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Six-Sigma comprises of many things and extends beyond a quality improvement tool. Six-

Sigma can be seen as a vision, a philosophy, a symbol, a metric, a goal and a methodology.

Six-Sigma has evolved to become a management tool for change and customer quality. One

of Six-Sigmaǯs strengths compared to other quality improvement techniques is that it

involves the whole organization and introduces a new paradigm. In contrast, Six Sigma is

not a cure for all ills, a guarantee of success and just for manufacturing. (1)

The term "six sigma process" comes from the notion that if one has six standard deviations

between the process mean and the nearest specification limit, practically no items will fail

to meet specifications. This is based on the calculation method employed in process

capability studies. (2)

The wide acceptance of this tool makes it evident that Six-Sigma has become a

phenomenon and a formula for success. The huge amounts of text written on this topic also

highlight its wide acceptance. The interesting point to note is that very few failures have

been listed and with the exceptions highlighted this paper we can say that, the

implementation of Six-Sigma does not guarantee success and its application depends on the

context and need for an organization. More important is the commitment and affordability

towards the program.

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Six-Sigma can be defined as a tool to improve the quality of business processes by

identifying and removing the causes of defects and minimizing variability. (2) This is a very

narrow definition. The philosophy of Six-Sigma is total customer satisfaction. The goal of

Six-Sigma is to ensure zero customer defects in a business process.

The statistical basis of Six-Sigma is that:

a)p All tasks are processes, and all processes exhibit variation

b)p Most variations follow normal distribution, which can be measured and analyzed

c)p The metric of Six-Sigma is the distance between the mean of the outcome and the

customer limits, measured in standard deviations or process sigma, and the new

practical limit of perfection is

obtained at six standard

deviations either side of the

mean

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Six Sigma projects follow two project

methodologies inspired by Deming's

Plan-Do-Check-Act Cycle. These methodologies, comprising five phases each, bear the

acronyms DMAIC and DMADV. (2)

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a)p DMAIC is used for projects aimed at improving an existing business process The DMAIC

project methodology has five phases:

* Define the problem, the voice of the customer, and the project goals, specifically.

* Measure key aspects of the current process and collect relevant data.

* Analyze the data to investigate and verify cause-and-effect relationships. Determine

what the relationships are, and attempt to ensure that all factors have been considered.

Seek out root cause of the defect under investigation.

* Improve or optimize the current process based upon data analysis using techniques

such as design of experiments, mistake proofing, and standard work to create a new, future

state process. Set up pilot runs to establish process capability.

* Control the future state process to ensure that any deviations from target are corrected

before they result in defects. Control systems are implemented such as statistical process

control, production boards, and visual workplaces and the process is continuously

monitored. (2)

b)p DMADV is used for projects aimed at creating new product or process designs. The

DMADV project methodology, also known as DFSS ("Design for Six Sigma") features five

phases:

* Define design goals that are consistent with customer demands and the enterprise

strategy.

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* Measure and identify CTQs (characteristics that are Critical To Quality), product

capabilities, production process capability, and risks.

* Analyze to develop and design alternatives, create a high-level design and evaluate

design capability to select the best design.

* Design details, optimize the design, and plan for design verification. This phase may

require simulations.

* Verify the design, set up pilot runs, implement the production process and hand it over

to the process owner(s). (2)

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Six-Sigma relates to the practical application of statistical theory and can be applied in both

manufacturing and service industries. For manufacturing, the drive for low cost quality

along with post-production product assurance and in-production customer-related quality

remains the main focus. Service industries are inherently more complex and Six-Sigma

provides the tools and insight needed to improve quality of service and hence achieve

higher levels of customer satisfaction. Hence, there is a wide spectrum of industries like

finance, IT, manufacturing, health-care, education, etc. where Six-Sigma has been applied.

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Six-Sigma brings to the table two new elements to the quality improvement spectrum. They

are the name and symbol of Six-Sigma, like a brand name and a mark of world-class quality.

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Second it brings a collection of methodologies or practices, tools and techniques aimed at

successfully implementing change in an organization. The components of Six-Sigma

include:

a)p Total Quality Management, which provides tools and techniques to bring about

cultural change and process improvement within an organization

b)p Statistical Process Control, which provides powerful metrics, analysis tools and

control mechanisms

c)p A Japanese approach to process improvement and design, to bridge the gap between

customer expectations and satisfaction

d)p A new paradigm of total customer satisfaction as a primary driver for the quality

initiative. (1)

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Any process improvement strategy needs three components. Six-Sigma not only provides

the tools and statistical models

but also ensures commitment

from the top management.

Six-Sigma identifies several key

roles for its successful

implementation.

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This section highlights the implications of Six-Sigma into the ten topics for Operations and

Supply-Chain management.

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One of the latest developments with Six-Sigma is its integration into new product

development. Employing Six-Sigma during new product or service design has the

potential to save an organization a considerable amount of money. For example,

according to Lean Sigma Technologies, LLC, an international consultancy, Dz70 to 80

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percent of all quality problems are design related and not manufacturing caused.dz If

these quality issues are addressed during design, an organization can eliminate costly

quality issues once the product is released. (4)

Product design and process selection affects product quality, product cost, customer

satisfaction and overall manufacturability Ȃ the ease with which the product can be

manufactured. The phases involve idea development, product screening, preliminary

design and testing and final design and the Design for Six-Sigma methodology takes all

these into account. The DzDesign for Manufacturingdz approach provides a series of

guidelines for producing a product easily and profitably by Simplification - Minimize

parts, Standardization- Design parts for multiple applications, using modular design

and by simplifying operations.

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Six-Sigma advocates the use of numerous tools and metrics to adopt the best process.

Some of these tools are Quality Function Deployment (QFD), Design of Experiments,

Regression Analysis, etc.

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According to Subir Chowdhury, author of the book DzDesign For Six Sigma: The

Revolutionary Process for Achieving Extraordinary Profitsdz, DzCompanies that correctly

employ Design for Six Sigma will do less and less Six Sigma because the product is

designed right the first time.dz (4) The drawback however, is that it more difficult to

quantify the savings involved with new product development than it is to attack an

existing process where waste has already been identified. Yet, ignoring it could

negatively impact an organizationǯs future performance.

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The concept of Design for Six-Sigma incorporates calculations for efficient long range

capacity planning. This is more accurate because of the strong statistical methods and

clearly defined metrics.

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The Logistic Network design hierarchy involves deciding the network topology Ȃ

number of stages, number of facilities and number of connections/modes. Following

this is the Location issue involving decisions like site analysis, capacities of facilities and

facility locations. This is followed by the vehicle routing dilemma to determine route

allocations and route paths. Again the numerous tools in Six-Sigma are useful to solve

all of these issues. These tools are Enumeration, Gravity methods and Heuristics.

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The techniques of process improvement in Six-Sigma can be applied to all kinds of

layout like job shop, cellular manufacturing, mixed-model, multi-model and flow line.

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Six-Sigma focuses on this aspect of the Operations management through use of

advanced ERP software packages. The concept of CPFR can also be considered while

implementing Six-Sigma.

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Trends in Six-Sigma these days include:

* Organizations sharing their six sigma knowledge with suppliers

* Shift from discrete manufacturing to other businesses

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Some organizations have run the gamut with Six-Sigma inside their organization and

are now looking outside the organization. Companies are now teaching their suppliers

about the benefits of Six-Sigma. (4) This represents an untapped opportunity for both

organizations to improve their performance by reducing errors throughout the supply

chain and hence reduce the bull-whip effect.

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The use of advanced software and integrated packages for efficient scheduling are

advocated in the Six-Sigma paradigm and hence result in effective shop floor control.

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This is the cornerstone of Six-Sigma. Six-Sigma started as a quality improvement tool

and has evolved into a formula for success for organizations in todayǯs world barring

some exceptions.

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The importance of quality today is as great as it has ever been. However, initially the

concept of quality came as an association with luxury and evolved into the idea of fitness

for use. The phrase Ǯyou only get what you pay forǯ was taken to imply that quality was

related to cost. But with advancements in technology and customer expectations, the

concept of quality has come a long way. The insemination of this started with an attempt to

separate the luxury associated with quality. (1)

W. Edwards Deming and Joseph Juran, now both father figures of the American quality

movement, developed a deep understanding of quality and the pursuit of perfection by

applying quality principles and techniques to processes, and also to the management of

organizations. Then quality went to Japan. From a standing start, by the 1970s

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manufacturing industry in Japan was producing cars, motorcycles and domestic goods

cheaper than anyone else. With the boom of the Silicon Valley, the competition for

manufacturing microelectronic chips intensified between the Japanese firms and American

companies. Then quality returned to America with companies such as Motorola coming up

with the idea of Six-Sigma. (1)

The roots of Six Sigma as a measurement standard can be traced back to Carl Frederick

Gauss (1777-1855) who introduced the concept of the normal curve. Six Sigma as a

measurement standard in product variation can be traced back to the 1920's when Walter

Shewhart showed that three sigma from the mean is the point where a process requires

correction. Many measurement standards (Cpk, Zero Defects, etc.) later came on the scene

but credit for coining the term "Six Sigma" goes to a Motorola engineer named Bill Smith.

(Incidentally, "Six Sigma" is a federally registered trademark of Motorola). (3)

In the early and mid-1980s with Chairman Bob Galvin at the helm, Motorola engineers

decided that the traditional quality levels -- measuring defects in thousands of

opportunities -- didn't provide enough granularities. Instead, they wanted to measure the

defects per million opportunities. Motorola developed this new standard and created the

methodology and needed cultural change associated with it. Six-Sigma helped Motorola

realize powerful bottom-line results in their organization - in fact, they documented more

than $16 Billion in savings as a result of our Six Sigma efforts. (3)

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The Nordham Group, one of the largest aerospace and aviation companies in the world,

experienced success with a Six-Sigma project aimed at reducing the 11-day lead time for

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assembling small aircraft components. The company suspected that the Cessna metal bond

process contained non-value added activities that, if eliminated, would reduce the lead time

considerably. (8)

The first step was to select the exact process steps for improvement. Then the team

clarified its objectives and organized a four-day run week. The team reviewed the existing

assembly process by videotaping operators at work. They observed wasted motion and this

was eliminated by close room association between related work-centers and providing

bar-code scanners to track work orders. These two changes saved two miles of walking

each day, or 416 miles of walking per year. (8)

In addition to this, the team identified a number of other areas for improvement, like

implementing a rotator inventory system and reducing scrap, and using product carts to

help establish Dzpulldz between process steps. Finally, it was the evaluation phase and the

project was a great success with the lead time reducing to 10.5 minutes per part and

leading to high monetary savings. (8)

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While implementing the Sig-Sigma program, 8,000 workers (about 11% of the workforce)

were axed, performance-review process was intensified, and the purse strings at a

company that had become a profligate spender were tightened. Thousands of staffers

became trained as Six Sigma "black belts." The plan appeared to work: as 3M's moribund

stock back to life and organization that had become unwieldy, erratic, and sluggish became

disciplined. Within this successes story 3M was losing its innovation. At the company that

has always prided itself on drawing at least one-third of sales from products released in the

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past five years, today that fraction has slipped to only one-quarter. The emphasis on Six-

Sigma had made 3M a less creative company. (7)

Efficiency programs such as Six Sigma are designed to identify problems in work processes

- and then use rigorous measurement to reduce variation and eliminate defects. When

these types of initiatives become ingrained in a company's culture, as they did at 3M,

creativity can easily get squelched. After all, a breakthrough innovation is something that

challenges existing procedures and norms. Invention canǯt be planned as by its own nature,

invention is a disorderly process. (7)

Indeed, the very factors that make Six Sigma effective in one context can make it ineffective

in another. Six-Sigma is good to implement when you know the nature of the problems. But

in case of 3M, there were very few facts available to start with; the nature of problem to be

defined was unknown. (7)

3M introduced two main Six Sigma tools; DMAIC, and Design for Six Sigma, or DFSS, which

purports to systematize a new product development process so that something can be

made to Six Sigma quality from the start. Thousands of 3Mers were trained as black belts

and nearly every employee participated in a several-day "green-belt" training regimen,

which explained DMAIC and DFSS, familiarized workers with statistics, and showed them

how to track data and create charts and tables on a computer program called Minitab. The

black belts fanned out and led bigger-scale "black-belt projects," such as increasing

production speed 40% by reducing variations and removing wasted steps from

manufacturing. They also often oversaw smaller "green-belt projects," such as improving

the order fulfillment process. (7)

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While Six-Sigma, invented to improve quality, it also saved time and money. Since the 3M

mainly had been living on innovation, there were enough costs to cut back and it did. But

the implications were the long term damage to the company. Under Six-Sigma, the R&D

function was systematized and the more emphasis was given on the commercial

application, the size of market targeted and the possible manufacturing concerns.

Traditionally, 3M had been a place where researchers had been given wide latitude to

pursue research down whatever alleys they wished and allowed researchers to spend

years testing products. Six-Sigma curtailed these liberty and lead to more incremental

innovation at the expense of more blue-sky work. (7)

While Six-Sigma is a more systematic new-product introduction process that allows

innovation to get to market faster but it also reduces the chances of new innovations.

Innovation is all about getting one successful idea among 5000 to 6000 raw ideas. (7)

Six-Sigma creates an atmosphere of confinement or sameness that inhibits innovation. Six-

Sigma values sameness more than creativity and undermines the environment need for

company like 3M. Though Six-Sigma brought some positives to the company but it failed at

3M that inherits the culture of innovation and creativity. (7)

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Service Industry - Qualtecǯs Services

áp Six Sigma deployments created

‘p Breakthrough Perfromance
‘p Captured Cost Savings
‘p Customer Delight
áp Projects Ȃ
‘p Insurance

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‘p Lending
‘p Securities
áp Benefits -
‘p We have saved over $20 million dollars in saving in two years of using Six Sigma
Qualtecǯs services!dz -Max Gordon Navistar

Manufacturing Industry - Fortune 500 Global Co. - Power Steering

áp CIO recognized the need to get real-time information from his global team on the
rationale and status for all his significant projects and over 500 projects in 27 countries.
áp Benefits -
‘p CIO Ȃ We have saved $500 million dollars from 500 Six Sigma Projects

LG Electronics Ȃ England

áp Six Sigma deployments created

‘p Order Lead Time Reduction from 55 to 41 days
‘p Improving Forecast accuracy
‘p Inbound lead time reduction from 8 days to 6 days
áp Savings from
‘p Interest Charges
‘p Stock amount
‘p Freight Charges
áp Benefits Ȃ
‘p Increased Brand Image
‘p Enhanced Customer Satisfaction
‘p Savings USD 850K(9)

We have focused on variety of Indian companies that have implemented Six-Sigma. The
industry wise success stories show that six-Sigma is effective across a variety of industries.
This is because it covers all the factors and elements that could be covered for business
process improvement in an organization and is based on strong statistical foundations.p

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1)p http://books.google.com/books?id=O6276jidG3IC&printsec=frontcover#v=onepag
e&q=motorola&f=true

2)p http://en.wikipedia.org/wiki/Six_sigma

3)p http://www.businessweek.com/print/magazine/content/06_49/b4012069.htm?ch
an=gl

4)p http://scm.ncsu.edu/public/facts/facs030624.html

5)p http://www.isixsigma.com/index.php?option=com_k2&view=item&id=1505:the-
history-of-six-sigma&Itemid=156

6)p http://www.businessballs.com/sixsigma.htm

7)p http://www.businessweek.com/magazine/content/07_24/b4038406.htm

8)p http://www.bmgi.com/Upload/CaseStudies/21.pdf

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