What is Six Sigma? Principles, Process, Metrics

What is Six Sigma?

Six Sigma is a methodology that originated in the manufacturing sector and has since been widely adopted across various industries, including healthcare, finance, and services. It focuses on improving the quality of processes by identifying and reducing defects and variations. The goal of Six Sigma is to minimize variability and errors in processes to achieve better efficiency, cost savings, and customer satisfaction.

Six Sigma is a quality methodology that is used for problem solving in business organisations. Use of this methodology aids an organisation in enhancing its operational functions.

Six Sigma is defined in various ways as stated below:

• A quality methodology that focuses on the number of defects and limits the defects in a product or service to a count of 3.4 Defects Per Million Opportunities (DPMO).
  
  
• A quality methodology that aids an organisation in achieving a rate of improvement of 70 per cent or more.
  
  
• A methodology that is data-driven, used for problem solving. It comprises the following steps Define, Measure, Analyse, Improve and Control (DMAIC).
  
  
• In a nutshell, the Six Sigma (6σ) methodology is a set of tools and techniques that are used to improve various business processes.

We mentioned that Six Sigma aims at process improvement which is made possible by identification, mitigation and elimination of reasons underlying defects in a process. Further, the Six Sigma methodology also aims at minimising the extent of variability in the process- es of manufacturing and service.

Six Sigma employs a multitude of methods, which are categorised as empirical methods and statistical methods. Adoption of the Six Sigma methodology creates a resource base of Six Sigma experts within an organisation. A typical Six Sigma project in an organisation is implemented in a pre-defined sequence of steps with some specified expected outcomes such as reduction in Turnaround Time (TAT), and reduction in costs, wastage, customer dissatisfaction and losses.

The term Six Sigma has its roots in the terminology related to statis- tical modelling of manufacturing processes, which is used in statisti- cal quality control to evaluate process capability. Sigma rating in the manufacturing process indicates its maturity and describes its yield, or in other words, the percentage of units produced without defects.

In a Six Sigma-compliant process, it is expected that 99.99966% of all the opportunities to perform a specific activity would be statistically free of defects. In other words, only 3.4 or fewer defects would occur per million opportunities (DPMO). In simple words, it indicates the ability of any process to produce a very high percentage of output complying with the given specifications.

However, Six Sigma’s main objective may not always be improving all processes necessarily to the 3.4 DPMO level. To start with, organisations need to determine an appropriate sigma level to be achieved for each of their important processes to which they would apply the Six Sigma methodology. To achieve the greatest effect and results from the Six Sigma exercise, the management must identify the priority areas for its application.

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Principles of Six Sigma

Six Sigma is based on the following principles:

• It is of vital importance to make continuous and sustained efforts so as to obtain process results that are not only stable but also predictable.
  
  
• The processes of both manufacturing and business companies are such that the principles of DMAIC can be applied to them.
  
  
• A top-down approach and commitment from senior level management is as important as the commitment from other employees to be able to achieve sustainable quality improvement.

Some features that differentiate Six Sigma from other quality improvement initiatives are:

• Six Sigma projects focus on obtaining quantified and measured results. These results may be operational and/or financial in nature.
  
  
• Need for a top-down approach and sustained support by senior leadership.
  
  
• Decision making is based on statistical analysis and inferences are based on sound data, not merely on anecdotal evidences or guesswork.

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Six Sigma Process

The term Six Sigma methodology represents the basic assumption or concept that no product will fail to meet specifications if the process mean is at least Six Sigma away from the nearest specification limit. Process capability studies measure the number of standard deviations that occur between the process mean and the nearest specification limit in units of sigma.

Standard deviation is represented by the Greek letter σ (sigma). An increase in the process deviation or movement of the process mean away from the tolerance limit leads to the possibility of a lesser number of standard deviations between the process mean and the nearest specification limit. This results in the reduction in the sigma number and an increased likelihood of items outlying the limits of specification. The calculation of sigma levels for process data does not depend on the data normalcy; therefore, there is no need to transform non-normal data into normal data.

There are two methodologies using which an organisation can implement the Six Sigma methodology. They are DMAIC and DMADV methodologies. Among the two, the former is the most common one. Usually, the DMAIC Six Sigma process consists of five phases as:

There are two methodologies using which an organisation can implement the Six Sigma methodology. They are DMAIC and DMADV methodologies. Among the two, the former is the most common one.

Usually, the DMAILet us briefly study various phases of the DMAIC Six Sigma process as follows:

• Define
• Measure
• Analyse
• Improve
• Control

Define

It is the first phase of the Six Sigma implementation. Here, the project manager and his team create a roadmap for Six Sigma implementation, which is known as the Project Charter. It gives a high level view of the project and is a step to document the voice of the customer. Major activities carried out under this phase include:

• A problem statement is documented to define the problem.
• A goal statement is documented to define the goals of the project.
• Process maps are created and documented to define the current and future state of processes.
• Requirements and definitions of customers are documented.
• Scope of the project is determined and documented.
• Tentative timelines of different activities are documented.

Measure

In this phase, project stakeholders begin the data collection exercise with the following goals:

• Identify the current state or project start point. This sets the process baseline.
• Make preliminary efforts to identify immediately visible root causes of the stated problems.

Some important activities under this phase include:

• Establishing the process base line.
• Identifying immediate root causes of the problems.
• Creating a data collection plan.
• Piloting a data sample to ensure reliability.
• Modifying the Project Charter if required.

Analyse

Once the data is collected as defined in the Measure phase, it is analysed by project experts. In the data analysis phase, processes are observed and the maximum possible root causes of process variation and waste are identified.

Some important activities under this phase include:

• Close observation of processes
• Visual data display using techniques such as fish and bone diagrams, box plot diagrams, etc.
• Potential root cause identification by methods such as interviews, brainstorming, etc.
• Validation of root causes
• Modification of the Project Charter (if required)

Improve

Once the problem, its root causes and possible solutions are documented, a structured plan to implement proposed solutions is developed.

Some important activities under this phase include:

• Identifying and proposing possible solutions using methods such as brainstorming
• Selecting and documenting all the feasible solutions
• Creating solution-wise process maps
• Identifying the most feasible solution
• Launching the solution(s)
• Documenting and measuring the improvement

Control

Once the proposed solution has been implemented and accepted, a roadmap is created for sustaining improvements. Process improvement ownership, infrastructure and related documents are then handed over to process owners and their teams.

ome important activities under this phase include:

• Finding innovative means to continually improve processes using the principles of Six Sigma.
• Validating management and control of processes.
• Replicating improved processes in as many functions of the organisation as possible.
• Sharing the gains of the new process with the other departments.

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Six Sigma Metrics

• Critical to Quality (CTQ) metrics
• Critical to Schedule (CTS) metrics
• Critical to Cost (CTC) metrics
• Overall Equipment Effectiveness (OEE) metric

Critical to Quality (CTQ) metrics

The performance of a process or operation can be measured in multiple ways. One such measure is the yield and it is generally supplemented with some other metrics that aid in performance measurement, such as the throughput yield, and for a process that comprises many steps, the rolled throughput yield. These supplementary measures are helpful in comparing processes to prioritise for improvement.

However, the finer details that may be needed for process improvement are generally not available with these metrics. The process capability index which has been widely and traditionally used provides the smaller details that are routinely required to bring about process improvement. The CTQ metric makes use of a statistical control chart which is compulsory for making the process metric stable and under statistical control.

An important function of the statistical control chart is that it is used as an analytical tool for process improvement due to its ability to distinguish between the variation arising out of natural causes or inherent causes and that arising due to environmental changes in a process. It is important to distinguish between the causes of variation because the interventions required to handle the special causes of variation are not the same as the interventions required to manage the inherent causes of variation.

Critical to Schedule (CTS) metrics

Critical to schedule metrics are generally concerned with process completion timelines [such as cycle time or Turnaround Time (TAT)], scheduling efficiencies, efficiencies related to the scheduling of tasks, equipment, efficiency of process cycle, process velocity, etc.

Critical to Cost (CTC) metrics

As you know, Six Sigma is a methodology that measures the performance of a process using metrics that are critical to both quality and schedule. However, how perfect a process may be, if it is not cost-effective, it may not serve the intended purpose.

Hence, Six Sigma also takes into consideration those metrics that are critical to cost. In a process, costs that are associated with process issues are inclusive of the impact of losses arising due to hidden factory and customer-related issues like logistics delays or communication gaps.

Overall Equipment Effectiveness (OEE) metric

OEE is a measure of equipment effectiveness that is estimated by calculating the product (by multiplication) of the availability of the equipment, the quality of the good (product) produced on the equipment and the performance of the equipment as compared to the theoretical maximum capacity. OEE is a good tool for comparing and prioritising processes for improvement.

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Objectives of Six Sigma

Following are the various objectives of six sigma:

• To give good performance and reliability.
  
  
• To provide value to the end customer.
  
  
• Reducing or minimizing defects in any type of process (reducing defects to less than 3.4 million operations).
  
  
• To eliminate wasteful practices i.e. the practices which do not provide any value to the process, should be eliminated.
  
  
• Providing after sales service quality.
  
  
• Improving the quality of the product.
  
  
• Satisfying both internal and external customers

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Advantages of Six Sigma

Following are the various advantages of six sigma:

Increase long-term revenue

By improving the quality of their service and products with the methodology, companies can see immense long-term revenue increases, yielding benefits for the company and for shareholders. GE was a fairly early adopter of the Six Sigma method, and saw $300 million in increased revenue in 1997 (the first year of Six Sigma), and a full extra dollar per share in the first five years of implementation.

Improve quality

A defect is defined as anything that falls outside of a customer’s expectations. That changes from product to product, but any company knows a defect in their products when they see it. Six Sigma challenges organizations to minimize these defects and improve quality to the point that very few customers will ever have a problem. Even “products” that aren’t manufactured can benefit from the Six Sigma treatment.

At Akron Children’s Hospital, customer service and overall quality was boosted in several different ways after implementing the method. MRI wait times were reduced by 90% (25 days to within 2 days), and the ER decreased the amount of time it took to locate airway supplies by 63%, improving the care the hospital could provide patients.

Expand innovation

Innovation is a necessary ingredient for any company, to prevent stagnation and promote ongoing growth. Six Sigma has been shown to promote teamwork and collaboration within organizations that take the initiative and begin to use the methodology.

Instead of stifling innovation, as some have feared, the methodology often promotes new ideas and insights. In fact, 46% of organizations that implemented Six Sigma saw their innovation improve, possibly because teams were focused on solutions and possibilities over limitations.

Reduce costs

Obviously, any savings through Six Sigma is an indication of return on investment (ROI) and more available funds to apply to other projects. Almost every organization that implements Six Sigma can expect to see savings—sometimes massive savings. In 2007, the US Army gave the methodology a try, and saw an incredible $2 billion in saving throughout that year.

Simply by streamlining processes like dining hall scheduling, recycling fuel, and task management, the organization cut costs massively, allowing them to use those dollars elsewhere.

Positively impact employee safety

Consistency and protocol both help to ensure employee safety, while improving quality and service. Six Sigma has been shown to have a positive impact on employee in 56% of cases, and can help improve employees’ working conditions in many ways. The Akron Children’s Hospital projects helped to reduce staff overtime in the cytogenics lab, saving the organization money and allowing staff to leave on time and enjoy reasonable work-life balance.

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Role of Six Sigma

Six sigma is a team job rather than an individual job. Different roles are required to be assigned to different people as follows:

Master Black Belt (MBB)

These individuals are responsible for translating the high level business goals into a Six Sigma strategy for the division and the supporting tactics. They work with the deployment leader to achieve the former. They also lead the development of the Six Sigma skills in the organization, for Black Belts, Green Belts, and the general associate base.

MBB’s have ultimate responsibility to ensure the quality, value, and sustainability of Six Sigma projects under their guidance. MBB’s are responsible, together, for the success of the overall Division’s Six Sigma effort. They coordinate and lead activity on key cross-division value streams (e.g. Customer Service, Cycle Time, Research, etc). They also ensure that a culture that values openness, creativity and challenging the status quo develops in the organization.

Black Belt (BB)

Six Sigma BB’s are full-time/part time project leaders and mentors of the business, including Green Belts and other associates. They have tactical responsibility for executing specific projects and ensuring that the results are captured, the changes are owned by the Champions (Sponsors), and the changes are sustained. They will also lead Six Sigma knowledge transfer to both full- and part-time participants. BB’s are expected to create an environment of open, honest debate of facts. They challenge the status quo where appropriate and share (and seek) ideas across boundaries.

Green Belt (GB)

Six Sigma Green Belts are the engine of Six Sigma projects. Black Belt’s support the efforts of the broader business teams to identify and implement change. The GB’s are part-time Six Sigma Project Leaders. They are responsible for scoping the projects, leading the project team, calling for help when needed, managing interfaces with business leaders, and ensuring sustainable results. The goal of GB’s is to translate the value of Six Sigma to the specific work environment and problems.

Champion or Sponsors

Project Champions (Sponsors) are the managers of the business, function, or value stream which has been identified as high priority for a Six Sigma team. They play a pivotal role in that they own the processes of the business and, therefore, must ensure process improvements are captured and sustained. They typically also manage Six Sigma Green Belts (GB’s) and must understand the challenges faced by GB associates (for example, removing roadblocks). They also must work with BB’s and MBB’s to ensure that their business area has developed, and is implementing, a long-term vision of a Six Sigma operating environment across the entire operative base.

Yellow Belt (YB)

These are the project-specific, full-or part-time resources that provide process and cross-functional knowledge, as well as help to sustain the gains. They have co-ownership of the project with the Six Sigma Experts and are responsible for the quality of the work and results. This team also plays the critical role of translating the process gains from Six Sigma to other areas of the business after the specific project has been completed.

Implementation Leader

this belt is concerned with implementing the entire six sigma effort within the organization. Implementation leader is the corporate vice president directly reporting to the Chief Executive. He is a seasonal professional and hired specifically for Six Sigma efforts. However, he may be an experienced executive from within the organization.