Six Sigma Principles

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Six Sigma: this article explains Six Sigma or Lean Six Sigma (LSS) in a practical way. After reading you will understand the basics of this powerful quality management method.

Background Six Sigma

The Six Sigma theory was originally developed by the American company Motorola in 1986. Today, this quality management method is used in many business and industrial sectors. It seeks to identify and remove the causes of errors as a result of which the quality of business processes can be improved.

Six Sigma consists of a collection of methods that improve the quality of processes. It is important to find employees within an organization with specific specializations and expertise in this field. It reduces product and business variations with the objective to match products and/or services with customer expectations. The Six Sigma theory projects have quantifiable financial objectives such as cost reduction and/or profit improvement.

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What is Six Sigma?

The term “Six Sigma” refers to a process in which the production is 99.99966% defect free and it originated from terminology that is associated with the manufacturing industry. Here, specific terms are associated with statistic modelling and manufacturing processes.

A “sigma rating” indicates the yield or percentage of defect-free products. Motorola set a goal of six sigma for all of its manufacturing processes and this became the nickname for all the management and technical activities used to achieve this. There are also various Six Sigma tools to improve and optimize manufacturing and business processes.

Six Sigma as quality framework

As soon as high demands are made on quality, Six Sigma comes into play. But also when there is a relatively high loss in production or when there are problems and errors are reported. It is proven quality management tool set and in particular for industry processes and the high tech sector.

However, it is also used as a general management method so that processes can be optimized. Another well-known tool that is used to improve cyclical processes is the DMAIC process model.

Problem factors

Six Sigma is an excellent method to solve complex quality issues of which the cause of the problem is not immediately obvious. It is important that the quality of the product and/or process in question is measurable or can be made measurable. As a result, the factors that affect quality the most can be traced and identified and controlled.

Similarities

Six Sigma has much in common with Gemba Kaizen, the Japanese production improvement method and the LEAN Manufacturing method for waste reduction. The objective of Kaizen Gemba is to eliminate waste within an organization and to standardize production.

What is Lean Six Sigma?

LEAN Manufacturing or Lean Six Sigma also focuses on realizing a maximum value for the customer with as little waste as possible. The main objective of all three methods is similar: to identify and prevent errors as a result of which the production process improves.

Six Sigma in practice

Six Sigma is primarily used within large organizations. According to several consultants, Six Sigma is not suitable for companies with fewer than 500 employees. However, they can adapt the standard approach to Six Sigma to make it work.

Six Sigma contains a large number of methods and tools that are ideally suited for small to medium-sized organizations. The fact that an organization is not large enough to facilitate black belts, does not mean anything about its ability to implement improvements using these techniques.

Manufacturing is a broad term and therefore Six Sigma cannot only be applied in something like a factory. Some examples of areas in which Six Sigma can provide value are:

Manufacturing

After Motorola successfully used the method in the late 1980s, other international companies also achieved success because they were able to achieve a large number of savings after applying Six Sigma. Well-known examples are Texas Instruments ($500 million saved) and Johnson & Johnson ($600 million saved).

Engineering/Construction

After conducting a case study on the company Tinjin Xianyi Construction Technology, it was found that through Six Sigma the company was able to reduce construction time by over 26% and waste by 67%. Similarly, the effects of Six Sigma implementation were studied at Bechtel Corporation. $30 million was invested there, ultimately saving $200 million.

Finance

Six Sigma has also been valuable in the banking industry. It has played an important role in improving the accuracy of automatic payments, reporting and reducing defects in check cashing.

Bank of America stated in 2004 that Six Sigma had helped increase customer satisfaction by 10%. It also reduced overall customer problems by 24%. Other financial institutions also used Six Sigma to improve customer satisfaction, including JPMorgan Chase and GE Capital.

Logistics

In logistics, it is important to get products and goods to the right place at the right time. At the same time, high quality standards must be met. By changing the schedule of the supply chain, Six Sigma can provide better quality control of products without affecting delivery times.

Healthcare

The healthcare industry is particularly likely to benefit from quality improvement methods such as Six Sigma because there is zero tolerance for errors. Preventing medical errors is almost always at the top of the list of priorities for medical institutions.

The purpose of Six Sigma in healthcare is broad. For example, a goal may be to reduce equipment inventory for cost savings or to change a process to make healthcare delivery more efficient.

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It’s Your Turn

What do you think? Is the Six Sigma applicable in today’s modern economy and operational management? Do you recognize the practical explanation or do you have more suggestions? What are your success factors for a good Six Sigma organization?

Share your experience and knowledge in the comments box below.

More information

  1. Pyzdek, T., & Keller, P. A. (2003). The Six Sigma Handbook. McGraw-Hill.
  2. Tennant, G. (2001). Six Sigma : SPC and TQM in Manufacturing and Services. Routledge.
  3. Neuman, R. P. & Cavanagh, R. (2000). The Six Sigma Way : How GE, Motorola, and Other Top Companies are Honing Their Performance. McGraw Hill Professional.

How to cite this article:
Mulder, P. (2013). Six Sigma. Retrieved [insert date] from Toolshero: https://www.toolshero.com/quality-management/six-sigma/

Published on: 01/08/2013 | Last update: 06/29/2022

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