SIX SIGMA APPROACH
Six sigma approach can be used both in improve an existing process and creating a new process.
Six sigma improvement methodology for a a process or product is composed of five specific steps: Define, Measure,Analyze, Improve, and Control (DMAIC). At each stage, data is collected, analyzed, and acted on in a closed-loop system that leads to lasting, continuous improvement and better performance.
Define: identify and articulate the requirements for each process and how they need to be improved to meet customer expectations.
Measure: identify the data sources and additional information that are used to convey how the process works.
Analyze: examine each process in depth and in detail from a customer perspective to determine what’s causing the defects or deviations.
Improve: identify solutions to reduce or eliminate defects and deviations and develop a plan to implement them.
Control: modify existing processes and structures or implement new ones that can ensure that the improved process remains within an acceptable performance range.
DFSS-Design for Six sigma methodology, for a new process is composed of five specific steps: Define, Measure, Analyze, Design and Verify/Validate
Define: initiate, scope and plan the project (resources, constraints etc)
Measure: understand customer needs and specify the key quality measures as perceived by the customer; benchmark competitors and industry
Analyze: review the current process and map it to the desired process to meet the customer requirements
Design: develop a detailed design for the ‘should-be’ process
Verify/ Validate: test process and validate the performance against the key measures
WHY IS IT IMPORTANT?
Six Sigma projects have resulted in tangible, often dramatic improvements in many different areas: cost reduction, productivity improvement, market growth, customer retention, cycle time reduction, and product and service quality. Examples of Six
Sigma successes both large and small abound.
Here are three:
1. MOTOROLA: Remarkable ‘turnaround’ performance
The 1980s were a harrowing time for Motorola. Overseas competition was eating away at its market share. Top company leaders agreed that the quality of their productswas substandard. Existing quality programs had no effect and Six Sigma was introduced. In the decade between Six Sigma’s beginning in 1987 and 1997, achievements included the following:
· Five fold growth in sales, with a 20% increase in its annual profit
· Cumulative savings of US$14 billion
· Stock price gains compounded to an annual rate of 21.3 percent
2. HONEYWELL: Business Transformation
AlliedSignal (now Honeywell) began its Six Sigma activities in the early 1990s. Achievements include the following:
· Annual savings of $600 million after only a few years.
· Reduced the amount of time required to design and certify new aircraft engines from 42 months to 33.
· In 1998, the company recorded productivity increases of six per cent and record profit margins of 13 per cent.
3. G.E: Holistic development
The most commonly cited and widely studied Six Sigma success story is G.E. Unhappy with the quality of the company’s products, and armed with a simple yet powerful idea that each of G.E unit had to be No.1 or No.2 in its market, Chairman Jack Welch launched an aggressive Six Sigma program with considerable fervor.
As they were for Motorola and Honeywell, the results were dramatic and across varied businesses:
· G.E.’s lighting unit cut invoice defects and disputes with Wal-Mart (one of their biggest customers) by 98 per cent, speeding payment and improving productivity for both companies.
· Streamlined contract review processes at one of G.E. Capital’s service businesses led to increased responsiveness and more completed deals for annual savings of $1 million
· G.E Power systems registered annual savings of hundreds of thousand dollars just by addressing the burning needs of its utility customers identified through Six Sigma approach of process improvement.
· G.E. Capital Mortgage analyzed the processes at one of its best-performing branches and expanded them to its42 other branches. This improved the rate of customers receiving a “live” G.E. employee from 76 to 99 per cent.
Other companies, including Black & Decker,Bombardier, Caterpillar, Dow Chemical, FedEx,Kodak, Sony, Toshiba, and many others have all implemented or are implementing Six Sigma projects of their own.
SIX SIGMA APPROACH CAN BE APPLIED TO ANY INDUSTRY
Six Sigma has its roots in manufacturing, but its unprecedented success has led many to adopt its principles and apply them in other sectors.
The following examples are all drawn from The Six Sigma Way: How G.E., Motorola,
and Other Top Companies are Honing Their Performance, McGraw-Hill, 2002.
At the post office:
• 300,000 letters delivered—
with 99 per cent accuracy = 3,000 misdeliveries
with Six Sigma = 1 misdelivery
In the IT department:
• 500,000 computer restarts—
with 99 per cent reliability = 4,100 crashes
with Six Sigma = less than 2
• 500 years of month-end closings—
with 99 per cent accuracy = 60 months not
balanced with Six Sigma = 0.018 months
• For every week of TV broadcasting—
with 99 % of airtime filled = 1.68 hours of dead
air with Six Sigma = 1.8 seconds
WHAT IS BUSINESS INTELLIGENCE?
Business intelligence is taking all the necessary corporate data about your business and turning it into meaningful understanding. BI creates the right kind of information base in bring about reliability into the planning process. BI can aggregate and consolidate disparate internal and external (third-party) data from different sources and applications into a central framework and creates a contextual collaborative platform within a department or an entire organization.
BI can be deployed at the department level to support a specific DMAIC Six Sigma project
(for example: reporting and analyzing the deviations in an existing process), or enterprise-wide to measure and manage an entire company’s performance with reference to a group of projects. Organizations can use BI to align operations with strategy and to measure performance against overall business goals.
WHY SIX SIGMA NEEDS BUSINESS INTELLIGENCE
Six Sigma initiative takes place at three levels—thinking, doing and communicating. A Business intelligence solution, delivered as an enterprise portal, becomes the ideal platform for all the levels of a typical Six Sigma initiative. It provides a visual presentation layer for the wide variety of reports and statistics that a Six Sigma projects initiative requires, while offering an enterprise wide communication platform..
BI can help companies analyze cost of poor quality and track the costs of each business process or Six Sigma project. It can identify bottlenecks in supply chains, isolate specific defects in manufacturing, errors in accounting, and other “defects” that result out of the process execution.
(Note: Defect in Six Sigma parlance is anything that causes customer dissatisfaction)
SIX SIGMA BUSINESS CHALLENGES
COMMUNICATING KEY QUALITY MEASURES ACROSS THE ENTERPRISE
Six Sigma is a highly statistical and data-driven process where In a Six Sigma approach every business problem is first converted into a statistical problem. Hence Six Sigma is a highly statistical and data-driven process. The success of a Six Sigma project depends on employees’ ability to collect and analyse the volumes of data that even a small-scale project can create and then communicate that understanding to the rest of the team.
If a Six Sigma project is cross-functional, the sheer volume of cross tabs, spreadsheets, and other charts scattered across the business units can make some employees hesitant to undertake a project. Black belts/Green belts and six sigma associates need a way to communicate facts in a way that is easy-to-understand and that enables quick decision making.
PROVIDING CURRENT AND ACCURATE INFORMATION
Early and quick Six Sigma wins in a particular department or a business unit can
help build momentum for more projects in the future and set the pace for the acceptance for Six Sigma within the organization. Two main criteria for achieving these wins are having accurate information, and having it as soon as possible. This
ensures that all the departments involved can agree on data sources, performance thresholds, defect definitions, and performance targets. There are two barriers:
using data from different systems that collect data in different ways, and using data sets that are refreshed at different rates.
ACHIEVING ENTERPRISE WIDE CONTEXTUAL COLLOBORATION
Improving work practices within business processes requires collaboration in context
while tapping into communities of practice as sources of best practices and innovation. As a company becomes increasingly interconnected, one single defect can adversely affect performance in any number of areas. Finding the cause of this defect and eliminating it using a quality initiative like Six Sigma can mean having to look at several processes across various departments or business units.
Individuals and teams need to understand their roles, their responsibilities, and the cross-functional impact of their decisions more clearly. This can be done more easily if all the members have information readily available and to share. This information also needs to be shared with a company’s external stakeholders.