Six Sigma
Gina owns a popular jewelry company, but there’s a problem. She’s noticed that about one in every thousand necklaces that her company produces has a faulty clasp. Now, one in every thousand doesn’t sound so bad, but every time a necklace is made with a faulty clasp, it costs her company money. That’s not good! To save money, Gina would like to reduce the number of necklaces with faulty clasps being made in her factory. But how could she do that?
Gina might want to try Six Sigma, which is a performance-enhancing and problem-solving program for businesses. The name Six Sigma is actually a statistical term that represents fewer than 3.4 errors per million opportunities for errors. In Gina’s case, that would mean an average of 3.4 out of every million necklaces would have faulty clasps. Compare that to her current rate, which is 1,000 out of every million. Six Sigma would be much better!
The Six Sigma program was developed at Motorola in the 1980s and became very popular after GM adopted it with great success in the 1990s. In both cases, as with Gina’s company, the goal was to reduce mistakes made. To help Gina implement the Six Sigma program, let’s look at its principles and process.
Principles
Gina thinks that Six Sigma could be very good for her company. After all, if she can reduce the number of necklaces with faulty clasps from 1,000 per million to 3.4 per million, she’ll be saving a lot of money! But she wonders what, exactly, the Six Sigma program entails. There are four major principles to Six Sigma that Gina will need to understand before she can implement the program. They are:
- Company-wide commitment is the only way to ensure success – For Six Sigma to work, the entire company has to be committed to working on improvement. From Gina all the way down to the lowest man on the totem pole, the entire company should be involved in the process.
- Improvement is a continuous process – If Gina thinks that she can just fiddle with a few things and then reach perfection, she’s wrong. Instead, Six Sigma looks at improvement as continuing to work hard to improve. For example, even if Gina’s company makes thousands of necklaces with no faulty clasps, they’ll still want to find ways to improve, such as becoming more efficient or making even stronger-than-average clasps.
- Business processes can be measured, analyzed, and improved – As we’ll see in a moment, the Six Sigma program is about the research of problems and implementation of solutions. If the problem is random, there’s nothing Gina can do. That is, if the faulty clasps aren’t a result of anything other than random chance, then Gina can’t improve the process. But the Six Sigma program believes that problems are not random and, therefore, can be improved.
- Scientific study can provide a guide for how to improve processes – Linked in with the idea of measuring, analyzing, and improving processes is the idea of systematic study of processes within a business. That is, Six Sigma treats business problems like science projects. The idea is to systematically study all aspects of a process to figure out what’s causing the problem, and then come up with a plan for how to improve.
Process
Okay, Gina gets the four main principles of Six Sigma. But how, exactly, can she implement the program? The actual process of the Six Sigma program is often abbreviated to DMAIC, which stands for define, measure, analyze, improve, and control.
Define is about figuring out the problem and goals to be addressed. For example, Gina wants to reduce the number of necklaces with faulty clasps being produced by her company. In defining the problem, Gina is making sure that she knows exactly what she’s looking for results-wise.
Measure involves getting a baseline performance measurement. That is, Gina needs to know where they are starting. In her case, she knows that about one in every thousand necklaces has a faulty clasp – that’s her baseline measurement.
Analyze means figuring out the cause-and-effect of performance. This is where systematic study really becomes important because there are many things that could cause a problem. For example, Gina’s problem could be with the materials that her company is using, or it could be an issue with the manufacturing equipment. It could even be that the problem is caused by exhaustion of her workers as they reach the end of their shift. Through careful observation and analysis, Gina can narrow that list down to the most likely cause of the faulty clasps.
Improve is the next step, and it involves creating new systems to make performance better. In Gina’s case, they might try using different materials or better equipment or making shorter shifts or more breaks for the workers, depending on what the analysis says is the problem.
Control involves continuing improvements over time. That is, once the number of faulty clasps decreases, Gina won’t want to go back to her old ways. Instead, whatever new processes she puts into place, she will want to keep in place in the future, too.
Lesson Summary
Six Sigma is a performance-enhancing and problem-solving program for businesses. The name Six Sigma is actually a statistical term that represents fewer than 3.4 errors per million opportunities for errors, which is the goal of the program. There are four major principles of the Six Sigma program: company-wide commitment is the only way to ensure success; improvement is a continuous process; business processes can be measured, analyzed, and improved; and scientific study can provide a guide for how to improve processes.
The process of the Six Sigma program is often abbreviated to DMAIC, which stands for define, measure, analyze, improve, and control. Define means figuring out the problem and goals of the intervention; measure involves getting a baseline measurement of performance; analyze is the process of studying processes to figure out the cause of the problem; improve involves creating new processes to make performance better; and control means continuing improvements over time.
Addressing the Problem
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Companies are always looking for ways to cut costs. One very important way of doing that is by avoiding mistakes. This is often easier said than done. Six Sigma is a program designed for businesses to identify and reduce trouble areas while increasing productivity. Six Sigma has been implemented with great success in many different types of businesses, which would at least warrant a review from other business owners.
Learning Outcomes
Discover just how effective your study time was as you set out to:
- Describe Six Sigma
- Enumerate each of the program’s principles
- Summarize the process of implementing it