Six Sigma is one of those buzz words that company management teams tend to throw around. It may sound like high level tosh, but its actually one (if not THE) most respected methodology for improving business processes with the aim of increasing business revenue and competitive advantage. There are lots of useful examples of companies who have deployed a six sigma project and have their processing running at six sigma. So what’s it all about? In this article I attempt to give a 1000 foot view of what it is and try and explain what it can do for an organizations processes. Remember though that this isn’t nearly enough information to understand it completely. There are courses for becoming practitioners at certain belt levels and it can all become pretty costly, however recorded results and ROI have recognised that this methodology works.
So what is it?
Six sigma is an applied methodology (organized collections of methods/activities) for improving business process performance. It can also be seen as a problem solving methodology for minimising the amount of errors in a business process out of a possible opportunity for errors. It started in the manufacturing sector with its creator Bill Smith working at Motorola back in 1986. A process that performs at six sigma is extremely efficient and experiences only 3.4 errors per million error opportunities. That’s quite a target to achieve, so efficient that the statistical analysis of a process is required to locate every possible point of defect, that’s why a six sigma project generally produces substantial improvements in process and why its known as the THE best process improvement methodology.
Since a six sigma deployment project aims to gain such efficient processes, it effectively maximises the value of the process output (remember a business process is just one or more inputs, a collection of interelated activities and a value added output). A six sigma deployment project will use a plethora of different tools to analyse business process data at a detailed level. What I hope to convey in more detail in future articles is the stages of a six sigma based project, the roles and the tools for each stage of the project. Finally, the key point to remember is that EVERY organization needs to improve in order to obtain the competitive edge (against other improving competitors).
The project generally has two levels to make it work. Managerial and Technical. The technical roles will be responsible for the physical transformation of a process based on the information gathered. The Managerial level is where the project starts, it must have managerial buy in and be driven from the top of the organization (or business area), not hugely different from most business critical projects.
Management: Management must understand that the project will provide them much improved ROI (one of its biggest focuses) and also its customer focus (since for most businesses, the output of certain process may benefit the customer directly). Finally, management should be taking accountability for the project and leading it, including organizing the structure of deployment, the strategies and tools that are to be used and who will take on which roles (belts in black, green and yellow).
Technical: The technical portion is the definition (D), analytical study and measurement (M and A) of the ‘as is’ process and the improvement (I) and control (C) of the ‘to be’ process (DMIAC).
Each part of a process output (i.e a service, a product or transaction) has characteristics that are generated as a result of the process. It’s looking at these characteristics that results in ‘component’ improvements. Improving the individual characteristics of each small component part of a bigger product, service or transaction is what results in a larger scale improvement in the end result. Each time a business process runs, its component parts (and their characteristics) don’t generate exactly the same output each time and together with all other parts of the process this can result in defects in the processes end result. Each ‘difference’ in component processing is known as variation.
Let’s take the production of a teddy bear, each bear could roll off of the conveyor belt in a slightly different form to the previous. This variation could be a result of variations in the way the bear’s nose is
attached. Understanding the variations is the key to change. As component defects multiply, the percentage of overall error is large (especially if one component of the process is dependant on another, compounding defects). Variation happens naturally as a result of cause and effects, its a case of managing or controlling that variation to produce really efficient processes. One important point to note is that variation can change over long periods of time, therefore short term variation and long term variation should been seen as different (variation may increase as a higher rate over time for example).
The Sigma Scale
The scale is the measure of how well a component characteristic performs against its requirement. The higher the sigma score the more capable the characteristic. If a component for example, lets say our bears nose assigning machine has a defect rate of 31%, then it is operating at two sigma. The goal of course is to up the operational accuracy and lower defects to a 0.0000019% defect rate, or for the process to performance at six sigma.
The Six Sigma Equasion.
Y = f(X) + E
or in simple terms, Process Output (Product, Service etc) = Component Function (Functions Inputs) + Defect Variable. Simpler again, a certain set of process inputs is transformed by a process component and together with its known variations generates a process output (with or without defects dependant on the variation variable). The DMAIC process can improve
Define, Measure, Analyse, Improve and Control are the technical systematic methods of the problem solving process. The DMAIC stages can improve any type of process in any organization, increasing its efficiency and effectiveness. The ‘Define’ stage deals with setting the context and project objectives. ‘Measure’ is the stage for getting the baseline performance for the process to be improved. ‘Analyze’ covers using a selection of tools to understand the cause and effect relationships in the process. ‘Improve’ is of course the roll out of modifications to the process and finally ‘Control’ is the stage at which plans are put in place to ensure that improved processes are sustained.
The DMAIC methodology is performed by trained practitioners and ‘tollgates’ are met. As one tollgate is completed, the next one can be tackled.
As I mention, performing these stages can include a lot of detail along with a lot of available tools to perform them. I’m not getting into that here as its far to much to go into, but there are lots of great Six Sigma resources on the web along with a great little iphone application that covers the tools and methods available to each of the stages in te DMAIC methodology. Pop Six Sigma into itunes for more information. There are also certification programmes for each of the belt levels that train individuals the tools and methods involved in the DMAIC process. Read a lot about six sigma and then get involved in a six sigma based project.