Six Sigma


Six Sigma:

Learning objective of the article:

  • Define and explain the concept of six sigma. Give an example.

  • What are advantages and disadvantages of six sigma.

  • Prepare a list of companies that have implemented six sigma.


Six SigmaDefinition and explanation of six sigma:

Motorola popularized the use of stringent quality standards more than 30 years ago through a trade marked quality improvement program called six sigma.

Very simply, six sigma is a quality standard that establishes a goal of no more than 3.4 defects per million units or procedures. What does the name mean? Sigma is the Greek letter that statisticians use to define a standard deviation from a bell curve. The higher the sigma, the fewer the deviation from the norm–that is the fewer the defects. At one sigma, two thirds of what-ever is being measured falls within the curve. Two sigma covers about 95 percent. At six sigma, you are about as close to defect-free as you can get. It is an ambitious quality goal! Although it may be an extremely high standard to achieve, many quality driven businesses are using it and benefiting from it. For example, General Electric realized approximately $8 billion in savings through its six sigma program from 1999 to 2002, according to company executives. Other well known companies pursuing this program include ITT industries, Dow chemical 3M Company, American Express, Sony Corporation, Nokia Corporation and Johnson and Johnson. Although manufacturers seem to make up the bulk of six sigma users, service companies such as financial institutions, retailers and health care organizations are beginning to apply it. What impact can it have? Let us look at an example.

Example:

It used to take well-mark Inc., a managed-care health care company, 65 days or more to add a new doctor to its Blue cross & Blue shield association medical plans. Now thanks to six sigma, the company discovered that half the process it used were redundant. With those unnecessary steps gone, the job now gets done in 30 days or less and with reduced staff. The company also has been able to reduce its administrative expenses by $3 million per year, an amount passed on to consumers through lower health insurance premiums.

Advantages and Disadvantages of Six Sigma:

Six Sigma has its both advantages and disadvantages, Following are some points which we have examined:-

� Six Sigma aims to maximize customer satisfaction and minimize defects – Globalization and instant access to information, products and services continue to change the way our customers conduct business. Today’s competitive environment leaves no room for error. We must delight our customers and relentlessly look for new ways to exceed their expectations. This is why Six Sigma Quality has become a part of our culture.

� Six Sigma is far more in depth than this document has illustrated. It is a tool that if used correctly, can identify key areas of business processes that need attention to lower defect rates. One of the greatest advantages is that all the measured improvements achieved through this technique can be directly converted into financial results. In fact, more and more shareholders even require that Six Sigma method be implemented.

� In the sales field there is an old saying; “Eagles never fly with doves. But to find angles you go through lots of doves.” In today’s world there is so much information on turnover based on specific industries so baseline the norm should be easy to come up with unless your industry is very special. Getting a sigma value is very easy as well with your current date on how your company is doing. Change however may not be from a process improvement unless management is willing to change as well.

� Research proves that firms that successfully implement Six Sigma perform better in virtually every business category, including return on sales, return on investment, employment growth and stock value growth. The strategy that has to be applied in today’s educational arena is a thoughtful concern on the part of the management to understand customer needs and strive to reduce defects throughout all educational processes.

� Most organizations embracing Six Sigma apply it without measuring the “buy-in” (enthusiasm for Six Sigma) of their employees. In some types of operations this may be critical. The performance of Six Sigma in many types of operations has never been or cannot yet be measured. For example, if a company sees that Six Sigma has improved the quality of its baseball cap production line, then it might presume that applying Six Sigma to its engineering think tank will improve its creativity by the same degree. Certainly any company, in a lawsuit involving the quality of its products, will proclaim its quality programs at the forefront of its defense. This causes some skeptics to claim that their organization has embraced Six Sigma only to look good in court. Whether this is the case or not, the fact that the statement is believed reduces the “buy-in” by the company’s employees, which may reduce the ability of Six Sigma to improve quality. Six sigma is no different than “reducing variation” or piece-to-piece consistency (at what cost?). IS the reduction of variation the only solution or the choice of when to reduce. Therefore, what is achieved by Six Sigma is piece-to-piece consistency or focus on parts. Piece-to-piece consistency may be adequately required for large volume production only when it is established by its “piece-to-system” consistency requirement (target thinking).

List of Companies that have successfully Implemented Six Sigma

The following companies have implemented 6-sigma

3M, A.B. Dick Company, Abbott Labs, Adolph Coors, Advanced Micro Devices, Aerospace Corp, Airborne, Alcoa, Allen Bradley, Allied Signal, Ampex, Apple Computers, Applied Magnetics, ASQC, Atmel, Baxter Pharmaseal, Beatrice Foods, Bell Helicopter, Boeing, Bombardier, Borden, Bristol Meyers – Squibb, Bryn Mawr Hospital, Campbell Soup, Cellular 1, Chevron, Citicorp, City of Austin, TX, City of Dallas, TX, Clorox, Cooper Ind, Dannon, Defense Mapping Agency, Delnosa ( Delco Electronics in Mexico), Digital Equipment Corp, DTM Corp, Eastmen Kodak, Electronic Systems Center, Empak, Florida Dept. of Corrections, Ford Motor Company, GEC Marconi, General Dynamics, General Electric, Hazeltine Corp, Hewlett packard, Holly Sugar, Honeywell, Intel, Junior Achievement, Kaiser Aluminum, Kraft General Foods, Larson & Darby, Inc, Laser Magnetic Storage, Lear Astronics, Lenox China, Littton Data Systems, Lockhee Martin, Loral, Los Alamos National labs, Martin Marietta, McDonnell Douglas, Merix, Microsoft, Morton Int’l, Motorola, NASA, Nat’l Institute of Corrections, Nat’l Institute of Standards, Nat’l Semiconductor, Natural Gas Pipeline Company of America, Northrop Corp, PACE, Parkview Hospital, Pentagon, Pharmacia, PRC, Inc, Qualified Specialists, Ramtron Corp, Rockwell Int’l, Rohm & Haas, Seagate, Society of Plastics Egineers, Solar Optical, Sony, Star Quality, Storgae Tek, Symbios Logic, Synthes, Technicomp, Tessco, Texaco, Texas Commerce Bank, Texas Dept. of Transportation, Texas Instruments, Titleist, Trane, TRW, Ultratech Stepper, United States Air Force, United States Army, United technologies, UPS, USAA, Verbatim, Walbro Automotive, Walker parking, Woodward Governor, Xerox

You may also be interested in other useful articles from “business and quality improvement programs” chapter:

  1. Just-in-Time (JIT) Manufacturing and Inventory Control System
  2. KANBAN
  3. Total Quality Management (TQM) System
  4. Six Sigma
  5. Business Process Reengineering (BPR)
  6. Theory of Constraints (TOC)

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