Introduction
In the era of globalisation and growing competitive market environment, organisations are facing stiff challenge for sustainability. Organisations are pondering over the possible opportunities for cost cutting and wise deployment of scarcely available funds. Industry leaders embraced Six Sigma business strategy as a framework and solution for process improvement and dramatic bottom-line savings for their organisations. This approach to reducing defects has made a stunning impact in organisations, resulting in enhancement in performance and a vast improvement in profits, employee morale, quality of products and customer loyalty.
Six Sigma is a well established approach that seeks to identify and eliminate defects, mistakes or failures in business processes or systems by focusing on those process performance characteristics that are of critical importance to customers. Ever since its conception at Motorola in mid 1980’s, Six Sigma program has grown in leaps and bounds worldwide. At the time of its conception, it was envisioned to be a quality improvement program that sought to deliver a near-perfect (3.4 defects per million opportunities) quality for Motorola through the use of DMAIC (Define Measure-Analyse-Improve-Control) methodology developed by Mikel Harry.
Although Six Sigma initiatives have grown in popularity due to its highly publicized reports of success, the strategy is not panacea that some insist, i.e. Six Sigma still has its critics. News keeps cropping up about the efficacy of the Six Sigma business strategy from its critics, as a management fad- a fashion that sweeps the world with great excitement for a brief period of time, usually less than a year, and then disappears.
A fad is often characterised as being an initiative that is adopted widely by companies and often falls from grace when the hope for benefits failed to materialize. Debates on its emergence as a strategic initiative have created critics who consider it as a old wine in a new bottle. In the last few decades, there existed many programs that have purported to be the answer to industry’s process management problems. They include zero defects, management by objectives, quality circles, Total Quality Management (TQM) and Business Process Reengineering (BPR) (Marsh, 2000). These programs were considered as a passing fad by the management and staff of different corporations.
Some of myths and realities pertaining to Six Sigma are described as follows:
Six Sigma is the flavour of the month
The latest assertion of being a fad or a magic pill to fix organisation’s problems is not what Six Sigma is assumed to be. Stories of success and dramatic improvement in business of many organizations itself reflects the efficacy of the approach. Larry Bossidy, CEO of Allied Signal, imbibed Six Sigma within the organisational culture and has following opinion about this business strategy:
“The fact is, there is more reality with this than anything that has come down in a long time in business. The more you get involved with it, the more you are convinced. ”
Since its inception in late 1980s, the popularity of Six Sigma has grown by leaps and bound. Today an Internet search will generate hundreds of thousands of hits on Six Sigma articles, books, conferences and jobs (Walters, 2005). As quoted by a leading quality expert: “Six Sigma has been very successful – perhaps the most successful – business improvement strategy of the last 50 years” (Montgomery, 2005).
Six Sigma is all about Statistics
The statistical terminology ‘sigma’ provides an impression of Six Sigma being a statistical and measurement program. This may be one of the reasons for its less popularity in United Kingdom as compared to its US counterparts. Six Sigma utilizes one of its armoury – statistics – solely as tools for analyzing, interpreting and clarifying data.
Six Sigma is more about changing the mindset of people, making a shift from traditional approach of problem solving (i.e. fire fighting) to proactive approach. It is not only about statistics. The Six Sigma drive for defect reduction, process improvement and customer satisfaction is based on the “statistical thinking” paradigm, a philosophy of action and learning based on process, variation and data. Statistical thinking provides practitioners with the means to view processes holistically. There is a logical thought progression from process-variation-data to Define-Measure-Analyse-Improve-Control (DMAIC)
Six Sigma is only for manufacturing companies
Six Sigma originated in Motorola in mid 1980’s and was promoted by manufacturing giants like General Electric and Allied Signal, giving an impression that it can be deployed only in manufacturing companies. In the last two decades, Six Sigma has sailed successfully from manufacturing sector and has been applied successfully in all segments of business- banking, healthcare, city council, airlines, hotels, retail stores, fast-food chains and so on. In terms of expanding the horizons of Six Sigma, the two application areas that seem to be rising to the top of the heap are healthcare and financial services. The popularity of Six Sigma as a means of improving the quality of service and customer satisfaction is growing exponentially in the last couple of years in the UK service industry.
Experts agree that the most common reason service-oriented organisations stay away from Six Sigma is that they see it as a manufacturing solution. One of the major hurdles service-oriented organisations must overcome is the notion that, because their company is human-driven, there are no defects to measure. This is wrong, say the experts.
Another common perception among service organisations is that Six Sigma requires complicated statistical tools and techniques. In fact, majority of the process and quality related problems in service organisations can be readily tackled using the simple problem-solving tools of Six Sigma such as process mapping, cause and effect analysis, Pareto analysis, control charts and so on.
Six Sigma works only in large organisations
Just as Six Sigma invigorated GE it can do the same for your organization. It is a myth that Six Sigma works for large companies. GE treated its business as many small business units integrated together. Six Sigma is about problem solving, and problems are everywhere. It does not matter what type or size of business this breakthrough methodology is applied to. You might be a wholesaler, a retailer, a manufacturer, or a service organisation. You might have three employees, or may be you have 300. No matter, Six Sigma will work for you.
No doubt deploying Six Sigma will cost organization some money and time, but it will be worth expending time, money and effort to achieve real measurable financial results. Any organization faces myriad of problems in their day to day functioning of the business. Six Sigma can be applied where there is a problem, irrespective of type or size of business. It can act as a catalyst for changing small and medium-sized enterprises (SMEs) in the quest for business excellence by mobilising their intellectual capital, provided there is total commitment.
In order to assist SMEs with the implementation of Six Sigma, the author is recommending a Six Sigma user group (SSUG) to share and exchange experiences of successful Six Sigma projects within SMEs as well as with similar companies which embark on Six Sigma programme.
Six Sigma is same as other quality initiatives of the past
It is often said by engineers and managers in small and big companies that there is nothing really new in Six Sigma compared to other quality initiatives witnessed in the past. Companies that have embraced Six Sigma within their working culture previously made improvements through the use of TQM or Crosby’s Zero Defects or Quality Circles (Walters, 2005). However, these programs obviously did not address all of their needs. Otherwise these same organisations would not be spending additional time and money to implement Six Sigma. As per Deming, one of the quality Gurus of 20th century, thought that TQM is terminologically vague, saying:
“the trouble with total quality management, the failure of TQM, you can call it, is that there is no such thing. It is a buzzword. I have never used the term, as it carries no meaning” (Deming, 1994).
In the quest for business excellence, Six Sigma should be viewed more as a business strategy than as a quality program. While many organisations have embraced numerous quality improvement programs, most fail to deliver the result that Six Sigma consistently identifies as tangible and quantifiable increase in shareholder value.
Six Sigma provide us with a common language as it reduces things to a common denominator- 3.4 DPMO and sigma capability level, thus providing the ability to benchmark ourselves against like production, processes, and practices.
There are four aspects of the Six Sigma strategy that are not emphasised in other business improvement methodologies and Total Quality Management (TQM).
First of all, Six Sigma places a clear focus on bottom-line impact in hard dollar savings. No Six Sigma project will be approved unless the team determines the savings generated from it.
Secondly, Six Sigma has been very successful in integrating both human aspects (culture change, training, customer focus, etc.) and process aspects (process stability, variation reduction, capability, etc.) of continuous improvement. Thirdly, Six Sigma methodology (Define-Measure-Analyse-Measure-Control or DMAIC) links the tools and techniques in a sequential manner.
Finally, as compared to other quality initiatives, the cultural change in Six Sigma organisation is facilitated by key players known as Champions and Black Belts, who act as an agent to facilitate that change. These change agents harness the power of knowledge to achieve enhanced performance, customer satisfaction and profitability-which is what it is all about. Companies that have implemented Six Sigma have achieved outstanding financial results and developed a disciplined, pragmatic plan and approach for improved financial performance and growth.
Deploying Six Sigma requires strong infrastructure and massive training
Six Sigma demands massive training costs and additional effort has become another misconception among many employees in the manufacturing and service sector. It is true that Six Sigma requires some investment at the outset for training the most talented people in an organisation and converting them into the so called ‘change agents’.
However, it is already a proven fact that the benefits obtained from Six Sigma implementation outweigh the investment costs. A company can start with Six Sigma deployment by selecting a project that is simple and achievable within few months. This will involve fewer resources and can win top management commitment and faith in the philosophy.
Since SMEs face constraint problems in training and deploying Black Belt to full time project, it is advisable for SMEs to collaborate or develop some sort of consortium with local universities and get their best people trained in Yellow Belt and White Belt to tackle their day to day problems. Academic institutions should help SMEs to meet their customer or stakeholder needs and assist them in creating value for their key customers.
This will ensure development of stable, long-term and cost-effective relationship between the organization and academic institution. SMEs should also accentuate on right project and right team selection process so that the company’s limited resources are effectively utilized.
Six Sigma Boat- To Sail or Not?
Six Sigma has been part of our business lexicon for more than a decade. The interest in it is still very strong with lot of air left in its sail and no sign of letting down. This may be attributed to the fact that over the past decade, Six Sigma has shown great flexibility and bottom-line benefits in its application beyond its root in manufacturing. Organisations have not yet seen the real benefits from this business strategy, say the experts.
Six Sigma like other business initiatives can become a fad in the eyes of the management team if not implemented correctly. An initiative like Six Sigma can gain a fad-like stigma in some companies because it fails to deliver as promised, when all the while it was an issue of leadership that drove the failure.
The answer to the question “Is Six Sigma a passing fad?” is clearly no. Six Sigma is neither a fad nor just another quality initiative. It is a ‘way of life’. It is a business strategy based on objective decision making and problem solving, relying on meaningful and real data to create actionable goals, analyzing root cause(s) of defects, and thus suggesting the ways to eliminate the gap between existing performance and the desired level of performance. Becoming a Six Sigma organization means embracing the fundamentals of statistical thinking:
- All work occurs in a system of interconnected processes
- Variation exists in all processes
- Understanding and reducing variation are the keys to success
While Six Sigma methodology is experiencing widespread adoption among a variety of business and industry, there is an inherent drawback of its misapplication if adequately trained personnel, with the proper foundational background, are not available. Under this contextual setting, academia has a critical role to play and bridge the gap between the theory and practice.
The need for personnel, in business, industry, and government, who are technically competent and trained in the philosophies and tools of quality improvement, is critical. This, in turn, puts some enormous responsibilities on academia to develop such needed talent. In order to keep Six Sigma alive, academic community needs to play an active role. Six Sigma lacks theoretical under-pinning and hence academics need to take up the responsibility to bridge the gap in the theory and practice of Six Sigma.
Authors personally feel that Six Sigma will evolve over time like many other initiatives we have witnessed in the past. However the key concepts, the principles of statistical thinking, tools and techniques of Six Sigma, will stay for many years, irrespective of whatever the ‘next big thing’ will be. In future, the Six Sigma toolkit will be enriched by the continuous emergence of new useful tools and techniques, especially in the software, finance and healthcare applications. The article ends at the following quotes:
“Six Sigma has similarities to quality programs of the past because it contains many of the same ideas and philosophies that have been taught for years, but it is vastly different in scope and complexity because it teaches practical method of achieving these ideas and philosophies. ”
References:
Deming, W.E., (1994), Report Card on TQM, Management Review, October, pp.26-27.
Montgomery, D.C., (2005), Generation III Six Sigma, Quality and Reliability Engineering International, Vol.21, No.6, pp. iii-iv.
Walters, L., (2005), Six Sigma: is it Really Different?, Quality and Reliability Engineering International, Vol. 21, No.6, pp.221-224.
About the Authors:
Maneesh Kumar and Jiju Antony
Centre for Research in Six Sigma and Process Excellence (CRISSPE)
Strathclyde Institute for Operations Management (SIOM)
University of Strathclyde
Glasgow, Scotland
E-mail: jiju.antony@strath.ac.uk
