Knowledge is power.
—Francis Bacon (1561-1626)
D
o you know, do you really know, what’s going on in your
organization? The assertion that knowledge is power rings
as true today as it did four centuries ago. In any industry, organization,
or daily process, when you don’t know
what you don’t
know, it’s going to cost you. For too many organizations the
costs (often hidden) of defects and waste in the way they operate
are huge.
Having processes in which errors occasionally occur may
not seem such a big deal. But when you consider how many
errors may be lurking in company-wide processes, the monetary
impact on overall productivity, customer satisfaction, and
profitability multiplies dramatically! The Six Sigma approach to
managing is all about helping you identify what you don’t know
as well as emphasizing what you should know, and taking
action to reduce the errors and rework that cost you time,
money, opportunities, and customers. Six Sigma translates that
knowledge into opportunities for business growth.
1
What Is
Six Sigma?
1
Many companies
believe that dealing with
errors is just part of the
cost of doing business. But
you don’t have to accept
that faulty logic. With Six
Sigma, you can eliminate
most errors, reduce your
costs, and better satisfy
your customers.
Six Sigma Defined and Explained
Six sigma is a statistical concept that measures a process in
terms of defects. Achieving six sigma means your processes
are delivering only 3.4 defects per million opportunities
(DPMO)—in other words, they are working nearly perfectly.
Sigma (the Greek letter
σ) is a term in statistics that measures
something called standard deviation. In its business use, it indicates
defects in the outputs
of a process, and
helps us to understand
how far the process deviates
from perfection.
(We’ll get into the statistics
in later chapters.)
A sigma represents
691462.5 defects per million
opportunities, which
translates to a percentage
of nondefective outputs of
only 30.854%. That’s obviously
really poor performance.
If we have processes
functioning at a three sigma level, this means we’re allowing
66807.2 errors per million opportunities, or delivering 93.319%
nondefective outputs. That’s much better, but we’re still wasting
2 Six Sigma for Managers
Process
Any repetitive
action—be it in a transactional,
manufacturing, or
services environment.The Six Sigma
methodology collects data on variations
in outputs associated with each
process, so that it can be improved
and those variations reduced.
Sigma
A term used in statistics
to represent standard
deviation, an indicator
of the degree of variation in a set of
measurements or a process.
Six sigma
A statistical concept that
measures a process in terms of
defects—at the six sigma level, there
are only 3.4 defects per million
opportunities. Six Sigma is also a philosophy
of managing that focuses on
eliminating defects through practices
that emphasize understanding, measuring,
and improving processes.
money and disappointing
our customers.
How well are your
processes operating? Are
they three sigma? Four
sigma? Five?
Most organizations in
the U.S. are operating at
three to four sigma quality
levels. That means they
could be losing up to 25%
of their total revenue due
to processes that deliver too many defects—defects that take up
time and effort to repair as well as creating unhappy customers.
Is that good enough? The answer is simple. No it’s not when
you could be doing a lot better. Helping you do that is what this
book is about.
The central idea of Six Sigma management is that if you
can measure the defects in a process, you can systematically
figure out ways to eliminate them, to approach a quality level of
zero defects.
So, in short, Six Sigma is several things:
• A statistical basis of measurement: 3.4 defects per million
opportunities
• A philosophy and a goal: as perfect as practically possible
• A methodology
• A symbol of quality
Six Sigma in Context
Let’s take an example, an all-too-familiar scenario: lost luggage
at the airport. Many of us have experienced the frustration of
watching the baggage carousel slowly revolve while waiting for
luggage that never arrives. The system is far from perfect. But
just how far, in sigma measurement terms?
In general terms, the baggage handling capability of many
airlines is performing at around the three sigma level. That means
What Is Six Sigma? 3
Defect
A measurable characteristic
of the process or
its output that is not within
the acceptable customer limits, i.e.,
not conforming to specifications. Six
Sigma is about practices that help you
eliminate defects and always deliver
products and services that meet customer
specifications.The sigma level
of a process is calculated in terms of
the number of
defects in ratio to the
number of
opportunities for defects.
there are about 66,000 “defects” for every one million luggage
transactions, which equates to an approximate 94% probability
that you’ll get your luggage. Is that good enough? Certainly not
for the customers whose bags are among the “defects.” The
“defects” increase costs for the airlines, because employees must
deal with misplaced luggage and unhappy passengers. And those
“defects” can result in lost business in the future.
If the airline moves to six sigma in luggage handling, it
clearly pays off in terms of lower costs and happy passengers,
who are then more likely to fly with that airline again.
As Figure 1-1 indicates, operating at anything less than six
sigma levels means your processes have higher probabilities of
delivering defects.
It may seem like three sigma is good enough. After all, if
there are 66,807 defects out of a million, that means that
933,193 things went well—93.319% perfection.
But if the airline is taking comfort in those statistics, it’s losing
money and losing customers. Consider this three sigma
level from another perspective.
For
customers, three sigma represents highly unsatisfactory
performance. The airline is not meeting their most basic expectation—
that their luggage will be put on the same flight, to travel
with them to the same destination. So the airline is likely to
be losing many of those frustrated customers.
4 Six Sigma for Managers
Sigma Level
(Process Capability)
Defects per Million
Opportunities
2 308,537
3 66,807
4
5
6
6,210
233
3.4
Figure 1-1. Probability of defects of different sigma levels
Three sigma is also costing money. Variations—time, waste,
and errors—abound in the baggage-handling process: misrouting
the baggage, reporting the problem, processing the report,
searching, retrieving, and finally delivering the lost luggage.
When you translate the 6% probability gap of missing luggage
into monetary terms, the hard cost of this defect can be much
higher than 6% of the overall cost of handling luggage—perhaps
several million dollars per year. If the baggage-routing process
were improved, the margin for error would be reduced and the
allocation of resources, both human and monetary, could be
much more profitably used.
How many customers can your business afford to lose?
How much money can
your company afford to
lose because of mistakes?
Why accept it as normal
to be running processes at
only three sigma or four
sigma when, by changing
the way you manage your
processes, you could get a
lot closer to six sigma and
all the resulting benefits.
Six Sigma uncovers the
layers of process variables—in data terms—that you must
understand and control to eliminate defects and wasteful costs.
It’s a management approach that aims to achieve the apex of
quality by measuring, analyzing, improving, and controlling
processes to root out defects and boost bottom-line results.
A Little History of Quality
Many people associate Six Sigma with the quality movement.
So, it seems logical at this point to start from that perspective.
How does Six Sigma differ from the “quality” programs you
may have already experienced? To answer that question, let’s
briefly recap the history of the quality movement.
What Is Six Sigma? 5
Variation
Any quantifiable
difference between a specified
measurement or standard
and the deviation from such measurement
or standard in the output of a
process. Variation in outputs can result
from many causes in the functioning
and management of processes. An
important goal of process improvement
is to reduce variation in outputs.
No understanding of the quality movement would be complete
without mentioning the visionary W. Edwards Deming,
best known for helping the Japanese revitalize their industries
after World War II. His approach was radically new and had significant
impact on the evolution of quality and continuous
improvement programs in organizations around the world.
It is fair to say that Deming’s management approach, which
came to be known as
Total Quality Management
or TQM (though Deming
didn’t like that term), has
changed the way thousands
of companies conduct
their operations. By
the mid-1980s, the extent
to which corporate management
was focusing on
quality
was significant:
businesses adopting TQM underwent a major paradigm shift, a
transformation of “unlearning” everything previously believed
about business to create better products and services. They
began to understand that quality did not require higher costs but
more efficient and reliable processes that delivered defect-free
outputs and that they had to focus on process improvement and
customer satisfaction. TQM is an excellent foundation from
which to build toward the next level of quality management,
represented by the Six Sigma approach.
But Six Sigma is far more than the latest “quality” trend.
The proof? Companies that have implemented Six Sigma have
achieved outstanding financial results and developed a disciplined,
pragmatic plan for improved financial performance and
growth.
Companies such as Motorola, Texas Instruments, IBM,
AlliedSignal, and General Electric have successfully implemented
Six Sigma and reduced costs literally by billions of dollars.
More recently Ford, DuPont, Dow Chemical, Microsoft, and
6 Six Sigma for Managers
Total Quality
Management (TQM
) A
management approach that
focuses on the organization as a system,
with an emphasis on teams,
processes, statistics, continuous
improvement, and delivering products
and services that meet and exceed
customer expectations. Six Sigma is a
disciplined extension of TQM.
American Express have started working on instituting the Six
Sigma methodology. But it’s about more than money. Jack
Welch, the CEO who started Six Sigma at General Electric,
called it “the most important initiative GE has ever undertaken,”
and said that Six Sigma is “part of the genetic code of our
future leadership.”
Essentials of the Six Sigma Methodology
The Six Sigma methodology uses statistical tools to identify the
vital few factors,
the factors that matter most for improving the
quality of processes and generating bottom-line results. It consists
of four or five phases:
•
Define the projects, the goals, and the deliverables to
customers (internal and external).
•
Measure the current performance of the process.
•
Analyze and determine the root cause(s) of the defects.
•
Improve the process to eliminate defects.
•
Control the performance of the process.
We’ll outline these phases in Chapter 6.
We should note that Six Sigma methodology is not rigid.
Approaches vary, sometimes significantly. One of the variations
is in the phases: some approaches use all five of the phases listed
above, while others do not include the Define phase. Six
What Is Six Sigma? 7
Six Sigma at Motorola
Six Sigma was conceptualized as a quality goal in the mid-
1980s at Motorola because technology was becoming so
complex that traditional ideas about acceptable quality levels were
inadequate.As the number of opportunities for defects increases, the
percentage of perfection must rise. In 1989 Motorola announced a
five-year goal
—a defect rate of not more than 3.4 parts per million—
six sigma.This initiative challenged ideas of quality in the U.S. and
changed the concept of quality levels. It was quickly no longer sufficient
to measure quality as percentages (defects per hundred opportunities).
Now the bar was raised, to measure defects per million or
even per billion.
Sigma professionals recognize
that this approach
is a kind of roadmap for
improvement, and it doesn’t
matter if it’s called
DMAIC, MAIC, PCOR
(from the Air Academy—
prioritize, characterize,
optimize, and realize),
GETS (from GE
Transportation Systems—
gather, evaluate, transform,
and sustain). The
point is that this is a set of
tools aimed at helping
managers and employees
understand and improve critical processes.
Six Sigma is based on a few key concepts, which we’ll cover
in later chapters:
• Defect
• Variation
• Critical-to-quality
• Process capability
• Design for Six Sigma
Six Sigma focuses on defects and variations. It begins by
identifying the critical-to-quality (CTQ) elements of a process—
the attributes most important to the customer. It analyzes the
capability of the process and aims at stabilizing it by reducing
or eliminating variations.
Simply put, Six Sigma management is about tying quality
improvement
directly to financial results. The Six Sigma goal is
to link internal processes and systems management to endconsumer
requirements. Six Sigma is a scientific approach to
management, driven entirely by data. The Six Sigma methodology
eliminates the use of opinion—“I think,” “I feel,” or “I
8 Six Sigma for Managers
Vital few factors
Factors
that directly explain the
cause-and-effect relationship
of the process output being measured
in relation to the inputs that drive the
process.Typically, data shows that
there are six or fewer factors for any
process that most affect the quality of
outputs in any process, even if there
are hundreds of steps in which a
defect could occur
—the vital few.
When you isolate these factors, you
know what basic adjustments you
need to make to most effectively and
reliably improve the outputs of the
process.
What Is Six Sigma? 9
believe.” Six Sigma drives
the organization to a more
scientific means of decision
making by basing
everything on measurable
data.
Focus on Engaging
People and Changing
Processes
The first thing to know
about Six Sigma is that it
doesn’t rely on the latest program fads or “magic pills” to fix
organizations. It relies on old-fashioned hard work coupled with
factual data and a disciplined problem-solving approach. It
affects every aspect and level of an organization—from line
workers to middle managers to CEOs—to transform your
people
and your
processes.
As the first step in that transformation, the Six Sigma mindset
considers you and your people as
assets, rather than as
costs
(liabilities). That’s right—you are as much an asset as any
piece of capital equipment,
and you represent an
investment with extraordinary
potential for return.
Shifting the perspective on
people from liabilities to
assets (or investments) is
fundamental to Six Sigma.
Once you’re thinking in
terms of “human assets,”
it’s equally important to
realize the underlying monetary
value of rooting out
wasted materials and steps
Process capability
A statistical
measure of inherent
variation for a given event in
a stable process. It
’s usually defined as
the process width (normal variation)
divided by six sigma and quantified
using
capability index (Cp). More generally,
it
’s the ability of the process to
achieve certain results, based on performance
testing. Process capability
answers the question,What can your
process deliver?
It’s Not Just
the People
Managers often tend to
focus just on people in their organization.
When something goes right or
something goes wrong, they look for
a person to congratulate or to blame.
The fact is that work gets done
through processes executed by people;
both successes and problems are
usually the result of what lots of people
do, not just one person. If you
don
’t pay careful attention to both
people and processes, improvement
will not happen.
in processes, as this is key to unlocking the hidden return on your
investment in people. And that’s also another aspect of the Six
Sigma approach to managing.
By changing the way you look at processes, by understanding
the vital few factors that cause waste, error, and rework, you
can improve the ability of your processes to deliver higher quality
to your customers and to lower costs. Once you know which
vital few factors to focus on, you can make improvements that
deliver dramatic results.
Sound simple? It is once you put your mind to it. By putting
your people to work at solving process problems with proven
statistical tools, you eliminate not only errors, but also inaccurate
speculation about why processes don’t work. Again,
instead of opinion, you arm yourself and your people with quantifiable
information—based
on facts, not hunches and
guesswork. When you
know the facts, you are in
a position to fix the problems
permanently and
gain long-term benefits. In
other words, you’ve leveraged
the power of knowledge
to transform performance.
10 Six Sigma for Managers
Seeing Employees as Assets
An easy way to understand the concept of human assets is
to calculate their individual return on investment (ROI). For
example, if an employee costs the business $50,000 a year and his or
her activity produces revenue of $100,000, the employee has covered
the costs and raised an additional 100%
—the profit or return. So, the
annual ROI for that employee is 100%. By calculating employee ROI,
you can focus on making the most of them as assets invested in your
business.
Elevator Talk
A CEO of a major corporation
once asked me
,
“
What’s the 30-second elevator
speech that explains Six Sigma?
” My
answer went like this:
“Six Sigma is a
problem-solving technology that uses
your human assets, data, measurements,
and statistics to identify the
vital few factors to decrease waste and
defects while increasing customer satisfaction,
profit, and shareholder value.
”
Not Just Statistics, but Cultural Changes
Because it uses statistical terminology, Six Sigma is frequently
perceived as a statistics and measurement program. This is not
the case. The Six Sigma approach to management uses statistics
solely as tools for interpreting and clarifying data. You focus
on tool selection and the use and interpretation of data to drive
decisions. Six Sigma practitioners also use computers and statistical
software to take advantage of knowledge and speed the
improvement process. The ultimate goal is to create Six Sigma
companies—companies whose systems and processes are as
perfect as possible, functioning at their best performance level.
To achieve that level of quality requires not just statistics,
but changes in the culture of the organization. The Six Sigma
approach is rigorous, requiring a deep commitment from the
highest levels of management
that permeates the
entire organization. It
requires a tolerance for
endlessly questioning the
validity of sacred company
beliefs and the traditional
ways “things are done
around here.” It also
requires a sense of
urgency—an understanding
that, in order to solve
the problems that undermine
profitability and customer
satisfaction, you
need to involve your key people in actively implementing the
Six Sigma methodology.
Champions and Black Belts
The Six Sigma approach to management involves cultural
change. Essential to this cultural change are key players known
What Is Six Sigma? 11
Culture
Refers to the
beliefs, expectations, ways
of operating, and behaviors
that characterize the interactions of
people in any organization. It
’s about
“
how things are done around here” in
an organization. Culture evolves over
a long period of time and it often
reflects the beliefs and behaviors of
top management. Because Six Sigma
affects the way things are done, its
successful implementation will require
a change in culture that may be profound.
as
champions and black belts, who act as agents to facilitate
that change. These two titles play pivotal roles in the success of
Six Sigma management, as we’ll outline in Chapter 5.
A champion, generally selected from the ranks of upper
management, serves as a
coach, mentor, and
leader—supporting project
teams and allocating necessary
resources.
A black belt leads a
defined project on a fulltime
basis, working strictly
on defining, measuring,
analyzing, improving, and
controlling processes to
reach desired outcomes.
Black belts do nothing
else; their only responsibility
is to root out variation
and identify the vital few factors. They devote 100% of their
energies to the chosen project, supported by project team
members. So, why the martial arts terminology? Because a
black belt’s sole function is to focus on disciplined problem
solving, practice specific skills, use a defined set of tools, and
defeat the enemy—processes that deliver defective outputs.
There are other roles and levels in Six Sigma, which we’ll
cover in Chapter 5, but none as important as the black belt—
the fully dedicated, thoroughly
trained agent of
improvement. The black
belts are the people who
apply the Six Sigma techniques
to organizational
problems and help change
organization culture to
focus on continuously get-
12 Six Sigma for Managers
Champion
A senior-level
manager who promotes
the Six Sigma methodology
throughout the company and especially
in specific functional groups.The
champion understands the discipline
and tools of Six Sigma, selects projects,
establishes measurable objectives,
serves as coach and mentor,
removes barriers, and dedicates
resources in support of black belts.A
champion
“owns” the process—monitoring
projects and measuring the
savings realized.
Black belt
A full-time
change agent trained in the
methodology to solve product
and process defects project by
project with financially beneficial
results. A black belt does Six Sigma
analyses and works with others (often
teams) to put improvements in place.
ting better in every aspect of performance. They harness the
power of knowledge to achieve enhanced performance, customer
satisfaction, and profitability—which is what it’s all about.
The average black belt improvement project results in a return
of approximately $175,000 to the bottom line. And since black
belts work on four to six projects per year, think what that can
mean when multiplied by the number of potential projects in
your organization!
Six Sigma is exciting. But it requires tenacity, mental toughness,
and, above all, an unwavering dedication to the pursuit of
perfection in every aspect of business operations. Once you’ve
fully embraced that, the possibilities are virtually limitless in
what you can achieve.
Six Sigma Applied
So how do you go about linking people to processes and practically
applying what Six Sigma promises? That’s the subject of
this book. But, to give you a quick idea of what lies ahead,
here’s an example to show how Six Sigma works.
The CEO of a diversified
Fortune 50 company gave the
president of the financial services group the task of improving
its net income by 10% and meeting a stretch target of 25%. The
consequences of not meeting the CEO’s directive would be
dire—the division would be liquidated or sold off. A further
wrinkle in meeting
these requirements was
that the CEO, a Six Sigma
advocate, insisted this
approach be used to
achieve the stated breakthrough
goal.
The president of the
financial services group then gave her direct reports and management
staff the task of improving net income by the stretch
target of 25% and reiterated the CEO’s directive to use Six
Sigma methodology to do this. Clearly, all of the managers had
What Is Six Sigma? 13
Breakthrough goal
A
dramatic, near immediate,
and significant improvement.
In measurement terms, reaching a
breakthrough goal represents an
improvement of 60% to 80%.
their work cut out for them. They all realized that there was
plenty of waste in their processes, but they didn’t know how to
identify the problems and eliminate this waste to reduce their
costs.
Financial Services
Let’s consider the financial services division, whose primary
business focus is in loans. To find out which processes generated
the most variation, the very first step was to ask the fundamental
question: how do we make our money? Since the
answer was “loans,” managers needed to deploy the Six Sigma
methodology to discover the facts about the dollars they were
losing—what, who, when, where, and how in the loan process.
In short, they needed to know what they didn’t know.
As we mentioned earlier, Six Sigma begins by identifying the
critical-to-quality (CTQ) elements of a process. In the residential
loan department, the manager (we’ll call him Greg) defined
the CTQ metric as the loan approval process time. Specifically,
he determined that the process should take only two days from
receipt of the application. Anything else would be considered a
“defect.” The department was not meeting the specification,
since the average loan approval took a full seven days. The
five-day variance was the defect—the waste in the process.
Greg’s loan processing department processed about 10,000
loans per month, with an average loan value of $25,000. The
department was not measuring the money value of time lost in
14 Six Sigma for Managers
Meeting Stretch Targets
A stretch target is the concept of looking beyond meeting
basic requirements and exceeding your own expectations.
When you understand that your defined goals are within reach, you
need to shift your mindset to go farther, to reach higher, to stretch
your capabilities.And when you do that, you realize far greater results
than you initially thought possible.
What if you don
’t hit your target? You’ll still have raised your bar: a
stretch goal is a powerful way to motivate everyone to do better.Try
it
—you’ll be surprised at how possible the “impossible” is!
processing loans, which
according to his specification
meant losing five days
of interest a month or 60
days a year. That translates
to about two months’
worth of interest payments
on $25,000,000. Given an
average interest-rate yield
of 10%, this meant the department was losing approximately
$400,000 per year because of the critical-to-quality factor of
variance in loan processing time.
Once Greg identified the CTQ factor, he could specify the
project—the way he would root out that waste by examining
every process step and measuring the results. The goal was to
identify what steps were causing this time variance.
There are three important components that characterize a
Six Sigma project:
1. A critical-to-quality metric
2. An actual cost associated with a defect affecting the CTQ
metric
3. A specific time frame for eliminating the defect to attain
the CTQ metric
Now that Greg had his project parameters, he could assemble
a team and lead them in his black belt role, focusing solely
on determining the vital few factors standing between the
process and its target performance.
His boss acted as the champion, ensuring that Greg and his
team received all the necessary resources, removing any barriers,
and informing upper management about the project’s
progress. Greg had a vested interest in the project’s outcome:
his division would benefit and so would he, since his performance
bonus was tied to and measured by the project’s results!
The Six Sigma five-phase sequence of DMAIC (Define,
Measure, Analyze, Improve, and Control) was about to begin.
What Is Six Sigma? 15
Critical-to-quality (CTQ)
Elements of a process that
significantly affect the output
of that process. Identifying these elements
is vital to figuring out how to
make the improvements that can dramatically
reduce costs and enhance
quality.
The Magic of DMAIC
Six Sigma statistical tools work like magic to uncover what you
don’t know. Yet you don’t have to be a statistician to use them:
you focus on selecting tools, using them, and analyzing data
and let the specific software do the calculations. The five-phase
process of DMAIC, described earlier in this chapter, uses a collection
of tools and is a logic filter to lead you to the vital few
factors affecting your process outcomes:
•
Define—Determines the project goals and deliverables to
customers (internal and external).
•
Measure—Identifies one or more product or service
characteristics, maps the process, evaluates measurement
systems, and estimates baseline capability.
•
Analyze—Evaluates and reduces the variables with
graphical analysis and hypothesis testing and identifies
the vital few factors for process improvement.
•
Improve—Discovers variable relationships among the
vital few, establishes operating tolerances, and validates
measurements.
•
Control—Determines the ability to control the vital few
factors and implements process control systems.
In other words, the
Define phase sets the targets for the Six
Sigma project, the
Measure and Analyze phases characterize
the process, and the
Improve and Control phases optimize the
process and then maintain it.
In the Define phase, Greg determined that the project goal
was to reduce the time for approving a loan to two days.
In the Measure phase, Greg started to map the loan application
process. He identified four key areas: application form
process, credit checking, management approval, and other
areas, including rechecking and reapproving the loan application—
virtually a built-in “rework” loop that was impacting the
bottom line.
Once process mapping was complete, components were
further broken down into the vital few inputs in the Analyze
16 Six Sigma for Managers
phase. In the case of the loan application form, the output was
100% completion of all form information. That created a baseline
for defining a defect, as missing vital information on the
form. Other process outputs causing waste were the four
approval layers and unnecessary inspection points.
That may sound minor, but consider the rework and time
value of “fixing” information at a later point in the process and
then multiply that by the volume of loans. Once again, the
exponential cost of a small defect soars.
In the Improve phase, the team developed the relationship
equation between the application form (inputs) and loan funding
(outputs) and prepared the way for the Control phase, which
implemented changes. One of those changes was in the software.
Now employees had to complete each field on the form
before moving on to the next: the software would not let them
skip ahead until they got the right information the first time.
Greg achieved his goals: by stopping rework on the application
form, he reduced staff overtime, increased productivity, satisfied
applicants with faster funding and met the breakthrough
goal—reducing monthly operational costs by $60,000. Prior to
the project, monthly loan processing costs were about
$150,000; by removing $60,000 of waste, Greg trimmed that to
$90,000 and achieved a 50% reduction in process time—yielding
another $200,000 in additional interest payments. Now,
that’s a significant financial result! Needless to say, Greg got his
bonus and the division stayed intact.
Turning Process Variation into Dollars
Process variation exists in every transaction, department, and
business unit. From the micro to the macro perspective, using
Six Sigma methods allows you to
define goals and set specifications,
measure
process characteristics and estimate baseline
capability,
analyze the variables and identify the vital few factors,
improve
the process, and control the vital few factors and
implement process control systems. Using the DMAIC
approach, you can dig out waste and return hidden dollars to
your bottom line.
What Is Six Sigma? 17
What Six Sigma Is Not
Six Sigma is not another quality program. That’s an important
point to emphasize.
Businesses exist for one purpose—to profitably serve customers.
So it follows that any problem-solving initiative should
do the same. Six Sigma uses your resources to fix identifiable,
chronic problems. It proves its value by connecting outcomes to
your bottom line.
Quality programs lay a valuable foundation in creating a
quality mindset. But ask yourself if any you’ve experienced
have generated specific financial results like Six Sigma. It’s very
possible you’ll answer, “No,” since a primary criterion for selecting
Six Sigma projects is to return money to your balance sheet
as the result of
full-time efforts by dedicated resources.
Six Sigma is not theory. It’s a practice of discovering the
vital few processes that matter most. It defines, measures, analyzes,
improves, and controls them to tie quality improvement
directly to bottom-line results.
Six Sigma is an active, involved effort that puts practical
tools to work to root defects at all levels of your organization.
It’s not a theoretical exercise: you don’t
think about Six
Sigma—you
do it.
Since the success of Six Sigma is directly linked to monetary
outcomes, it generates real-world results. It uses the most
readily available resources in an organization—its human
assets. That means that positive, tangible results consistently
show up wherever and whenever people are engaged in implementing
Six Sigma techniques.
18 Six Sigma for Managers
Link Six Sigma Goals
and Company Objectives
Six Sigma projects require well-defined problems and breakthrough
goals. For example, in the case of the
Fortune 50 company, the
10% net income goal is the immediate, defined goal. Not meeting it
will result in clearly adverse consequences for the company. As long as
you know what you
’re measuring and can tie that to the specific
breakthrough goal, you
’ve got the charter to achieve the outcome.
Six Sigma is not a training program. Of course, practitioners
are trained in the methodology to ensure correct implementations
and results. But Six Sigma is a business strategy that fosters
a cultural shift at all levels. Permeating departments, functional
groups, and all levels of management, Six Sigma changes
the outlook and practices of everyone in the organization.
From workers on assembly lines and bookkeepers in
accounting to operations managers and human resource personnel,
training exists only to instill the method, facilitate transformation,
and get financial results by attacking chronic defects
with proven statistical tools.
What Is Six Sigma? 19
Six Sigma Is Not Another Quality Program
Quality programs are valuable in that they can create a
quality perspective and culture. But Six Sigma fixes identifiable,
chronic problems that directly impact your bottom line. Six
Sigma projects are selected to reduce or eliminate waste, which translates
into real money.
Six Sigma is not theory. It defines, measures, analyzes, improves, and
controls the vital few processes that matter most, to tie quality
improvement directly to bottom-line results.
Six Sigma Myths
There are many myths and misunderstandings about Six
Sigma.And as you participate in it, you
’ll probably hear at
least one of the following:
Six Sigma
…
... works only in manufacturing settings.
... doesn
’t include customer requirements.
... is repackaged TQM.
... uses difficult-to-understand statistics.
... is an accounting game without real savings.
... is just training.
... is a
“magic pill” with little effort.
Just remember that Six Sigma actively links people, processes, and
outcomes in a rigorous, adaptable way to get you the results you
’re
looking for. No matter the industry, business, product, or service, as
you apply Six Sigma, you
’ll see the tangible results on your projects.
We began this chapter with an important quote—“Knowledge
is power.” Six Sigma helps you identify what you don’t know,
indicates what you should know, and helps you reduce defects
that cost time, money, opportunities, and customers.
Will you achieve a six sigma level of quality, only 3.4 million
defects per million opportunities—99.9997% perfect? That’s
really not the question. The question is “How much are process
variations and defects costing you?” If you don’t have that
knowledge, you don’t have the power to reduce or eliminate
those problems and achieve significant savings.
This book will help you acquire that valuable knowledge
about your processes—and about the Six Sigma techniques and
tools to convert problems into profits.
Manager’s Checklist for Chapter 1
❏
Six Sigma is the optimum level of quality for organizations,
averaging 3.4 defects per million opportunities. It can be
applied to any transaction in any business.
❏
Six Sigma is not a theoretical exercise, statistics, or training
system. Although it’s based on the foundation of TQM,
Six Sigma is not a quality program.
❏
Six Sigma is the active deployment of statistical tools that
eliminate variation, defects, and waste from all business
processes and that are linked to significant financial
results.
❏
Six Sigma deploys human assets and specified projects to
effect lasting change in processes and meet stretch targets
via a disciplined, five-phase approach that unearths variation
and directs the precise steps for improvement.
20 Six Sigma for Managers
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