing it down to its major factors and root causes. The analyze phase tends to vary the most, depending on the problems presented. It is best defined as a cycle. Hypotheses are generated and analyzed to determine the root cause. If they are incorrect, a new hypothesis is created, and so on. Improve is the payoff. This phase requires creativity and careful consideration of new ideas, and should always keep the original objective in mind. Control marks the beginning of the sustained improvement of the Six Sigma system and is addressed in a later chapter.

Whenever a DMAIC tool is used, the team should have a clear understanding of why they are using it and have made a careful consideration of all possibilities. In these situations, simple is best. The team should always be able to recognize when a given tool is not working, and stop appropriately. Leaders should also recognize that process improvement is not linear; it is often cyclical. Revelations made along the way can inform and inspire revision of any step in the process, including its very foundation.

Step 4B: Six Sigma Process Design/Redesign

Asking a few key questions as they apply to a particular organization can help uncover the DMAIC process. What is the scope of the activities involved? What are the critical outputs and their requirements? How will the organization test and refine this new process? This type of design/redesign is needed because it places emphasis on the needs of the customer. There is no formula for how to launch a redesign effort, so companies must go about it based on their circumstances, such as existing needs or opportunities. The redesign conversion is a risk for any company, but it can be a calculated risk with proper planning. A process charter is used to set direction and define parameters. It also brings a sense of purpose to the process improvement team and the organization as a whole.

Step 5: Expanding and Integrating the Six Sigma System

Once a process improvement strategy has achieved its goal, it can become difficult to sustain the results. Sustained improvement can be achieved, however, by taking a few key actions:

*Implement ongoing measures. It helps to build support for the solution among others. Leaders should be inviting documentation on all changes made, and keeping that documentation brief, clear, and available. They should select meaningful, ongoing measures and display them in charts. They should also have response plans in place, in case something goes wrong.

*Define responsibility for process ownership. Leaders should be positioning their organizations to adopt a process management approach. They will get results efficiently so they can more effectively serve their customers and get buy-in from their employees. Process owners should be identified who can maintain and supervise any new system put into place.

*Execute “closed-loop” management. This means revisiting the very first steps of the process improvement roadmap: identifying core processes and key customers, defining customer requirements, and measuring performance.

Advanced Six Sigma Tools

There are more sophisticated Six Sigma tools and techniques that can bring about even greater change and development. These “power tools” have more specific applications and should be used with great care. Such tools include tests of statistical significance (in which patterns are found hidden in statistics that can confirm or validate change) and mistake-proofing (in which detection and correction of mistakes is emphasized). These types of solutions should be carried out by specially trained Black Belts.

The elements of the Six Sigma system can be applied to any business or organization to achieve sustained improvement and success. The system can be adapted to fit the unique goals of individual organizations.