SIX SIGMA Approach – A business booster

In 1987, Motorola developed and organized the Six Sigma process improvement methodology to achieve “world–class” performance, quality and total customer satisfaction. It is a management driven, scientific methodology and fresh quality management strategy for product and process improvement which creates breakthroughs in financial performance and customer satisfaction. Reducing variability is the essence of Six Sigma methodology.

Fig.1 Essence of SIX SIGMA

Among the dimensions of the process performance triangle in Fig 2, variation is the characteristic preferred measurement for product/process performance in Six Sigma. Cycle time & yield also can be covered through variation as characteristic.

Fig.2 Process Performance Triangle

The distribution of a characteristic in Six Sigma is usually assumed to be Normal distribution for continuous variables and Poissonian for discrete variables. The two significant parameters that determine Normal distribution are mean value μ and standard deviation σ. LSL is Lower specification limit & USL is Upper specification limit. Cp, Cpk are ratios to express process capability which is target for improvement. Six Sigma process adherence is identified by Cp=Cpk=2.0 as per shown in fig.3.0 which limits defects/errors to 3.4 PPM opprtunities (DPMO). Cp<2.0 means business process ranges from 1σ – 6σ and DPMO >3.4.

  

 Fig.3  Normal distribution for Six Sigma process

 

Six Sigma methodology touches on all aspects of the business enterprise.

  1. Design for Six Sigma focused on product design excellence, design for manufacturability, customer satisfaction and cost reduction within all components of the development and new product introduction process.
  2. Transactional Six Sigma focused on operational excellence, customer satisfaction and cost reduction within all components of the operation. Areas of focus include Sales, HR, Finance, Materials, etc.
  3. Production Six Sigma focused on product production excellence, variation and defect reduction, lean production techniques, customer satisfaction and cost reduction within all components of the production and delivery process.

Six Sigma process improvements follow the methodology and associated tools as per fig 4.0

Fig.4  Roadmap for process improvement

Six Sigma product improvements follows the methodology and associated tools as per fig 5.0

Fig.5  Roadmap for product improvement

Customers play a key role in six sigma initiative. Customers engagement in critical-to customer CTC which is subset of CTQ critical to quality is important to meet customer satisfaction. Six sigma enterprises should listen to VOC voice of customer in order to reflect VOC in developing new products and services. Recently growing e-Business & service industry segment is completely dependent on VOC and customer satisfaction.

In recent years, numbers of manufacturing and service companies have realized that Six Sigma methodology is flexible enough to be applied throughout all business functions. Marketing and sales organizations at GE & Dow have been using Six Sigma for new product development and customer support to reduce costs, improve performance and increase profitability. Rylander and Provost (2006) suggest that companies should combine Six Sigma methodology and online market research for better customer service and Pestorius (2007) noted that Six Sigma could improve sales and marketing processes. Six sigma methodology has made its way into accounting function and has contributed to reduced errors in invoice processing, reduction in cycle time and optimized cash flow (Brewer and Bagranoff, 2004). A number of companies have applied Six Sigma to the finance process to reduced variability in cycle times, error rates, costs “day to pay” of accounts payable and improve employee’s productivity ratios. (Brewer and Bagranoff, 2004; McInerney, 2006) Six sigma reduces variability in financial reporting, increases shareholder value and increase accuracy of the financial process (Gupta, 2004).

Many commercial firms are wondering whether Six Sigma is right for them now. Embarking on a Six Sigma initiative begins with a decision to change-specifically, to learn and adopt methods that can boost the performance of organization. The starting point in gearing up for Six Sigma is to verify that an organization is ready to-or needs to- embrace a big change.

Top-level management commitment for Six Sigma is first and foremost. The Chief Executive of the corporation or business unit should genuinely accept Six Sigma as the management strategy then organize a Six Sigma team and set up the long term Six Sigma vision for the organization. This approach is driven by leadership to lead to its maximum possible outcome.

References:

  • SIX SIGMA EXECUTIVE OVERVIEW, Thomas A Little consulting
  • APPLICATION OF SIX SIGMA IN FINANCE, A Ansari et.al.
  • INTRODUCTION TO SIX SIGMA, Ketch consulting Inc.
  • SIX SIGMA FOR QUALITY AND PRODUCTIVITY PROMOTION, Sung H.Park

 

Blog by
Dr. Anagha Bhope
Asst. Professor, ISBS

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