|What is Six Sigma?|
Sigma is the letter in the Greek alphabet used to denote standard deviation, a statistical measurement of variation,the exceptions to expected outcomes. Standard deviation can be thought of as a comparison between expected results or outcomes in a group of operations, versus those that fail.The measurement of standard deviation shows us that rates of defects, or exceptions, are measurable. Six Sigma is the definition of outcomes as close as possible to perfection. With six standard deviations, we arrive at 3.4 defects per million opportunities, or 99.9997 percent.This would mean that at Six Sigma, an airline would lose only three pieces of luggage for every one million that ithandles; or that the phone company would have only three unhappy customers out of every one million who use the phone that day. The purpose in evaluating defects is not to eliminate them entirely, but to strive for improvement to the highest possible level that we can achieve.
Key Point We evaluate defects to improve overall performance,knowing that eliminating them completely is unrealistic.We know that trying to achieve Six Sigma would be impractical on a consistent basis; so while it is a desirable goal, it presents a model against which we can measure our performance. So rather than setting the unrealistic goal of achieving perfection, we can observe (1) our current Sigma level and (2) improvement in that level as changes are made. Table 1.1 presents an abbreviated summary of Sigma level, defects per million, and yield, or success rate of the outcomes.
You can identify your level of Sigma performance and then compare it to the chart. This is where the benefits of Six Sigma are realized. By comparing your outcomes to the ideal outcome of Six Sigma, you can quantify quality itself.
Example: Your department performed 535 specific operations last month. Of these, 43 were defective (they fell outside the acceptable range of outcomes). This means that 492 of the operations were successful. The yield was:
492 ÷ 535 = 91.9%
Referring to Table 1.1, we discover that this outcome represents Sigma somewhere between 2.5 and 3. If you were able to reduce the number of defects by half, ending up with 21, your acceptable outcomes would then grow to 514 out of 535 operations, and your yield would increase as well:
514 ÷ 535 = 96.1%
Now the Sigma is between 3 and 4, a significant improvement.Of course, if you cut defects in half, you are going to know your outcomes have improved, so what purpose does Six Sigma provide beyond the obvious scorekeeping? As the preceding example demonstrates,improvement in quality can be specifically measured. In practice, you may be dealing with a much greater volumeof outcomes, and the incremental rate of success is likely to be smaller than that shown in the example; and Six Sigma is far more than a measuring system. It is a way of doing things, a change in cultural attitude that is designed to create a company-wide team in practical terms. As far as the scorekeeping aspects of Six Sigma go, if you begin with an assumption that a change in procedures will produce an expected change in outcomes, you can then compare actual to projected results to judge the success of your work.
Key Point What makes Six Sigma different from most other quality control programs? It is more than just a way to improve performance; it is a method for changing the corporate culture, from top to bottom.
An “operation” can be any function you perform delivery of goods, telephone contact, balancing accounts,or executing a repair, for example. Any operation is measurable in Sigma terms. The desired outcome represents satisfaction of the customer’s expectation, and any time that expectation is not met, the outcome is defective.
While measuring results is a crucial part of the process, you will be more concerned with how Six Sigma is applied and what role you and other employees will perform within that process. So the idea of Six Sigma is much more than the latest approach to quality control; it represents a change in philosophy that affects everyone.It is designed to bring everyone into a single team with the same overall goals. So many corporate employees especially in large organizations have a sense of isolation or view their relatively small department as a realm unto itself. Six Sigma encompasses the entire corporation as a single team and is aimed at removing that sense of isolation.
The concept of Six Sigma began at Motorola in the 1980s. An engineer named Mikel Harry began analyzing variation in outcomes in the company’s internal procedures,and realized that by measuring variation it would be possible to improve working systems. However,whereas other quality systems were designed at only measuring performance, the Six Sigma approach that grew from Harry’s original ideas was different. The procedures were aimed at taking action to change procedures so that overall performance could be improved permanently and at every level within the company.
Within a few years, the same idea had taken root at General Electric and AlliedSignal. GE decided in 1995 to implement Six Sigma throughout the entire organization.CEO Jack Welch led the company through this implementation,and many divisions of GE experienced impressive improvements in quality during those years. Estimates are that cost savings from Six Sigma application exceeded $320 million within the first two years, and more than $1 billion by 1999.
Key Point Cost savings are an important aspect of quality control, but they are only one aspect; a permanent,effective, and rewarding quality program requires more work.
So many quality programs have been devised,named, and put into effect over many years. Most fail after a while because employees lose faith in those programs. It becomes obvious to employees that “quality control” really represents management’s attempt to cut costs and expenses and get more work from its labor force. In other words, the program applies to the worker but there is no change in management itself. If the final result of a quality program is to achieve increased efficiency, and that results in layoffs, who benefits? With Six Sigma, everyone is involved and everyone is expected to change (for the better) as part of one overall team. The purpose is not assigned to the rank and file, but is shared from top to bottom.