Six Sigma: A Breakthrough Strategy for Results
Six Sigma GE Quality 2000 will be the biggest, the most personally rewarding and, in the end, the most profitable undertaking in our history.
– Jack Welch, Jr., Chairman and Chief Executive Officer, General Electric Company
In 1985, Florida Power and Light (FPL) decided to embark on a quality journey that became known as The Deming Prize Challenge. At the time, no non-Japanese company had ever applied for, much less, been awarded the coveted Deming Prize for quality. FPL was a true quality pioneer and, as such, had many trails to blaze in the wilderness before the journey was completed.
One of these trails, and perhaps the most important one, was learning the Six Sigma methodology from the JUSE counselors. At FPL, there were about seventy-five pioneer Application Experts, which was the JUSE term for six-sigma Black-Belt at the time, and I was fortunate to have been trained as one. I was then given the challenge to create and lead the FPL consulting and external training arm, which was called Qualtec Quality Services. Ten years later, Qualtec eventually merged with Six Sigma International to become Six Sigma Qualtec, whose mission is to bring the Six Sigma methodology, metrology, and tools to clients around the world.
In recent years there has been much interest in the application of statistical and related metrology techniques to process improvement. Within organizations, the CEO is hearing about the monetary benefits that others have achieved through Six Sigma and are ready to cash-in on the benefits offered by the techniques within their organization. Other organizations are dealing with the statistical requirements that their customers are putting on them, such as statistical process control (SPC), design of experiments (DOE), and on-going reliability testing (ORT).
Organizations can gain much through a Six Sigma business strategy; however, failure and frustration can result when the techniques are not executed wisely. Six Sigma is a statistical measurement, allowing you to measure the quality of your products and services. A level of Six Sigma represents the apex of quality–the virtual elimination of defects from every product and process in a company (about three defects out of every million). It is estimated that companies operating at three to four sigma, which is today’s U.S. average, waste 10-15% of their total revenue due to defects.
Although Six Sigma technically means a failure rate of 3.4 parts per million, in practice the term is used to denote much more than a simple counting of defects. It has come to imply a whole quality culture of strategies, statistics, metrologies, and tools for improving a company’s bottom line. “Black-Belt” is the title used to describe people who are qualified experts in using those tools.
Background of Six Sigma
Motorola coined the term “Six Sigma” and created the original formulas in the 1980’s, based upon the work done by FPL, AT&T, and other pioneers in the field. The result was a culture of quality that permeated throughout Motorola and led to a period of unprecedented growth and sales. The crowning achievement was being recognized with the Malcolm Baldrige National Quality Award.
The term sigma is a Greek alphabet letter used to describe variability, where a classical measurement unit consideration of the program is defects per unit. A sigma quality level offers an indicator of how often defects are likely to occur, where a higher sigma quality level indicates a process that is less likely to create defects. A Six Sigma quality level is said to equate to 3.4 defects per million opportunities (DPMO).
The following is a brief history of Six Sigma movement:
- 1985- FPL begins working with the JUSE counselors on the Application Expert program, the forerunner of the Black-Belt expert
- 1986- FPL Qualtec Quality Services is formed to bring the JUSE-based training to other American companies
- 1987- Dr. Mikel Harry begins Application Expert/Six Sigma training at Motorola
- 1988- Motorola begins its own unique version of Six Sigma training with the support of FPL President John Hudiburg, who was a friend of Bob Galvin, the Motorola Chairman and CEO
- 1990 – Motorola Design of Experiments (DOE) Symposium Committee organized
- 1991 – Motorola Six Sigma Research Institute established
- 1991 – Corporate Six Sigma Black Belt Steering Committee formed
- 1992 – Initiated an effort between Motorola, Texas Instruments, IBM, Kodak and others to jointly develop the Six Sigma Black Belt Program
- 1992 – Six Sigma Technical Institute (SSTI) developed as a required training vehicle for Black Belt candidates
- 1992 – First Six Sigma Black Belts recognized in Asia and US
- 1993 – First Six Sigma Black Belt symposium held
- 1994- The Six Sigma Academy is formed and headed up by Motorola consultant Mikel Harry
- 1996 – Six Sigma Black Belt Steering committee formed
- 1996 – Intro. to Black Belt Program” replaces SSTI as required course
- 1998 – Motorola Elma leads AIEG/ACCES group wide push for Black Belts and reintroduces program
- 1998- Qualtec merges with Six Sigma International to form Six Sigma Qualtec and the movement comes full circle.
- 1999- ASQ forms a strategic alliance with the Six Sigma Academy
An Overview of the Black-Belt Movement
Since it was introduced by JUSE to FPL and Motorola in the 1980s, Six Sigma has been adopted by many other corporate giants, including Texas Instruments Inc. (Dallas), Assea, Brown, Braveri Inc. (Norwalk, CT), Allied Signal Inc. (Morristown, NJ), and General Electric Co. (Fairfield, CT). Although in the past, large companies such as these were the only ones that could afford to launch their own full-fledged Six-Sigma Black Belt training programs, the growing availability of external programs is now putting Black Belt training within the reach of smaller companies as well.
Six Sigma Black Belt training usually consists of one week of training for each of four consecutive months. Each week’s class work focuses on one of the four phases of Six Sigma problem solving: measure, analyze, improve, and control (MAIC). With a price tag that can range all the way up to $30,000 or more per person, depending on the vendor and venue, Black Belt training is not cheap. But the expected rewards can be well worth the investment. “Being a Six Sigma Black Belt can be very exciting,” said Forest Breyfogle III, author, of the seminal work Implementing Six Sigma: Smarter Solutions Using Statistical Methods’ (John Wiley and Sons, New York, 1999), and founder, Smarter Solutions Inc., an Austin, TX, company that offers Six Sigma and ISO 9000 training, consulting, and coaching. “Six Sigma Black Belts orchestrate the work of projects that are important to the business. On the average, they can impact the bottom line of the company between $500,000 and $1 million annually.”
The Six Sigma Methodology
How can one person or one project have such a dramatic impact? The key is rigorous training, which gives the prospective Black Belts in-depth knowledge of techniques such as process mapping, measurement-systems analysis, graphical analysis, capability analysis, hypothesis testing, regression analysis, analysis of variance, supply-chain management, design of experiments, mistake proofing, statistical process control, failure-mode-effects analysis, gage repeatability and reproducibility, and many more topics. More importantly, it gives them practical, hands-on experience in how and when to apply these skills to solve actual quality problems.
Although Six Sigma methods and training is not strictly standardized among different providers, the typical certification process includes one full week of training per month for four consecutive months, for a total of twenty days. In contrast, the original Application Expert training offered by the JUSE counselors consisted of three to four days of training per month for nine months, for a total of thirty- three days.
Usually, each week’s class work focuses on one of the four phases of Six Sigma problem solving: measure, analyze, improve, and control. During the time between sessions, each candidate works on a project to solve a real-life problem in his company. In addition to simply demonstrating that the prospective Black-Belt has mastered the techniques taught in class, the project is expected to actually improve the organization’s bottom line. Mere technical expertise is not sufficient on these projects because the problem solving does not happen in isolation. Each prospective Black Belt must also develop team leadership and project management skills.
Adept at number-crunching and advanced problem-solving techniques, they find solutions to quality dilemmas when everyone else is stumped. Skilled in project management and team dynamics, they act as leaders, teachers, and mentors. Their projects can save their companies millions of dollars per year. Corporations implementing Six Sigma see radical net income improvements and most often financial results are seen shortly after implementation, if all goes according to plan.
Pitfalls and Critical Success Factors
One of the pitfalls of Six Sigma is that companies embark on this, and they think that every problem now becomes the Black Belt’s job to solve. Metrologists and statisticians all have problems to solve on a daily basis as part of their normal jobs which shouldn’t become projects. The projects reserved for the Black Belt should be the ones where you’ve tried to fix it three or four times and it is still out of whack, or it’s gone away and it’s come back. That’s when the Black Belt should come in to really understand what is the root cause? How to truly get after it? And how to keep it in control in the best way possible?”
Proper support from corporate management is crucial to a successful Six Sigma implementation. Having a Six Sigma Black-Belt on your staff does not mean that great things are going to happen to your company if you don’t have the infrastructure to support that person. To be really successful, the Black Belt needs time to apply their new skills. They cannot be expected to function efficiently if they are required to fulfill both their old duties and new ones. Management should be careful to choose projects that are big enough to be significant without being so large as to be unwieldy, and should take care to match the “horses for the courses”–the right people for the right projects.
It is also important to set reasonable goals. Sometimes companies hear Six Sigma and think they immediately need to reduce failure rates to 3.4 parts per million on every single process. Then they spend a huge amount of effort creating ways to measure all those defect rates, without actually fixing any real problems. “Not every company has had success in Six Sigma,” Breyfogle cautions. “It depends upon how you do it. You have to go at it wisely, and you can’t just make it a way of playing games with the numbers. That’s what it can get to be if you’re not careful.”
If everything is going great, there’s probably no need for a Six Sigma project. But if employees are trapped in a constant cycle of reacting to problems instead of fixing the root causes, then you might want to explore ways that Six Sigma could help. But even the most dedicated Six Sigma Black Belt can’t function without the backing of a supportive corporate infrastructure . That’s why many companies that take their Six Sigma programs seriously also assign and train Six Sigma Champions, who are people whose role it is to ensure that the barriers are removed. Usually, Champions are trained before the Black-Belts, so that they have a chance to assess the areas of the company most in need of problem solving, and come up with a list of projects for the Black Belts to do. In other words, the Champions are the ones who choose the projects in order to increase the ownership and buy-in of senior management.
The Benefits of the Six Sigma Approach
- Dramatically improved metrology practices and communications within and between organizations, which can dramatically improve bottom-line results.
- Dramatically improved supplier quality.
- Savings of millions of dollars per year, or $250,000 per project
- Improved customer satisfaction
- Reduced cycle times
- Increased productivity
- Improved capacity and output
- Reduction in total defects
- Increased product reliability
- Decreased work-in-progress (WIP)
- Improved process flow
Benefits Pro and Con
The following illustrations were cited in a USA Today article (Jones, 1998):
- “After four weeks of classes over four months, you’ll emerge a Six Sigma “black belt.” And if you’re an average black belt, proponents say you’ll find ways to save $1 million each year.”
- “Nobody gets promoted to an executive position at GE without Six Sigma training. All white-collar professionals must have started training by January” says GE Chairman Jack Welch. GE says it will mean $10 billion to $15 billion in increased annual revenue and cost savings by 2000 when Welch retires.
- “It will keep the company (Allied-Signal) from having to build an $85 million plant to fill increasing demand for caperolactan used to make nylon, a total savings of $30-$50 million a year.” Martin used to spend average of 200 work-hours trying to get a part that covers the landing gear to fit. For years employees had brainstorming sessions, which resulted in seemingly logical solutions. None worked. The statistical discipline of Six Sigma discovered a part that deviated by one-thousandth of an inch. Now corrected, the company saves $14,000 a jet.”
- “Lockheed Martin took a stab at Six Sigma in the early 1990s, but the attempt so foundered that it now calls its trainees “program managers,” instead of black belts to prevent in-house jokes of skepticism … Six Sigma is a success this time around. The company has saved $64 million with its first 40 projects.”
- “John Akers promised to turn IBM around with Six Sigma, but the attempt was quickly abandoned when Akers was ousted as CEO in 1993.”
- “Marketing will always use the number that makes the company look best and promises are made to potential customers around capability statistics that are not anchored in reality.” Because manager’s bonuses are tied to Six Sigma savings, it causes them to fabricate results and savings turn out to be phantom.”
- Six Sigma will eventually go the way of other fads, but probably not until Welch and Bossidy retire. “History will prove those critics wrong, says Bossidy, who has been skeptical of other management fads. “Six Sigma is not more fluff. At the end of the day, something has to happen.”
Most companies today operate between three and four Sigma, which equates to a wide range between 6,200 to 67,000 defective products (manufacturing) or transactions (service) per million. That’s simply not good enough in today’s economy. Winning and keeping customers requires near perfection. The bottom line is that three and four Sigma companies waste up to 15 percent of their revenues fixing defects. The Six Sigma solution–and difference–is to implement proven, leading-edge metrologies and methodologies for carving out costs, in order to reach and maintain world-class quality levels.
Many companies have recently experienced success using Six Sigma as a business strategy. When a company implements a Six Sigma business strategy, statistical tools are used in a structured fashion within processes to create products or services that are improved, less expensive, and more timely. Repeated use of the tools by practitioners on a project by project basis can significantly improve the bottom line; however, if the techniques are not used wisely there is a very large danger that the effort will be counterproductive and frustrating, leading to failure.
I believe that Six Sigma can be the best thing that ever happened to a company. or a company can find Six Sigma to be a dismal flop. It all depends upon implementation. Organizations need to follow a Six Sigma Roadmap that leads an organization away from a measurement strategy built around playing games with the numbers to a metrology strategy that yields long lasting process improvements with significant bottom-line results. This Six Sigma RoadMap will be the subject of a separate paper. Stay tuned for further details!