Six Sigma in Business Management
At many business management of organizations six sigma simply means a quantitative measure of quality that strives near to perfection. To illustrate, It is a defined and disciplined business methodology that helps increase customer satisfaction and profitability by streamlining operations, improving quality and reducing waste in every kind/type of organizations. In summary, Six Sigma helps company to become a customer-centered, gain control over process complexities and improve response time.
In brief, The core idea behind Six Sigma in Business management is that if you can measure the number of defects in process, you can systematically figure out the ways to eliminate it with the possibility of getting closer to “zero defects”.
One of the famous personality, Jack Welch, Former CEO of GE (General Electric) Company once said, “The best Six Sigma in management projects begin not inside the business but outside it, focused on answering the question: How can we make the customer more competitive? Additionally, What is critical to the customer’s success? Learning the answer to that question and learning how to provide the solution is the only focus we need.”
In general Six Sigma is:
A Business Strategy:
Business can strategize its plan of action for driving the increase of revenue, reduction of cost and improvement in all parts of the organization by using Six Sigma Methodology.
A company can create a vision of providing defect free and positive environment to the organization, using Six Sigma methodology.
Six Sigma is actually a benchmark. When a company process is fastened with zero defect, it helps improve the company metrics and further can be used to improve the newly stabilized process metrics.
Organization can have a stringent goal and best use of methodology often leads towards achieving those goals using Six Sigma Methodology.
A Statistical Measure: It is a data driven methodology and statistical measure is used to identify root-cause of the problem, in additional this methodology helps calculate the process performance using Sigma unit.
A Robust Methodology:
Six Sigma is a methodology having various tools and techniques to implement in an organization for calculating and eliminating the defects of an organization.
It is a business strategy, a vision, a benchmark, a goal, statistical measure and a robust methodology.
History of Six Sigma in Business Management:
It was introduced or developed by Engineer Bill Smith and Bob Galvin while working for Motorola in 1986. And it turns out that Motorola became the first company to receive Malcolm Baldrige National Quality Award in 1988. Sigma believed that, “Leadership directly influences the quality of a product”, that’s why it talks about the involvement of experts for sigma projects. Moreover, Identification of Expertise happens in form of different belts like Master Black, Black, Green, Yellow and White.
The History can be shown as follows:
1979-1986: Period of Evolution
1986-1992: Period of Design
1992-1994: Period of Refinement
1994-1996: Period of Results
1996-1997: Period of Awareness
1997-1998: Period of Adaption
1998-Today: Period of Enlightenment
Today almost every top companies in the World uses six-sigma or some other forms of quality management system. Talking about six sigma in business management, although it was originally used as a method of production process improvement, now has been applied to many processes unrelated to manufacturing.
Things we need to know about six sigma for Business Management
- It is considered as philosophy:
The relationship is established between Output variable ‘y’ and various inputs ‘x’s. Therefore the sigma revolves around identifying, analyzing and controlling the inputs ‘x’s to manage ‘y’.
- It is a metric: 6 Sigma means lesser or equal to 3.4 defects per million opportunities (DMPO).
Note: Yield is used to measure the performance of the process. Higher the yield, higher will be the performance level.)
- It is a project based approach:
Several projects are initiated for proper functioning of work in service as well as manufacturing organizations. (* Solving the single or group of problems for improving one system is known as sigma project.)
- It requires strong support and involvement from Top Management: Otherwise it can be huge risk as opportunity loss especially in small scale businesses.
- The roles of professionals involved in project are pre-defined: Different belt holders have different responsibilities.
- It is a methodology: It is a methodology, if used in right manner would give bullet-proof and high yielding returns. It is the only documented methodology for solving the problem and available in a market.
To illustrate, There are two major methodologies within 6 sigma.
- DMAIC (Define, measure, Analyze, Improve, Control)
- DMADV (Define, Measure, Analyze, Design, verify)
DMADV is basically used to create new products, processes and services, whereas DMAIC is preliminarily used to improve the existing business process.
Specifically, DMADV stands for:
- Define the designed goals that are consistent with customer demands and the enterprise strategy.
- Measure and identify CTQs (characteristics that are Critical to Quality), product capabilities, production process capability, and risks.
- Analyse to develop and design alternatives.
- Design an improved alternative, best suited per analysis in the previous step.
- Verify the design, set up pilot runs, implement the production process and hand it over to the process owner(s).
DMAIC stands for:
- Define the problem and the project goals.
- Measure in detail the various aspects of an organization.
- Analyze data to find the root defects in the company processes.
- Improve the existing processes.
- Control how the process will be done in future.
Key Principles of Six Sigma:
- Focusing the requirements of customers.
- Using the statistical measurement and analysis to understand how to perform and identify the root cause of the problems (variations).
- Involvement of team in the projects.
- Being proactive in controlling and eliminating the variations.
Importance of implementing Six Sigma in service oriented organizations:
- Increase in profitability because of cost reduction due to improvement in quality of work.
- Reduction of waste like unneeded movements, delays in work, duplication (i.e. when it comes to filling multiple forms), lack of communication, inventory issues (i.e. unwanted stuffs stored as stock in company premises), lost opportunities with customers.
- Helps in driving customer focus by assisting to build robust business processes and services.
Other importance are:
- Generates sustained improvement.
- Fosters continuous learning and development.
As per the research, it shows that service organizations incur cost of poor quality, analysis states that less than only 10% of process cycle time is “productive work”, remaining is waste, re-work and other non-value added activities. Hence, six sigma in service organizations play a vital role to achieve improvements. Most importantly its implementation leads to Happy Customers.
Implementation of Six Sigma in Business Management
Highly skilled personnel trained in the use of statistical tools and the techniques are the one to implement six sigma in and organization. Moreover, Martial arts provide the six sigma training and certification levels. Also, The certification and belts includes white, yellow, green, black and master black belt designations.
- White Belts: May not be part of Six Sigma, but can work with local problem solving team.
- Yellow Belts: Participants as a project team member and review process improvement that supports the projects.
- Green Belts: Work under the assistance of Black Belts, lead Green Belt projects and team and assists with data collection and analysis for Black Belts projects. Green belt holders are the actual implementer of Six Sigma in an organization.
- Black Belts: Leads problem-solving projects as well as trains and coaches project teams.
- Master Black Belts: Trains and coaches Black Belts and Green Belts.
*Green Belt Certification: Six Sigma Green Belts are employees who spend their time in process improvement. So, for being green belt sigma certified one must have 3 years of full time working experience in the area of Six Sigma Green Belt Body of Knowledge (one can be quality control as well). One should have the ability to demonstrate the knowledge of Six Sigma tools and processes.
Direct involvement of employees is a major factor for successful implementation of Six Sigma project in Business management
For implementation of six sigma in initial phase, the following steps need to be followed:
- Project: The best way to implement is to start with a pilot project (i.e. activity planned as test or trial). We can identify company process that generates defects or has other problems.
- Training: The person leading six sigma has to be knowledgeable about Six Sigma methods and principles. That means he/she should be ‘Black Belt’ expert. Also should be able to provide training to other personnel working for the projects.
- Team: Once a company choose black belts, he/she will assist with implementation. Then an organization requires good workers who are black belts and green belts certified.
- Plan: Black Belt identifies problems areas and workers working for projects work with solutions.
- Execute: Requires initial effort and then it is a continuous process. Further, The pilot project need to be in place in organization as continuous application.
- Evaluate: Personnel get training even in pilot projects. We receive green belt as well as black belt holders. And thus, the process continues to be in company’s operations.
Some of the tools that supports Six Sigma are as follows:
- 5 Why’s
- Statistical and Fitting tools
- Analysis of variance
- General linear model
- Regression Analysis
- Scatter Diagram etc.
- Value Streaming Mapping
- Cause and Effect Diagram (Fishbone/Ishikawa Diagram)
- Taguchi Loss Function
- SIPOC analysis (Supplier, Input, Process, Outputs, Customers)
- Quality Function Deployment
- Histogram/Pareto Chart/Pareto Analysis)
- KANO Analysis
- Poka Yoke
Companies implementing Six Sigma for Business Management
Though 1000 of companies are implementing six sigma for better efficiency in organizational process, there are only few companies who strongly claim the successful implementation of Six Sigma i.e. (38 to 50). Also, these companies have proven that they are the most successful and well-known companies in the World. Some of them are:
- Bank of America
- United States Army
- United States Marine Corps etc.
Benefits of being sigma certified:
- Customer Satisfaction: Improved quality control leads to improved service, improved service leads to higher customer satisfaction.
- Employee Satisfaction: Direct involves all employees in sigma projects, thus it creates a sense of companionship.
- Improve Performing Workforce: For instance, With sigma training, employees can analyze how best to utilize resources.
- Improve Business Partnership: Being sigma certified proves that you/company is loyal to its business partners as well as customers.
For Personnel Career:
- Firstly, Six Sigma certification makes the professional stand out from the competition.
- Secondly, Being Sigma certified shows your promise to improving your business understanding and analytical abilities.
- Once you achieve certification, you will have a thorough understanding of meaning and qualifying financial benefits.
Picture speaks itself
While Six Sigma is a best standard to aspire to, some companies find that it’s too costly to maintain the standard, some companies ought to adopt a Five Sigma Standard (i.e. 230 DPMO).Improving quality to a point where there are less than 230 DPMO is still a huge accomplishment and may certainly be an acceptable standard. To conclude, The current performance measurement paves a way for continual improvement of sigma level striving towards 6 sigma.