Introduction to Six Sigma

Six Sigma is a methodology of implementing a highly successful project, or producing a high quality product or service, using techniques and principles that ensure excellence. The Six Sigma methodology incorporates many years of studying best practices in business and its goal is ultimately the creation of a nearly error-free business environment.

The name of the methodology takes its name from a letter in the Greek alphabet, sigma, which is used by mathematicians to measure variability. In business, the principle of variability is used to measure the number of errors in a process. The goal of a Six Sigma implementation is to produce a product or service with fewer than 3.4 problems per million transactions. A transaction may be defined as a product produced or a service performed.

Six Sigma has been so successful because it dispenses with some of the more cumbersome aspects of older business implementation methodologies and, as such, it has risen to become one of the most respected and followed project management systems. Many of the world's most successful companies utilize the principles of Six Sigma because customers in today's business environment expect excellence and companies must be willing to deliver it if they want to survive in today's highly competitive marketplace.

The employees within a company who train on Six Sigma are called "Six Sigma Black Belts."  Usually, these Black Belts use advanced computer and business technologies, but the methodology of Six Sigma can easily be broken down to a simple model that comprises five elements: Define, Measure, Analyze, Improve, and Control. Together, they are referred to as the DMAIC model. 

Using the DMAIC model, a company's Black Belts must define (D) the goals of a project, measure (M) the existing system in place, analyze (A) the implementation of the project to ensure that there is little difference between actual results and the goals of the project, improve (I) the system wherever possible, and, finally, they must control (C) the new system in place to ensure continued success.

History of Six Sigma

The concepts of Six Sigma were created by the company Motorola in the 1980s under the leadership of Bob Galvin, the company's Chief Executive Officer (CEO). In the early 1970s, a Japanese company took control of a Motorola factory that manufactured televisions. The quality of the televisions was very low and Motorola hired a firm to investigate the problems and to implement a solution. 

Within a very short period of time after the Japanese firm took control, the quality of the televisions was dramatically improved. Defects were decreased by 95%, but the company used the same workers and the same technology. In addition to drastically lowering defects, the company was also able to lower manufacturing costs. One thing was very clear: Motorola's management of the factory was the problem and the Japanese firm had managed the process with a remarkable degree of success. The concepts they used to achieve this success were incorporated and expanded by Motorola and would eventually become known as Six Sigma. In 1988, Motorola won the prestigious Malcolm Baldrige National Quality Award, one of the most coveted awards in business. Other businesses started to take notice of Motorola's success and strategy, and the concept of Six Sigma grew rapidly. 

One of the most fundamental concepts to understand about Six Sigma is that its methodology is not solely concerned with increasing quality in the traditional sense.  While increased quality is a result of its implementation, Six Sigma is primarily concerned with increasing efficiency within a company and delivering higher customer value. 

Six Sigma is not solely about cutting costs to improve the bottom line. It is about cutting unnecessary expenses (waste) which do not add to the actual quality, or value, of its products. When companies spend money to fix problems, this expense is often called the cost of poor quality. Typically, companies that utilize Six Sigma spend about 5 percent of the their revenue fixing problems, while the typical cost in most companies that do not use Six Sigma can be as high as 25 percent of revenue. 

The Scientific Method

Six Sigma applies the Scientific Method to business.  The Scientific Method is a very precise approach used by scientists to invent, discover, and test their theories.  Any discovery or theory that does not closely follow the Scientific Method is not regarded as a valid experiment.   

The principles of Six Sigma follow these important elements of the Scientific Method: 

1. Observation: Closely examine the operations of your business. 
2. Draft an explanation, or theory, that summarizes your observation.
3. Develop predictions of future events based on your observations and theory.
4. Make experiments to test your predictions. Adjust your theory, if necessary, based on your experiments.
5. Repeat the process of developing predictions and conducting experiments until there are no differences between your theory and the results of your experiments.  

At the end of this process, a Black Belt in a Six Sigma company will be detailed to certify a theory which explains an important element of the company's business. It eliminates a culture of guessing and employee bickering and moves to a more factual environment.   

Six Sigma versus Older Project Management Methodologies

There have been many process and quality improvement initiatives used before Six Sigma, but they differ in several important ways. 

Traditional process improvement initiatives focused almost exclusively on the manufacturing process while Six Sigma is concerned with the analysis of data across a broad spectrum of a business. It analyzes all aspects of the business environment, with a special emphasis on efficiency. Thus, Six Sigma considers manufacturing just one part of the business process since customers are concerned about many more things than just the manufacturing quality of a product. 

In addition to wanting a high quality manufactured product, customers are concerned with price, service, keeping updated with future releases of the product, and technical support, among many other concerns.   

The beneficial effects of this approach go far beyond just customers. Investors and owners benefit greatly from Six Sigma as it improves the bottom line performance of the company. All stakeholders, which are defined as people who have an interest in the success of the company, benefit from the Six Sigma approach to improving efficiency and adding value to the customer experience.