Introduction to Six Sigma for Operations Managers

Overview

 

Six Sigma is the most potent and popular tool in Operations Management. This methodology was first developed by Bill Smith and implemented in Motorola, saving more than 16 billion dollars. Six Sigma is derived from Statistics, where Sigma means Standard Deviation. 

 

Six Sigma is a process improvement technique that aims for 99.99966% perfection in any process. In other words, it allows not more than 3.4 defects per million opportunities. This methodology helps operations managers identify and fix major and minor issues in a process and enhance overall quality. This is achieved by applying the principles of statistics. 

 

Six Sigma is widely used in industries like Automotive, IT & ITES, Banking, FMCG, Retail, Healthcare, Pharmaceuticals, etc. The objective of Six Sigma is to design an environment where companies perform continuous improvement and thereby make their customers happy by meeting their expectations.

 

There are two sub-concepts in Six Sigma - DMADV & DMAIC. These two tools are applied to different business scenarios. A detailed explanation is presented below:

 

DMADV (Define, Measure, Analyze, Design, Verify)

 

1. Used in case of developing new products or services or processes

2. It is a significant part of DFSS or Design for Six Sigma

3. DMADV is all about getting the new process right at the first shot itself

4. It focuses on the prevention

5. It leverages qualitative tools

 

DMAIC (Define, Measure, Analyze, Improve, Control)

 

1. Used in case of existing business processes

2. It focuses on correction

3. DMAIC aims for reducing variations in the current process

4. It leverages quantitative tools 

5. It is applied for short-term improvements

 

(Must read: Phases of Project Life Cycle)

 

Five Main Principles of Six Sigma

 

1. Focus on the Customer: 

 

This should be one of the major goals of any business. A customer once was satisfied with a black ambassador. It was the time of company-driven markets. 

 

Today is not the same. We are living in a customer-driven market and as everyone says, the customer is God. Businesses should be customer-centric and identify aspects that customers love. 

 

Also, it is important for organizations to determine factors that affect their revenue numbers and keep themselves updated on customer needs and market standards.

 

2. Identifying the Problem from the Value Chain: 

 

List down all important activities that need to be performed in a specific process. Activities that do not add value to business goals should be removed. 

 

Perform a cause-and-effect analysis with the help of Ishikawa or Fishbone diagrams to identify potential root causes of a problem.

 

3. Minimize variation and eliminate anomalies: 

 

There can be outliers or anomalies in the process. Try to eliminate those using various operations and statistical tools and techniques. 

 

Variation in the process can be minimized with the help of six sigma and lean methodologies. Lean, in particular, can be applied to remove waste or unnecessary activities in the process.

 

4. Stakeholder Management: 

 

A well-structured process should be in place and all stakeholders should be defined properly in advance. They should cooperate with each other and together find a solution to the problem. 

 

All stakeholders should have good skills and experience so that the project can be tackled in a hassle-free manner and process optimization can be achieved.

 

5. Highly Responsive System: 

 

It is obvious that when modifications are made in a process, the work style and employee approach should be changed. Execution of projects would become simpler when there is a highly responsive system in place. 

 

Change is a constant thing in the universe. The system of an organization should embrace new changes frequently, only then it will stay competitive in the market. (Source)

 

Difference between Six Sigma and Lean Six Sigma:

 

Six Sigma is implemented by companies to improve their profitability by eliminating mistakes and defects in the process of manufacturing. Lean Six Sigma is the combination of two popular methodologies - Lean and Six Sigma. 

 

We already know a lot about Six Sigma by now. Lean is a waste management technique that is used by many organizations across the world to remove 7 types of wastes - TIM WOOD (Transportation, Inventory, Material, Warehousing, Overprocessing, Overproduction, Defects).

 

Real-Life Instances of Six Sigma:

 

1. Ventura County: 

 

The local government of Ventura County in the state of California leveraged the method of Six Sigma to achieve a savings of approximately 33M USD. 

 

Then the methodology was carried out at a country level and the government had employed more than 5000 people and trained them on performing six sigma. Ventura County stated that huge savings were possible only due to six sigma that helped them eliminate unnecessary activities and items in the process.

 

2. General Electric: 

 

This American multinational giant was once not that great at offering the best quality products and services. It was figuring out ways to improve the same. In spite of having experts working at the best of their capabilities.

 

Only after the strategic level management of General Electric brought the concept of Six Sigma into the picture, the company was able to enhance its service and generate good revenue.

 

3. Wipro: 

 

The technology multinational biggie had once faced the issue of client satisfaction. It was drastically improved after the implementation of the Six Sigma methodology.

 

4. Boeing Airlines: 

 

It faced many issues with air fans that are present inside the engine. No matter how much they tried, the company was not able to figure out the root cause for this issue. Once the senior management leveraged Six Sigma, they learned that the two main causes of this problem are FOD (Foreign Object Damage) and Basic Manufacturing Defects. 

 

5. Motorola: 

 

The birth of Six Sigma happened here. Bill Smith was the one who developed Six Sigma when he was working with Motorola. This telecommunications company’s existence has become permanent only after the development and implementation of Six Sigma that improved service quality, revenue, and resource utilization of the firm.

 

(Related reading: Cost-benefit analysis)

 

Six Sigma Belts and Their Rankings:

 

Based on the depth of training and experience, there are various levels at which professionals can get themselves upskilled. 

 

1. Black Belt: 

 

This is the ultimate level of Six Sigma Certification. People who pass all the other three belts are eligible to work on and achieve the Six Sigma Black Belt. 

 

Professionals who are black belt certified can take up large-scale projects and assess the impact that Six Sigma can bring to the table for an organization. They will be able to break down complex activities into simpler tasks and apply the concept of Six Sigma to achieve business goals.

 

2. Green Belt: 

 

This is the second-largest certification of Six Sigma. In other words, the only goal that would be left for someone who passed this level is Black Belt. 

 

Green Belt certified professionals are generally the team leaders in a company and work in a specific industry like Pharmaceuticals, Manufacturing, Healthcare, etc. They should often implement improvement techniques in various processes in the organization.

 

3. Yellow Belt: 

 

People of this level work closely with corporate leaders who are usually black belt certified. Yellow Belt certified professionals contribute their part in terms of defect elimination to the project and the team they are working in.

 

4. White Belt: 

 

This is the first and baby step towards becoming a six sigma professional. Beginners achieve this level and then look for higher belts. 

 

In White Belt certification, fundamentals of process optimization, waste minimization are taught to young professionals. Ideal individuals who take up White Belt certification are the ones who did not have any formal training earlier in their career.

 

(Read also: How Business Analytics impacts Decision Making in Businesses)

 

 

Concluding Lines

 

Needless to say, Six Sigma works much better than all other sigma variants such as one Sigma, two Sigma, three Sigma, four Sigma, and five Sigma. 

 

This is because the higher the standard deviations of the process limits from the mean point, the lesser chance of the process occurring outside of acceptable limits and resulting in a defect or mistake. 

 

One biggest advantage of Six Sigma is that it is so adaptable that the concept can be applied to any and every industry under the sun. Even after so many years of its inception, Six Sigma is still the first go-to tool for a manager to solve problems of the organization he/she is working for.