What is Six Sigma in Operations Management?
Six Sigma Operations: Success to the Stars
Six Sigma is a methodology for improving the quality of operations management by eliminating errors and defects, reducing cost, and saving time. It is primarily for high-end engineering and manufacturing, where companies seek Six Sigma quality (fewer than 7 defects per million), but it can be adopted for other product and service industries. It is expensive to implement, but, done properly, pays for itself and makes companies into industry leaders and Centers of Excellence.
Fly to Success with Six Sigma
Is Six Sigma Right for Your Company?
This article explains what Six Sigma is, but offers little about its history and does not evaluate it. If you want help in deciding whether Six Sigma is a good choice for your company, please read Will Six Sigma Help Operations Management in Your Company?
Six Sigma Quality for Operations
Six Sigma is a great method (with some problems) and with a lousy name. Six sigma is an obscure statistical concept elevated to a corporate goal by Jack Welch of GE. Unfortunately, it is also an industry buzzword, and most people are confused about what it is, what it means, and what it is good for.
Writing my book on quality, Quality Management DeMYSTified (McGraw-Hill, 2006), and helping companies solve expensive problems, I've seen both the advantages and disadvantages of Six Sigma initiatives to improve the quality of operations. I've also seen that a lot of people in business just don't understand what Six Sigma is. This article is here to help.
Six Sigma began as a method in Quality Management. But the United States is a nation of fads, and the words "Quality Management" were a fad from 1980 to 1995, and then they died, hard. So Six Sigma stopped talking about quality and started talking about improving operations. In a way, that makes sense. Any effort to improve the quality of operations should be going on right inside operations itself, not in a separate Quality Assurance department. In another way, it's all smoke and mirrors. Ever since the origin of quality management in 1911, there has been just one goal: to improve the quality of operations. To learn more about the relationship between Six Sigma and Total Quality Management, you might read an Overview of Leading Continuous Improvement Tools by Global-Chica.
What does it mean to improve the quality of operations?
- We change the way we work, eliminating errors in process.
- With better process, we get better results, that is, fewer defects in our products. Customers get what they want and expect, and are happier.
- Once we have great products, we focus on producing them faster, at lower cost, and with less waste. We reduce inventory, increase flexibility of production control, and create more and better options, so that we offer greater value to our customers.
Offering greater value to our customers means getting bigger market share. Doing this at lower cost, we stay ahead of the competition, and our profits go up.
Of course, our competitors have hired their own black belts and are improving quality of operations with Six Sigma as well. The competition is on. So the worst thing we could to is decide that Six Sigma is a fad, and drop it. That's like a cage fighter stopping training and expecting to win his next match!
Read on to learn about Six Sigma and how to drive your operations, manufacturing, service, and sales to the top of your industry.
What Six Sigma is Not
Six Sigma is not:
- A Quick Fix: Initial investment is likely to be costly. After that (perhaps within the year) there will be a big return.
- A Magic Pill: Everyone wants one-size-fits-all solutions. DMAIC isn't like that. It is more like going to a medical specialist for a whole series of tests. Then there will be surgery and rehabilitation. But, when it's over, your company will be like the Six Million Dollar Man: Better, Stronger, Faster.
- A Quick Romance: Remember, your competitors can implement Six Sigma, too! You can't implement it just once and expect to remain an industry leader.
- The Ultimate Solution: Markets, customers, and the economy will keep changing. Six Sigma is part of the best way to face these changes and remain an industry leader. But that will only happen if everyone at your company adopts Six Sigma thinking and applies it to every problem: New ones that come up, and old ones that come back to haunt us.
Six Sigma Principles for Operations Improvement
There is no Six Sigma standard method, but, if you read a lot of texts, you'll find all of these essential principles:
- Senior Executive Support. Six Sigma will only work if the quality engineers and department managers are supported by senior executives. Note, this is different from classical quality management, where executive leadership is required. And it may be a crucial difference. Sometimes, support from executives is not enough, and Six Sigma initiatives fail due to lack of executive leadership.
- Top-Down Training. Six Sigma may use outside expert consultants, but it can't rely on them for long. Everyone in the company, division, or department must receive Six Sigma training. Executives and senior managers must understand its business value and how to support it. Non-technical managers must know how to work with it. Engineers must know how to do it. And workers must know how to communicate issues with the engineers.
- Include the Voice of the Customer. Ultimately, there is only one measure of success: Happy customers who buy our stuff and come back for more. So, let's start there: The customer defines what quality is in our products and services through focus groups, surveys, complaints, and other tools we use to listen to our customers.
- Create an Infrastructure to Support Success. Six Sigma is not a one-time fix. To maintain high quality production, the whole organization must be able to communicate about errors and defects and how to eliminate them.
- Develop Short-Term Projects With Specific Goals. Rather than trying to run around and fix everything all at once, we organize Six Sigma initiatives into specific projects. Each project has a clear goal, and whichever projects benefit the bottom line most get done first.
- Focus on Process Improvement. An essential element of all quality management is to prevent, detect, and reduce errors in process to reduce defects in the product.
- Clear and Consistent Methodology. Across companies, there are many ways to do Six Sigma. Within one company, there must be one clear, overall approach, adapted to each area of the business.
- Focus on People and Process. Focusing on quarterly profits or on defective products will not improve profits or reduce defects. Excellent processes performed by trained, motivated team members produce high-quality products and high profits.
Operating according to these principles, Six Sigma companies improve operations and quality with many specific tools.
Six Sigma Tools
The Six Sigma toolkit is chock-full: a typical text lists over 50 different tools that can be used to solve management, operations, and quality problems. Some are common sense, some are simple logic, and some use very advanced statistics. It is the job of Six Sigma Black Belts and Green Belts to pick the right tool for each job.
The most central tool is DMAIC, which stands for Define, Measure, Analyze, Improve, and Control. DMAIC is both the methodology that governs the entire Six Sigma management system and also the method that creates the steps for each project. In brief, we think diagnostically. We:
- Define the customer requirements or executive directives that are to be met.
- Measure what is happening now. What needs to change from where we are now to meet the goals we defined?
- Analyze the root causes of the problem, so we know what changes we can make to meet our goals.
- Improve the process so that it achieves the goals.
- Control the process so that, going forward, the goal is always achieved.
There is a great deal more that can be said about DMAIC, and it is a useful approach to life and business, even outside Six Sigma initiatives. To learn more, please read Business Success Using Six Sigma tools: DMAIC.
Some Six Sigma tools are common sense methods. For instance, the Spaghetti Diagram is a floor plan that shows how things move back and forth through manufacturing from one department to another. If the diagram looks like a pile of spaghetti, then a lot of time and money are being wasted on moving stuff around, delays, and confusion. We can handle this by redesigning the factory and streamlining the process.
Many Six Sigma tools are borrowed from other methodologies. The Work Breakdown Structure (WBS) is a basic project management tool. Lean Methodology comes from Just-In-Time (JIT) manufacturing. Flow charts come from chemical engineering and data processing. The Five S system comes from Japanese continuous improvement (kaizen). The Six Sigma rule is: If a tool works, use it!
Many Six Sigma tools are statistical. Some, such as histograms and Pareto diagrams, don't require a statistician. Others, like ANOVA and the Nonparametric Test on the Equality of Means should only be used by statisticians. (Anyone else would drop their spaghetti!)
Six Sigma training is in-depth study of these tools and how to use them. Green Belt training focuses on using the tools to support projects. Black Belt training focuses on managing the projects to success.
Keys to Six Sigma Success
Six Sigma initiatives can keep companies from going bankrupt in these difficult times. They can also take a company to the top of its industry, making it an industry leader, a great place to work, a top competitor, and a Center of Excellence.
They can also fail miserably, wasting tons of money, creating conflict, and leaving things worse than where they were when the initiative was started. To understand why, read Business Success: Maturity & Capability, or Negative Synergy. The ideas there apply to Six Sigma as well as to the Capability Maturity Model (CMM).
These four elements, though, are the keys to making Six Sigma Successes and preventing operational disasters:
- Executive Leadership. Six Sigma says that only executive support is needed. But experience shows that complete commitment on the executive level with leadership by example is essential to long-term success.
- Standard Methodology. Six Sigma will only work if everyone is trained and actually uses the parts of Six Sigma that apply to their work. All too often, people give lip service to the methods, and go off and do their own thing. Then problems persist - and put a big drain on the bottom line - until the next initiative.
- Projects. Six Sigma can't be implemented everywhere at once, or in a mish-mash, here and there. It must be implemented in a series of projects, addressing the biggest improvements first, and moving forward from there.
- Keep Measuring, Managing, and Improving. Corporate and team commitment to success must be supported by management controls and communications that measure results and ensure ongoing success.
Working like this, you can implement Six Sigma without creating a disaster. You'll stay in business, and stay ahead of the competition. You may just find that your job and workplace are a great place to be, as well!
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