Six Sigma Could It Be the Tool to Take You to the Next Lean Level?

Your boss walks in one day and announces that your organization will begin a Six Sigma initiative. Usually, you're pretty good about going with the flow and trying new and better ways to manage processes, eliminate waste and operate Lean.

But Six Sigma? You've heard the term, but you're not sure what it means. Is Six Sigma really different? Or is it just another flavor-of-the-month program that will disappear eventually? Does this mean Lean is going out the door?

For starters, Six Sigma is not a fad or a cult, fraternity or secret society. It is a flexible quality improvement strategy being used by manufacturers to identify and eliminate variation and reduce cycle time and costs.

It helps to think of Six Sigma as a statistical yardstick for measuring quality. It involves the use of statistical problem-solving tools to gather data, measure and analyze a company's operations.

According to Jeff Stotts, field engineer in MAMTC's Pittsburg office, "Six Sigma boils down to the ability to understand the fundamental aspects of variation and process improvement. It is growing in popularity due to its effectiveness from the use of statistics."

This organizational quality system was made famous by the now-retired chairman of GE Jack Welch who initiated it in the 1980s. He challenged employees to turn quality into a practical way to manage a business and turned GE's performance around. Years later, the pay-off continues to accelerate some Wall Street analysts have predicted $5 billion in gains from the effort.

Other leading companies have discovered the benefits of a well-executed Six Sigma initiative and have saved thousands of dollars, increased speed and strengthened customer relationships.

"Companies such as Motorola, Texas Instruments and Lockheed/Martin have used Six Sigma successfully since the 1980s for producing such items as missile systems, electronics and aircraft," Stotts said.

"Commercial companies also have utilized Six Sigma, such as Commonwealth Health Corporation (Bowling Green, KY). They improved billing procedures and reduced radiology expenses while realizing over $750,000 in savings."

Stotts has seen first-hand the successful application of Six Sigma. "In the mid-1990s, I was employed in the defense/aerospace industry. We monitored the process capability of thermal battery production by tracking critical performance characteristics. Through the use of Six Sigma, we were able to improve battery performance by reducing the variation within our powder mixing operation," Stotts said.

Variation the barometer of real performance

The term Six Sigma comes from the Greek alphabet and refers to a statistically derived performance target of operating with only 3.4 defects for every million "opportunities" or products.

To meet the increasing demand for high-quality products at lower costs with more responsiveness, manufacturers must build consistency into their processes. "Process variation is the source of many problems and Six Sigma promotes identification and elimination of variation," Stotts said.

However, reaching Six Sigma is a goal of near-perfection many companies aspire to, but few have claimed to achieve. It means your process or product will perform with almost zero defects and you will provide total customer satisfaction.

To understand the huge and tremendously valuable degree of improvement between one and six sigma, consider this: If you're talking about distance, one sigma is from here to the moon and six sigma is four steps. Or, if you're talking about misspelled words per page in a book, one sigma is 17 and six sigma is one misspelled word in all the books in a small library.

Typically, average products fall in the four sigma range. But products we do not tolerate defects in such as airline safety, surgical operations or drug prescriptions are at or above six sigma range.

While Six Sigma is a flexible strategy, it won't work on just any project and selecting the right one is important. "Six Sigma works best for business problems where you are held within a rigid process/product framework and the application of DMAIC can be applied," Stotts said.

In fact, many companies have adopted the DMAIC (Define, Measure, Analyze, Improve, Control) model or some variation for their Six Sigma projects. "DMAIC is the traditional approach we use with clients to solve problems and implement Six Sigma," Niedenthal said.

Combining Lean and Six Sigma for dramatic improvement

Manufacturers in the middle of a Lean implementation may wonder if and how Six Sigma fits into the continuous improvement process. It is a mistake for them to rule out Six Sigma because they think they must focus on one methodology, according to Stotts.

"Although Lean and Six Sigma both promote continuous improvement, they are separate tools. Six Sigma is process and/or project-focused and Lean is a customer-driven philosophy with a goal to produce what your company wants with the shortest lead time," he said.

"But Six Sigma complements Lean nicely. It is a disciplined process that focuses on decreasing Defects Per Million Opportunities (DPMO) which supports Lean's goal to reduce waste. Six Sigma's goal is to accomplish less than 3.4 defects per million opportunities or 99.99966 % of good product produced," Stotts said.

"Lean promotes re-thinking how the process is structured and Six Sigma promotes refining the existing process to reduce variation," Stotts said.

According to Mark Minter, regional director of MAMTC's Overland Park office, consistency is the name of the game. "Lean is an umbrella program to eliminate waste. Six Sigma, on the other hand, looks at variation in processes. If we get rid of waste and variation, we can get a more consistent process," he said.

Taking Six Sigma beyond the shop floor A common mistake among manufacturers is to think that Six Sigma is just a shop floor strategy. "Six Sigma promotes the use of statistical minded personnel within all aspects of the business not just production," Stotts said.

Mike Niedenthal, MAMTC's vice president of operations, believes the methodology can be applied to the front office, as well.

In fact, the payoffs may even be greater in administrative areas because often these processes have been relatively untouched when it comes to process mapping.

"For example, order entry has lots of variation. Customers who call in with the same order are one thing. But customers who haven't made up their mind are handled differently. A sales person signs off on the order and tells the customer 'we can change it later'. This makes it difficult to predict accurate lead times," Niedenthal said.

Six Sigma FAQs

Does my entire organization have to use Six Sigma?
No, Six Sigma may start in individual departments. But to reach Six Sigma levels of performance, the methodology must be applied organization-wide.

How much will it cost?
It depends. It could cost next to nothing if you simply stop doing something that doesn't pay off. Or it could require an investment of millions of dollars for larger projects. The important thing to remember is that when waste is eliminated, the savings directly impact the bottom line.

How long before we see results?
Many companies see obvious benefits within the first year of implementing Six Sigma. Realistically, it takes from 3-5 years for a medium to large-sized company to experience the full benefit of statistical thinking.

What's all the talk about "Green Belts" and "Champions?"
People within organizations with important Six Sigma responsibilities and roles are given specific titles. A "Sponsor" or "Champion" is the senior manager who oversees an improvement project. The "Coach" provides expert advice and assistance to teams. The "Team Leader" takes primary responsibility for the work and the results. The "Belts" Green, Black and Master are individuals possessing special expertise in statistics and technical product/process improvement.

Why does Six Sigma work in some companies and not others?
Six Sigma can fail when top management doesn't understand or buy into the idea or employees aren't committed to the process. Another thing that hampers success is the failure to empower teams to make the project work.