Meaning of Six Sigma: The Industry-Independent Methodology

In layman’s term, Six Sigma is a measure of quality that strives for near perfection. The official definition for Six Sigma is: It is a disciplined, data-driven approach and methodology for eliminating defects in any process, from manufacturing to transactional and from product to service.

The above video discusses the following topics:

• What is Six Sigma?
• Where it all began?
• How does Six Sigma work?
• Who is using Six Sigma?

• Top Organizations benefiting from Six Sigma

What is Six Sigma?

The fundamental objective of the Six Sigma methodology is the implementation of a measurement-based strategy that focuses on process improvement and variation reduction.

The term ‘sigma’, denoted by Greek letter σ, is used to designate the distribution or spread about the mean(average) of any process or procedure. A six sigma process is one in which 99.99966% of all opportunities to produce some feature of a part are statistically expected to be free of defects (3.4 defective features / million opportunities).

Six Sigma goes beyond defect reduction to emphasize business improvement in general, which includes:

• Cost reduction
• Cycle-time improvement
• Increased customer satisfaction

And any other metric that is  important to the company.

History of Six Sigma:

In the mid-1980’s Motorola, Bill Smith and Mikel Harry designed an in-house model ‘Six Sigma’ for reducing defects. The then Chairman of Motorola, Bob Galvin implemented it across all sub functions. In 1991, Allied Signal adopted Six Sigma methods followed by General Electric’s CEO Jack Welch, in 1995. By 2000, Six Sigma was effectively established and implemented in all sorts of organizations around the world. Today, around 129 organizations across the globe apply Six Sigma methodology.

According to Jack Welch, former CEO of GE, “Six Sigma is the best training that an organization can give to its employees, it’s even better than sending them to Harvard Business School.”

How does Six Sigma work?

Business Problem:

The Business Problem is defined at the beginning of a Six Sigma project. Questions such as What, When and Where are addressed in a problem statement. The magnitude and consequence of the problem is also discussed  and the Project Scope is identified at this point of time.

Statistical Problem:

At this stage, the root causes for the Business Problems are identified. The root causes are then converted into Statistical Problems using Hypothesis testing methods. The causes are of two types: Trivial Many and Vital Few.

• Trivial Many Causes – These are all the possible causes for a given problem. They can affect the problem.
• Vital Few Causes – These are the few critical causes which cause a maximum impact on the problem.

Statistical Solution:

Identification of only 3-4 vital root causes is done using Statistical Analysis. These root causes play a vital part as they are deemed to present maximum impact on the problem. Any given problem follows a Pareto principle, where 80% of the problems are caused by 20% of the root causes. Solutions to these root causes are studied and an optimal solution is  identified.

Business Solution:

The Statistical Solutions are then converted to do-able practical solutions. Implementation of these Business Solutions is carried out as well. The Improvements are then observed and sustained.

DMADV and DMAIC:

The Six Sigma processes that look at the customer service aspects of a business are outlined in DMADV, which refers to Define, Measure, Analyze, Design, and Verify. DMADV is used when a client or customer requires product improvement, adjustment or creation of an entirely new product or service. DMADV is used for creating a high-quality product keeping in mind customer requirements at every stage of the game.

DMAIC, which refers to Define, Measure, Analyze, Improve and Control, is used in Six Sigma phases to solve both the organizational and the operational issues.  DMAIC helps in achieving process improvements by reducing variations. DMAIC is used for reducing many root causes to just a few vital root causes.

Who is Using Six Sigma?

Six Sigma is an ‘Industry-Independent’ methodology that is being successfully applied across various industries like Automotive, Aerospace, Health Equipment, FMCG, Electronic Goods, Continuous Process Industries, Textiles, etc. It is also used extensively in Service Industry including Telecom, Banking and Financial Services, Healthcare, Hotels, IT, ITES, KPOs, Airlines, Cargo Movement, Support Services, HR Services, Marketing Services, R&D organizations or in R&D functions of various organizations, etc.

How Organizations are benefitting from Six Sigma?

Six Sigma helps organizations produce products and services better, faster and cheaper. It also does the following:

• Remove Wastage
• Maximize Customer Satisfaction
• Maximize Product/Service Quality (Develop Close to Zero Defect Products/Services)
• Increase Sales
• Increase overall Organizational Productivity
• Save Costs
• Make the Organization a Data-driven organization
• Faster Cycle Time

• Empower Employees

Those who benefitted from using Six Sigma:

• GE was the 1st company to implement six sigma in services and offshoring, and since then has profited about 2 billion USD.

• Motorola reduced its process defects by over 300 fold, which has resulted in cumulative manufacturing cost savings of over 11 billion dollars.
• Airtel’s  Six Sigma implementation has yielded 250% ROI in the first year itself.
• LG has increased its brand image, enhanced customer experience and saved 850k USD.

• Qualtec Services has saved over $20 million in two years of using Six Sigma.

Webinar presentation:

1. How can Six Sigma be implemented in small scale industries?

The six sigma methodology can be applied to organizations of any size. It all depends on the nature of the problem faced. In case of a multiple occurring problems, the six sigma would be an optimum use. The problem faced by small-scale enterprises are related to raw material and quality of the output.  In these cases, from a Six Sigma pov, Statistical tools like Pareto Analysis will be well-suited and impactful for resolving the problem.

2. What are the different Six Sigma levels?

Sigma level defects per million defects:

• 690,000
• 308,537
• 66,807
• 6,210
• 233
• 3.4

3. What are the different kind of variations in Six Sigma?

• Mean
• Median
• Range
• Mode

4. What is the hierarchy of the Six Sigma implementation team?

• Executives/Executive Leaders
• Champions
• Master Black Belts
• Black Belts
• Green Belts

5. What are the Difference between Yellow, Green, and Black and belt in Six Sigma?

• Yellow Belt – Participates as a project team member. Reviews process improvements that support the project.
• Green Belt – Assists with data collection and analysis for Black Belt projects. Leads Green Belt projects or teams.
• Black Belt –  Leads problem-solving projects. Trains and coaches project teams.

• Master Black Belt – Trains and coaches Black Belts and Green Belts. Functions more at the Six Sigma program level by developing key metrics and the strategic direction. Acts as an organization’s Six Sigma technologist and internal consultant.

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