What is Six Sigma?
Six Sigma is a quality system designed to improve customer satisfaction and reduce both defect levels and total cycle time. In this way it becomes feasible to meet the organizational objectives, achieving a sustainable competitive advantage and better levels of returns on investment. Six Sigma is at the same time a statistical measure, a goal to achieve and a management system. As for statistical measurement, it measures the level of performance of a process or product.
As a goal, it focuses on achieving near perfection through continuous performance improvement. And as a management system, it is used as a strategy to achieve competitive advantages in the market.
What is Six Sigma's competitive strategy?
It is based on implementing a business management model based on process improvement at all levels of the company, using the knowledge derived from the statistical data process, in order to determine the appropriate actions to achieve a quality that represents a final index of product defects of only 3.4 defects per million opportunities (dpm).
Where and how did it come about?
This philosophy and management system emerged in the 1980s as a business and quality improvement strategy. He took his first steps at Motorola when engineer Mikel Harry began to influence the organization to study variation in processes as a way to improve them. These variations are what is statistically known as standard deviation. This initiative gave rise to an effort focused on improving quality by targeting a 6 Sigma level (representative of 3.4 dpm). Lawrence Bossidy, CEO of Allied Signal, upon becoming aware of this new methodology takes it for himself, implementing it in the corporation, thereby achieving significant increases in its profitability.
Subsequently, Jack Welch, CEO of General Electric, sets the goal of transforming GE into a “Six Sigma organization”, taking under his firm leadership the pertinent actions in order to achieve the objective set.
What's New in Six Sigma?
There are three key features that differentiate Six Sigma from previous quality programs. In the first place, this system is focused on the client, which implies keeping in close contact with their needs. Second, Six Sigma projects generate significant returns on investment. And thirdly, this system changes the way management operates, since it is much more than a mere improvement project, giving rise to a new focus on the way of thinking, planning and executing activities and processes.
What does Six Sigma mean as a statistical measure?
Sigma represents for statistical purposes the standard deviation, which constitutes the existing variation in a set of data, whether these correspond to articles or processes.
By graphing the data obtained from a sample corresponding to a certain process, a bell-shaped graph is obtained, if they are normally distributed. Expressed in a formula, there are two fundamental variables in it, one of which is the mean value (m) and the other the standard deviation (s). If m varies, the position of the bell is modified, which is logical since it is the average value. Whereas if s changes, the shape of the bell is altered. If s becomes small, it implies that there is less dispersion, which results in a narrower bell; while increasing the level of dispersion (s) the hood widens.
Once the Upper and Lower Tolerance Limits have been established according to the specifications of the product or service, we proceed to verify if the results of the measurements carried out are within said limits, if so, we will say that the process, product or service is compliant or quality.
Yes, in addition, that magnitude that we inspect is a random variable that has a normal and also centered probability distribution, which implies that the mean value coincides or is the same as the VCO (objective central value), also giving a level of dispersion (s) which makes it possible to fit 12 s within the interval defined by the tolerance limits (LTS - upper tolerance limit; LTI - lower tolerance limit). Within the exposed conditions there would be 0.0000002 percent, or what is the same, less than 0.002 dpm (defects per million) of manufactured products.
The point is that if we make a sufficiently large number of batches of products or processes we would discover that m does not always coincide with the VCO, but rather varies randomly within a certain margin, due to the wear of tools, difference in materials, personnel acting in the process, etc.
In Mikel Harry's 6 Sigma model, the hypothesis is that m drifts randomly over time until it travels up to 1.5 s at most. If this situation occurs, and the upper and lower tolerance limits being the same as those previously set, the number of dpm, and consequently the products out of specification, would be slightly higher than 3.4 dpm, which implies that 99, 99,966 percent of products would be compliant, meaning they would be within specification.
It is at this level of 99.99966 percent of conforming products, equivalent to a defect level of 3.4 dpm, which is called the Six Sigma quality level (± 6 s). That is, the upper and lower tolerance limits contain 12 s of a normal distribution whose mean value m is offset from the target value by 1.5 s.
The 6 s quality level corresponding to 3.4 defects per million, takes into account that there are sources of variability in the processes but that they are under control. It is considered an excellent level of quality and, therefore, a strategic objective to achieve if a company aims to satisfy its customers.
It should be emphasized that by giving the level in ± s we indicate how many s fit within the tolerance interval and, therefore, how small s is, which measures the dispersion of the data with respect to the tolerance limits. The smaller the dispersion, the smaller s will be, and the more s will fit in the tolerance range and the larger the number on the ± s scale.
How is the Sigma level calculated?
By using the Excel Spreadsheet, the formula to use is:
= -DISTR.NORM.ESTAND.INV (DPMO / 1000000) +1.5
DPMOs (Defects Per Million Opportunities) are calculated by dividing the total defects found by the total number of possible defects, multiplying the result by 1,000,000.
What is the implication of achieving the Six Sigma goal?
When a company violates important customer requirements (be it internal or external), it generates defects, complaints and costs. The greater the number of defects that occur, the greater the costs incurred.
If we take as an example the billing process of a company, billing failures, and the delay in the issuance and delivery of invoices, not only will they generate an untimely collection, but also significant costs of verification and consequent correction.
The goal of Six Sigma is to help people and processes aspire to deliver defect-free products and services. Six Sigma recognizes that there is always room for defects, even in the best processes or the best product, but with a correct performance level of 99.9997 percent, Six Sigma sets a goal where defects in many processes and products are practically non-existent.
The Six Sigma goal is especially ambitious when you consider that before starting a Six Sigma initiative, many processes in many companies operate at 1, 2 and 3 sigma levels, especially in service and administrative areas. This implies that 66,000 to 700,000 errors are generated per million opportunities. Becoming aware of such low performance produces a real shock for management levels.
A company may have been able to survive despite the high levels of waste caused by such a large number of failures, but in an ultra-competitive economy how the current one does not improve quality levels implies not only higher costs, but also lower sales and as a consequence drop in profits and yields. With this, consumers, owners and / or shareholders, employees and, logically, managers lose. A company that loses is also bad for its suppliers and for the collection agencies. As can be seen, there are many and varied stakeholders who should be critically interested in the good performance of the company, and therefore its good quality management.
How does Six Sigma work in terms of steering system?
A great difference between Six Sigma and previous quality programs is the possibility of exercising continuous control that variations in quality have on the profitability levels of the company.
Through the application of Six Sigma, and the subsequent monitoring of the system and its processes, it is possible to know in time and form the levels of:
- Customer satisfaction. Performance of Key Processes. Metrics according to a Control Chart on how the business works. Profit and Loss Accounts. Employee attitude.
These measures provide feedback on the performance of the organization's processes, products and services.
As a Six Sigma steering system it is not owned by top management, nor is it driven by middle management. The ideas, solutions, discoveries in processes and improvements that arise from the application of Six Sigma arise in the first organizational line. Six Sigma companies are putting more responsibility in the hands of people who work directly with internal and external customers.
What is the philosophy of Six Sigma?
The Six Sigma philosophy is based on a principle as simple as it is powerful, consisting of uniting the power of people and the power of process. Good companies strive not to make mistakes, they concentrate all their effort on not wasting time and materials, avoiding production and delivery errors as much as possible. And they try not to neglect what they do best. Avoiding mistakes can be just as or more profitable and is available to everyone.
Sigma is a measure that allows us to determine how well processes are being carried out, or in other words, how many mistakes a company makes when carrying out its work.
Six Sigma seeks quality, but not only in the final product; quality is sought in customer service and manufacturing. A perfect product delivered two weeks late is not Six Sigma.
Who uses Six Sigma?
Public or private organizations, dedicated both to the generation of goods and services, which are fully committed to continuous improvement and the highest level of customer satisfaction through the timely delivery of products and services, free of defects and at reasonable costs.
The system in question can be used both in the production of goods, as well as in check processing, mailing, surgical operations, agricultural production, dairy production, education. Any feasible measurement activity that is considered to be subject to improvement is feasible to be subject to the application of the system in question.
What are the best known companies that make use of this management methodology?
It is worth mentioning among the most renowned companies such as Motorola, Allied Signal, General Electric, Polaroid, Sony, Lockheed, Blach & Decker, Toshiba, Dupont, Bombardier, Ford Motors, FeDex, ABB, Texas Instruments, Johnson & Johnson, among others.
What are its principles?
We have eight fundamental principles to analyze, which are:
- Principle 1: genuine customer focus. Which means that customer focus is the top priority. Principle 2: Fact-and-data driven leadership. The key is in the systematic survey of statistical data, then proceeding to its analysis and interpretation. Principle 3: the processes are where the action is. Concentrating energy and analysis methods in processes implies improving them in order to increase satisfaction to internal and external customers, with the greatest efficiency in the use of resources and with the greatest speed. Principle 4: proactive management. Being proactive means acting in advance of events rather than reacting to them. Starting from the deep knowledge of the system and applying a creative thought and attitude to it,It is achieved through the inverse analysis to discover what can go wrong, and consequently adopt preventive measures and actions aimed at avoiding the occurrence of failures and errors. Principle 5: collaboration without barriers. Destroy and eliminate the barriers that give rise to organizational silos, which impede teamwork in the organization as a whole, making it difficult to achieve improvements in processes and consequently the increase in quality levels. Principle 6: seek perfection and tolerate failure. Companies will not be able to achieve Six Sigma level without generating new and innovative ideas. For people to want to test new ideas, concepts, systems and work methodologies, they need to know with total clarity that possible failures must be tolerated,otherwise no one will risk producing ideas aimed at improving processes. Principle 7: cultural change aimed at implementing empowerment. Instead of employees working to satisfy their superiors, it is the latter who must support their employees in order to achieve the greatest satisfaction for customers. This is what is called the inversion of the organizational pyramid. Managers must support and sustain the actions undertaken by employees and workers on a daily basis. Employees must lose their fear of reporting bugs and errors (what has been called "killing the messenger"), a deep and mutual trust must be generated, both vertically and horizontally (end with us and they).It cannot be measured and reported without full confidence that such measurements and information will be used with the objective of providing better customer service in the most efficient way, thereby achieving a sustainable competitive advantage for the company. Principle 8: motivate and Group incentivize the generation of ideas and their subsequent implementation to improve the performance and performance of the organization.
What is the process for problem solving and process improvement?
On the one hand, there is a cycle composed of six phases, which are the following:
- Phase 1: Project identification and selection Phase 2: Team formation Phase 3: Development of the project framework document Phase 4: Training and training of participants Phase 5: Execution of the DMAMC process (definition of the problem-measurement-analysis-improvement-control of the results Phase 6: Transfer of the solution for its implementation.
What tools are used in the Six Sigma system?
On the one hand there are tools for the generation of ideas and organization of information. Among them we can mention: brainstorming, affinity diagram, tree structure, first-level process map, process flow diagram and cause-effect diagrams (fishbone).
Regarding the tools for obtaining data, we have: statistical sampling, VDC (methods to obtain the voice of the customer), control sheets and charts, analysis of the measurement system.
If it is about tools for the analysis of the process and data, we can mention among the most used: the analysis of the flow of the process, analysis of the added value, diagram and graphs, Pareto chart, histograms, trend graph and diagram of dispersion.
Then we have the tools for statistical analysis, and the tools for the implementation and management of the processes. Among the latter tools are: Project Management Methods, Potential Problem Analysis, Failure Mode Analysis and its Effects (FMEA), Analysis of affected groups, Force Field Diagrams, Process documentation, Table of Integral Command and process indicators.
What is required to implant Six Sigma?
It requires several factors, which are detailed below:
- First and foremost, a deep awareness on the part of the managers in the first instance and later in the middle and lower levels. It is necessary to raise awareness so that they duly take into account the needs of customers and consumers, the cost for the company of not generating products and services right "the first time." Second, total support from the Directorate intended to lead the necessary changes with strength, commitment and enthusiasm. A total commitment to continuous improvement must be generated. Third place for cultural change, clearly a fundamental condition. Not only is it enough to become aware, it is also essential to change the culture, typical of traditional companies, and generate a new organizational culture, typical of new competitive companies.Paradigm changes in human resource management are critical for this purpose. A broad mindset is required that goes beyond statistical measurements or metrological vision, to seriously consider all aspects related to organizational behavior.
How long does it take to implant Six Sigma?
This must be properly evaluated according to the type of company, both its size, especially in terms of its number of personnel, as well as its operations and nature of activities. The minimum time for SMEs is between 4 and 6 months, increasing as the complexity of operations increases, the number of departments, areas or sectors, and the number of personnel to train and train.
How much does it cost to implement Six Sigma?
It depends on the organization and the level at which you want to apply. The costs corresponding to each stage of implementation must be taken into consideration. On the one hand we have the cost related to the exploratory and awareness stage, later it is necessary to take into consideration the training and training costs, the cost linked to the software, the implementation costs and the quality audit costs.
How many experts should be trained?
One Champion per Business Unit or Manufacturing Site should be trained; one Master Black Belt for every 30 Black Belts or for every 1000 employees; one Black Belt for every 100 employees for industries and one for every 50 employees for service companies; and finally, one Green Belt for every 20 employees.
How much training should they receive?
There are variants according to the type and size of the organization, but on average the training required for the main roles is as follows: from 20 to 40 hours for each Champions; 280 to 460 hours for Master Black Belts; 180-280 hours for Black Belts; and finally, from 70 to 140 hours for the Green Belts.
Who can be coaches?
For each rum, certain types of abilities, skills and experiences are needed, appropriate to the type of activity and responsibility to be managed:
- Senior Management and Executives familiar with statistical tools to fill the position of Champions Managers or Chiefs with technical degrees and mastery of basic and advanced statistical tools, such as Master Black Belts Engineers, technicians or personnel with five or more years of experience, with mastery of basic statistical tools, such as Black Belts. And to be Green Belts it is required to be technical or support personnel of the area involved with basic knowledge in statistical tools.
What is the relationship between the level in Sigma and the average costs per product or service?
Increasing quality levels implies generating better products and services "the first time", which means reducing costs due to internal and external failures as well as evaluation costs, all of which entails a reduction in the total cost of quality (or poor quality) per product, leading to higher returns on investment and company assets. These results are transferred to the economic added value and for this reason allow greater incentives to the staff.
What possibilities are there to include Six Sigma as a measure of internal processes within the Balanced Scorecard?
Not only are there possibilities, but it also constitutes an obligation, that if the Six Sigma methodology is being used in the company, the latter is permanently informed about the results that are being obtained in the various operational processes, and their corresponding interrelationships.
Appendix
|
Performance (%) |
Dpmo |
Sigma level |
|
6.680000 |
933200.0000 |
0.000 |
|
8,455000 |
915 450.0000 |
0.125 |
|
10.560000 |
894 400.0000 |
0.250 |
|
13.030000 |
869 700.0000 |
0.375 |
|
15.870000 |
841300.0000 |
0.500 |
|
19.080000 |
809200.0000 |
0.625 |
|
22.660000 |
773400.0000 |
0.750 |
|
26,595000 |
734050.0000 |
0.875 |
|
30.850000 |
691500.0000 |
1,000 |
|
35,435000 |
645 650.0000 |
1,125 |
|
40.130000 |
598700.0000 |
1,250 |
|
45,025000 |
549750.0000 |
1,375 |
|
50.000000 |
500000.0000 |
1,500 |
|
54,975000 |
450 250.0000 |
1,625 |
|
59.870000 |
401300.0000 |
1,750 |
|
64,565000 |
354 350.0000 |
1,875 |
|
69.150000 |
308,500.0000 |
2,000 |
|
73,405000 |
265,950.0000 |
2,125 |
|
77.340000 |
226600.0000 |
2,250 |
|
80.920000 |
190800.0000 |
2,375 |
|
84.130000 |
158700.0000 |
2,500 |
|
86.970000 |
130300.0000 |
2,625 |
|
89.440000 |
105 600.0000 |
2,750 |
|
91,545000 |
84,550.0000 |
2,875 |
|
93.320000 |
66800.0000 |
3,000 |
|
94.790000 |
52100.0000 |
3,125 |
|
95.990000 |
40100.0000 |
3,250 |
|
96.960000 |
30400.0000 |
3,375 |
|
97.730000 |
22700.0000 |
3,500 |
|
98.320000 |
16800.0000 |
3,625 |
|
98.780000 |
12200.0000 |
3,750 |
|
99.120000 |
8800.0000 |
3,875 |
|
99.380000 |
6200.0000 |
4,000 |
|
99,565000 |
4350.0000 |
4.125 |
|
99,700000 |
3000,0000 |
4,250 |
|
99,795000 |
2050.0000 |
4,375 |
|
99.870000 |
1,300,0000 |
4,500 |
|
99.910000 |
900,0000 |
4.625 |
|
99.940000 |
600,0000 |
4,750 |
|
99.960000 |
400,0000 |
4,875 |
|
99,977000 |
230,0000 |
5,000 |
|
99,982000 |
180,0000 |
5,125 |
|
99,987000 |
130,0000 |
5,250 |
|
99,992000 |
80.0000 |
5,375 |
|
99,997000 |
30.0000 |
5,500 |
|
99.997670 |
23.3500 |
5,625 |
|
99.998330 |
16.7000 |
5,750 |
|
99,999000 |
10.0500 |
5,875 |
|
99.999660 |
3,4000 |
6,000 |
