<< MORE >>

Lean Six Sigma for Services

Service operations now comprise more than 80% of the GDP in the United States and are rapidly growing around the world. Even within manufacturing companies, it’s common to have only 20% of product prices driven by direct manufacturing labor—the other 80% comes from costs that are designed into the product or costs associated with support and design functions (finance, human resources, product development, purchasing, engineering, etc.).

Moreover, in service applications, the costs related to work that adds no value in your customers’ eyes (“non-value-add”) is higher than in manufacturing, in both percentage and absolute dollars. The revenue growth potential of improving the speed and quality of service often overshadows the cost reduction opportunities. For example, as you’ll see in the case studies later in this book, work that adds no value in your customers’ eyes typically comprises 50% of total service costs. This represents enormous “white collar” potential for achieving significant speed, quality, and cost improvements, all of which can give organizations a major strategic advantage over their competition.

Here are some typical organizations that needed Lean Six Sigma in their services and business processes: Like many of its counterparts in the banking industry, Bank One had been reincarnated several times throughout the 1990s. Mergers and acquisitions meant that heroic efforts were needed every day just to get the basic business work accomplished. In an industry as competitive as finance, this condition couldn’t last long—and they had a long way to go to get the process under control, let alone achieve any kind of competitive advantage.

In 1999, Lockheed Martin (LM) set a goal of eliminating $3.7 billion in costs. At the time, LM was a relatively young organization, having been formed by a series of mergers and consolidations in the aerospace industry in 1995. Its workforce was a conglomeration of almost 20 separate companies, cultures, and processes, with a core manufacturing operation surrounded by a much larger “service” component (procurement, administration, design/engineering, etc.). 

How could they bring everyone together to achieve such a challenging goal?

At Stanford Hospital and Clinics (SHC), the future was clear: Patient volume was dropping because SHC kept losing contracts due to high costs. Physicians and management alike recognized that if they didn’t do something soon, they would continue to lose current patients and be unable to attract new ones. It’s one thing to want to provide high-quality patient care, but the pragmatists operated under this slogan: “No margin, no mission"

When Graham Richard, an entrepreneur and businessman, was elected as Mayor of Fort Wayne, Indiana, he had a simple vision: “I want Fort Wayne to be a safe city. I want it to have quality jobs.

I want it to have excellent service and attract new businesses.” He knew the city couldn’t keep doing “bureaucracy as usual” if it was to implement this vision. But was there an alternative that would work in government?

Though these organizations come from a range of sectors, they represent significant service opportunities for applying Lean Six Sigma. Their goals and objectives may be different, their needs range from providing medical care to patients to providing logistical support for manufacturing, but they are all in the vanguard of a new movement. They realized the most effective way to achieve their objectives was by integrating Lean and Six Sigma principles and methods to improve service operations.

Bank One’s use of these principles and methods started with an initiative in their National Enterprise Operations called Focus 2.0. Launched in February 2002, it began with a series of carefully selected, strategically important projects. As a result of their efforts, the NEO group has the opportunity to generate millions of dollars in revenue per year due to improvements in one operation and saved

thousands of dollars in cost avoidance and waste reduction in others. Lockheed Martin developed a clear goal: “We want Lean processes with 6s capability.” They can cite a long list of service processes from procurement to design that now take a fraction of the time and cost they took before. In fact, over 1000 projects have been completed in the past few years in service areas alone. Their debt is down, revenues are healthy, they are going to exceed their cost-reduction target, and there are a record number of orders backlogged. They were able to offer their newest missile (with all the customer-required capabilities) at half the cost and one-third the cycle time of its predecessors due to significant and widespread use of Lean

Six Sigma, not by using cheaper materials or cutting corners! They won the Joint Strike Fighter contract, which has an estimated value of over $100 billion. “There are a lot of reasons that contribute to these kinds of results,” says Mike Joyce, a vice president at Lockheed Martin, “but a fundamental contributor is LM21 (Lockheed Martin 21st Century), our organizational effectiveness initiative that’s based on Lean Six Sigma.”

• In just four years, Stanford Hospital and Clinics’ application of Six Sigma concepts (data, customers, quality) and Lean thinking (process flow, the preventable costs of unnecessary complexity) put them in a position to deliver higher quality patient care with lower costs—and regain market share from local competitors. Here’s an example of their results: mortality from coronary artery bypass graft surgery dropped by 48% at the same time costs in the cardiac unit dropped by 40%.

Overall, material costs throughout the hospital are now running $25 million below previous levels per year.

• Fort Wayne Mayor Graham Richard has authorized the launch of numerous projects citywide that draw on Lean and Six Sigma principles and methods. Many city departments have seen improvements in some aspect of its citizen services (clearer communication, faster response times to queries or complaints), a significant drop in costs, or better use of city resources. A change in construction permits, for example, has dropped the response time from almost two months to less than two weeks, and removed the kind of hassles that dissuaded many companies from wanting to do business with the city. (See Case Study # 3 in Chp 12 for details.) Improvements in garbage collection have reduced costs nearly $200,000 a year for the subcontractor while providing better services.

Each of these organizations recognized several fundamental truths:

(1) getting fast can actually improve quality, (2) improving quality can

actually make you faster, and (3) reducing complexity improves speed and quality. However, this cycle doesn’t happen unless you apply both Lean and Six Sigma.

Top 10 Ways You Know You Need Lean Six Sigma

10. Customers still complain about your products and services.

9. Employees complain about the roadblocks to serving customers.

8. Blaming customers.

7. Blaming employees.

6. Customers return products for refunds.

5. Warranty costs climb.

4. Customers switch to your competitors.

3. Sales flat-line or fall.

2. Margins thin.

1. Growth stagnates or shrinks.

Find Your Fix-it Factory

Every company, service or manufacturing, has two “factories:”

1. A “Good” factory that creates and delivers your product or service. In a printing company, this might be the pressroom. In a hospital, this would be the emergency room, surgical rooms, and nursing units. In an automotive manufacturer, this would be the assembly line.

2. A hidden “Fix-it” factory that cleans up all the mistakes and delays that occur in the main factory. If your company is a typical company (and virtually all non-Lean Six Sigma companies are), then the Fix-it factory is costing you $25 to $40 of every $100 you spend.

Your Expenses Potential Savings

$1 million $250,000–$400,000

$10 million $2.5–$4 million

$100 million $25–$40 million

$1 billion $250–$400 million

Double Your Profits

If you’re like most businesses, reducing defects, delays, and costs by 20% would

more than double your profits.

Calculate Your Benefits

Your Business Reduce Costs Example

1. Gross Revenue $__________ $10 million

2. Annual Expenses $__________ $9 million

3. Current Net Profit (#1 – #2) $__________ $1 million

4. Reduce Costs by 10% $__________ $900,000

5. New Net Profit (#3 + #4) $__________ $1,900,000

Just think what saving a fraction of that waste could do for your productivity and

profitability!

The urgencies of any business can consume all of your time. Fortunately, given

the right gauges on your operation’s dashboard, it’s easy to diagnose where to focus your improvement efforts even while you are still working in your business.

When I worked in a phone company, managers used to say that process improvement is “just common sense,” but what I’ve learned is that common sense will only get you to a 1 to 3% error rate. Hospitals get to a 1% error rate on things like infection rates and medication errors, but that’s where they reach the edges of human perception, the end of common sense.

Doctors routinely use diagnostic tools like EKGs, x-rays, and MRIs to detect possible problems in the body. Shouldn’t you use a more advanced set of tools to diagnose problems in the corporate body?

When you reach the end of what you can do with one problem-solving technology

(e.g., common sense), you need to look to the next level: systematic problem solving and the tools of Lean Six Sigma.

You know there are still unsolved problems in your business, but it’s not your fault.

In The Structure of Scientific Revolutions, Thomas Kuhn found that humans are

natural problem solvers. He discovered a pattern to our ongoing ability to solve

problems: an S-shaped curve. When confronted with a new type of problem, new

methods are tried and the most successful one is rapidly adopted. But over time, the method’s ability to solve that class of problems levels off.

At this point, almost everyone is fully vested in the old paradigm and a fringe

group is exploring ways to “jump the curve” to the next paradigm of solution. The

success of the old method often blinds people to the value of a new method (e.g.,

digital vs. mainspring watch, cell phone vs. wired phone). I find the same thing

holds true when working with managers and business owners. The instinctive methods of solving problems level off at about 1% to 3% error. You aren’t going to want to abandon the strategies that have taken you this far and made you successful, but that’s where the next level of performance can be achieved.

If you want to move to higher levels of quality and profitability, you will want to

jump the curve by learning to apply the enhanced methods and tools of Lean Six

Sigma.

Lean Six Sigma is a Journey

Lean Six Sigma is a journey, not a destination. The good news is that you can start

today; the bad news is that you’re never finished. There will always be better, faster, and cheaper ways to perform any process. There will always be customers demanding

that next level of perfection.The good news is that if you’re the first one in your industry to embrace Lean Six Sigma, you get a decided first mover advantage. The bad news is that if you’re a slow follower like the American automotive industry, you’ll always be playing catch up. Japanese cars still have fewer defects per car than American cars.

Customers expect ever-higher levels of quality. If you can’t deliver, they’ll find

someone who can. The typical lifespan of any business is 30 years. Will your

company still be around on its 30th or even 100th birthday? Or will it suffer from

rigidity of the way we’ve always done things here? It’s up to you. Lean Six Sigma

can help, but you’ve got to be willing to look at what’s not working and focus on

your weaknesses, not your strengths. It’s sometimes painful, but always rewarding.

It’s the breakfast of champions.

DFSS (Design for Six Sigma)

The DFSS process drastically changes the way organizations design their products, services, and processes. DFSS allows early prediction of overall design quality, including potential problems that may occur later. Subir Chowdhury (2000) claims that DFSS is the proper methodology because that is what DFSS is designed to attack — new products, services, or processes. Six Sigma’s DMAIC, on the other hand, focuses on improvement . . . of existing products and services.

This also reinforces my earlier point that Six Sigma does not have to be a prerequisite for DFSS .

The DFSS process also places an emphasis on total quality and customer satisfaction in the early design phases, to effectively and greatly reduce the need for product changes and process improvements. Snee, Heorl, and Hall (2003) stated that

many organizations have now adopted the General Electric-developed DMADV roadmap of Define, Measure, Analyze, Design, and Verify.

By including Six Sigma certification tools early into the design process, the probability of product or process failure is sharply reduced. It promotes creativity and innovation with a definite outcome of products and services of superior design.

A brief description of the DMADV roadmap stages will help to illustrate some examples of the tools used:

Define: Perhaps benchmarking will give some direction to what needs to be done. Also, Voice of the Customer tools such as House of Quality (Quality Function Deployment), Customer-First-Questions, Customer Needs Table. Others are Gap Analysis, Problem Specification, Process Mapping, Problem Analysis, Value Analysis, and the Five Whys.

Measure: Important tools are Data Collection Strategy, System Analysis (SIPOC), Measurement Matrix, Objectives Matrix (OMAX), Failure Mode and Effect Analysis (FMEA), Process Capability Ratios, Cost of Quality,

Checksheet, Descriptive Statistics, Importance Weighting, Basili Data Collection Method, and Balance Sheet.

Analyze: Typically applied tools are Variance Analysis, Process Capability Ratios, Pareto Chart, Trend Line, Correlation/Regression, Process Analysis,

Hypothesis Testing, most problem-solving tools such as the Five Whys, Problem Selection, Process Flowchart, Cause and Effect Diagram, and Work Flow Analysis.

Design: Tools that bring much to this stage are Design of Experiment (DOE) tools such as Analysis of Variance (ANOVA), Factor Analysis, Hypothesis Testing. Customer-First-Questions (Kano), Creativity

Assessment, Forced Association, Semantic Idea Borrowing,

Phillips 66, Opportunity Analysis, Morphological Analysis, Checkerboard Method, Circumrelation.

Verify: Failure Mode and Effect Analysis (FMEA) results may provide a final check; Countermeasures Matrix, Yield Chart, Value Analysis, Point Scoring Evaluation, Customer Satisfaction Analysis, Measurement

Matrix, Cost-Benefit Analysis.

PFSS (Process for Six Sigma) Many would remember Shewhart’s Plan-Do-Check-Act (PDCA) cycle as part of the

toolbox for TQM. A more refined process is used within Six Sigma’s DMAIC roadmap, which consists of the Define, Measure, Analyze, Improve, and Control stages. Simply put, Six Sigma teams use this roadmap to complete every quality or process improvement project. The team:

• Defines the customer’s “wants” and/or satisfaction measures;

• Measures how existing processes perform;

• Analyzes data that points to root causes of problems;

• Improves processes by reducing variability and cycle time;

• Controls improved processes by anchoring them in place with new metrics or controls.

It is of important to note here that several tools will perform similarly; it may be necessary for the reader to consider several and then select one that fits best in the situation at hand. A brief description of the DMAIC roadmap stages will help to illustrate a few examples of tools used:

Define: Problem Specification, Process Mapping, Potential Problem Analysis, System Analysis (SIPOC), Voice of the Customer tools such as House of Quality (QFD), Customer-First-Questions, Customer Needs Table, the Five Whys, Information Needs Analysis, Objectives Matrix (OMAX), Problem Analysis, and Value Analysis.

Measure: Data Collection Strategy, Process Capability Ratios, Failure Mode and Effect Analysis (FMEA), Benchmarking, Cycle Time Flowchart, Basili Data Collection Method, Checksheet, Cost of Quality, Descriptive Statistics, Measurement Matrix, SWOT Analysis, Competency Gap Assessment, and Customer Satisfaction Analysis.

Analyze: Pareto Chart, Correlation/Regression, Variance Analysis, Activity Analysis, Hypothesis Testing, Conjoint Analysis, Cycle Time Flowchart, Force Field Analysis, Matrix Data Analysis, Multivariate Chart, Opportunity Analysis, Potential Problem Analysis, Stimulus Analysis, Importance Weighting, and Cause-and-Effect Diagram. Improve: Factor Analysis, Checkerboard Method, Comparison Matrix, Criteria

Filtering, Problem Selection Matrix, Problem Analysis, Process.

Flowchart, Process Selection Matrix, SCAMPER, Solution Matrix, Value Analysis, What-If Analysis, Work Flow Analysis, Attribute Listing, Defect Map, and Why/How Charting.

Control: Control Charts, Cost-Benefit Analysis, Objectives Matrix (OMAX), Process Capability Ratios, Trend and Run Charts, Yield Chart, Stratum Chart, Quality Chart, Point-Scoring Evaluation, Monthly Assessment Schedule, Major Program Status, Basili Data Collection, Checklist, Checksheet, and Balance Sheet.

Six sigma training

Brainmeasures has launched a new initiative to help you learn six sigma, its tools and techniques.  Now you can ask Brainmeasures resident Master Black Belt all your questions on six sigma and he will answer them within 5 hours.  Just submit your question along with your name and e-mail address in space provided below and your six sigma question will be answered in 5 hours.

Highlights

Only site to offer such kind of innovative service Absolutely free !! You do not have to enroll in any of our course and certification programs to avail this service. Short response time, your questions will be answered in 5 hours You can ask any question on Six Sigma Certification Six Sigma Case Studies Six Sigma Master Implementer Six Sigma Master Black belt Six Sigma Black Belt Six Sigma Green Belt Six sigma Training Six Sigma Projects/Any thing on Six Sigma

ASK ANY SIX SIGMA QUESTION GET ANSWER FOR FREE !

This section discusses some very important concepts, illustrates the power of these

tools in the decision-making process, and explains some basic calculations relevant to

Six Sigma design (DFSS) or process work (PFSS).

 1. Change management

Frequently, executive management will only “react” when the dissatisfaction (customer

complaints, amount of rework, increased costs, etc.) exceeds the costs (funding,

resources) to fix the problem. This can be expressed as follows:

C = f(D+P+E) > $

Where:

C = change — could be DFSS or PFSS

f = a function of

D = dissatisfaction — with the present state (problem)

P = process — that may be DMADV or DMAIC

E = expertise — trained Green Belts/Black Belts working with Six Sigma teams

> = greater than

$ = bottom-line costs to eliminate or reduce the problematic condition

2. A change in factorial experiments

The DFSS process includes many diverse tools, among them Design of Experiment

(DOE) which attempts to identify, by checking the main effects and interactions, the

optimum combination of factors (x) to meet a product design requirement (Y). D. H.

Stamatis (2002) provides some advice:

The DMAIC model focuses on fixing problems, whereas DFSS [DMADV]

focuses on prevention and robustness. Robustness is indeed the design’s

focal point if we are serious about improvement. The traditional model of

Y = f(x) is no longer appropriate. We must focus on the Y = f(x, n).

Therefore, the requirements at this stage are to optimize product and manufacturing/

assembly process functions by testing in the presence of anticipated

sources of variation .

 3. Defects/rework determine first-pass yield

 The diagram below illustrates how defects during assembly can affect the total output

or yield.

INPUT                STAGE 1       STAGE 2       STAGE 3      OUTPUT

Subassemblies     ————         ————     ————     Result: 903 fully

and parts for       ➔ 95%           ➔ 96%        ➔ 99% ➔         assembled units

1,000 units          ————     ————           ————      to the customer

                            50 defects      38 defects          9 defects

                            950 units       912 units            903 units

                            Yield = 1 — (97 defectives/1000 units) x 100 = 90.3%

                             Check: (.99 x .96 x .99) x 100 = 90.3%

 

4. SIPOC, a widely used tool in Six Sigma work

SIPOC is an acronym for Supplier-Input-Process-Output-Customer. It illustrates the

process flow from supplier to customer.

Another SIPOC application example is shown below of an organization that is striving for Six Sigma quality. It assumes 1,000 video

cassette recorders in production.

 SUPPLIER        INPUT           PROCESS          OUTPUT           CUSTOMER

—————     ———            ————             ————          ——————

.985 ➔ .             997 ➔ .             994 ➔ .                995 ➔                .998

—————       ———                  ————          ————     ——————

Defective        Kitting,                 Assembly           Tested out             Escaped

  parts              document                defects             defects                   defects

received             errors                    (rework)            (QC)                     (returns)

(15)                       (3)                       (6)                     (5)                           (2)

 

Therefore, product/process quality= (.985 x .997 x .994 x 995 x .998) x 100 = 96.9%

Also, cost of poor quality = defects per unit (DPU) x volume x mean cost/defect

Given that most organizations still work and produce at the 3-4 Sigma level of

quality, this example does show that even small improvements at every stage will

give a significant payback in total quality!

 5. The concept of “defect budgeting”

This process is an objective approach to assign defect or error elimination activities to

the organizational department identified as the source of the defects. For example, a

Pareto chart indicates:

65% of the defects are caused during assembly

15% of defects are due to faulty material from the supplier

12% of defects are caused during painting

8% of defects are traced to packaging and shipping

These results give first priority to assembly, and their given objective would point

to a requirement of 65% reduction in defects in the overall assembly process. Next,

the supplier would receive a reduction of faulty materials notice in order to close a

15% quality gap and so on, right across to all departments that have been identified

as defects contributors.

 6. A brainstorming tool that truly returns breakthrough ideas

Many times teams are disappointed with their own brainstorming results. They just

do not come up with any fresh ideas that could make the difference!

This tool not only asks for the normal brainstorming input of ideas, it also

asks the team for a second round of ideas to make this problem worse, as people

always seem to be better at thinking of ways to destroy or make things worse. These

ideas, once listed, are then negated and added to the original list of brainstormed

ideas. It is truly amazing what ideas are produced, ideas that rarely would have been

mentioned during normal, straightforward brainstorming.

 7. Pugh-type decision-making methodology tools

Six Sigma books and articles frequently describe a scoring matrix called a Pugh

Matrix used for comparing alternatives. It is popular because it is easy and fast to

construct and allows many variations for scoring. The basic Pugh Matrix requires six

basic steps, completed on a flipchart:

Step 1: Team brainstorms the criteria to be used for comparison.

Step 2: Team facilitator determines scoring — this could be a simple three-level

score (+, 0, –), or a five level score (+2, +1, 0, -1, -2), or even finer.

Step 3: Team facilitator lists the alternatives to be compared.

Step 4: Team compares and assigns scores of +, 0, or – to alternatives.

Step 5: Team facilitator totals scores.

Step 6: Facilitator then ranks the top three choices (alternatives).

 8. Calculate and validate team results of quantitative

and qualitative improvements

 In team-based organizations, questions always come up regarding how one reports

(converts) qualitative improvements into a dollar figure. Another concern is present

whenever two or more teams are working in the same process area and report their

results independently and at different times: how is the overall effect measured? It

could indeed become very difficult to assess overall improvement cost savings. For

example, suppose there are two teams working to reduce process cycle time, materials

cost, or defects, and they have achieved the following improvements:

Presently, a work cell assembles 10 switches for $1,000 — this is the baseline

measurement. $100 per switch before changes.-------------------

Team A has found a way to 10 switches for $900 — a quantitative result

reduce material costs by 10%

—————————————————————————————————————

Team B has conducted 12 switches for $1,000 — a qualitative result

retraining and was able

to reduce rework by 20%

Both teams report their success to the department manager. Team A reports a

10% cost savings, and Team B reports, two weeks later, a 20% cost savings. Is the

manager correct in reporting an overall 30% reduction in costs? No! The bottom line

will only show an overall 25% saved, since $900 divided by 12 Units equals $75

per switch instead of the $100 before changes.

The work cell now assembles 12 switches for $900 — Teams A and B

combined results $75 per switch after changes

The point is that whenever many teams work on several processes or known

problem areas, careful accounting practices need to be in place to measure, with

validity, a team’s performance.

 9. A powerful tool to measure progress of

all Six Sigma implementation activities

 Six Sigma Champions with overall reporting responsibility could use

Objectives Matrix (OMAX), to verify the status of all Six Sigma implementation activities,

or they could use it as an ongoing, monthly Six Sigma project progress reporting

tool. This tool tracks work by percent completed on all stated objectives, shows what

activities may fall behind schedule, and provides a composite index value that represents

the combined progress of all activities.

Company training is not often regarded as important when resources are required

elsewhere to meet higher priorities. This changes with Six Sigma. Very structured and

detailed training is necessary to provide the skills and knowledge that are needed to

successfully implement the work ethic of Six Sigma. Without a focused and fully

committed training effort, Six Sigma may fail in its early stages of development. So,

who needs to be trained? According to Greg Bruce (2002), the “key players” in the

total Six Sigma effort are:

• An executive leader — who is committed to Six Sigma and who promotes it.

• Champions — who remove barriers.

• Master Black Belts — who work as trainers, mentors, and guides.

• Black Belts — who work and manage the Six Sigma projects full-time.

• Green Belts — who assist Black Belts on a part-time basis .

An in-depth training program begins with a 2-3 day Six Sigma orientation session

for executive management, and is typically followed with 5-8 days of Project

Champion training. This consists of an overview of DFSS (DMADV) and PFSS

(DMAIC), change management, Master Black Belt and Black Belt assistance, project

management, resource allocation, process integration, and team dynamics.

Green Belts receive 10-15 days of training, mostly in the application of basic

tools and techniques in the DMAIC stages. They receive a certificate for the successful

completion of the formal training and assigned project tasks. They also assist

Black Belts in the completion of Six Sigma projects. Black Belts’ training often

consists of 20-25 days that include all major components of Six Sigma work, an

expanded mix of tools, inferential statistics, and the completion of two small Six

Sigma projects within the learning cycle. The Black Belt will also receive a certificate

of completion. The Master Black Belt usually receives 2-3 weeks of additional

training in financial results reporting, team conflict resolution, mentoring, and trainthe-

trainer information to train Black Belts and Green Belts. They also act as internal

consultants for people assigned to Six Sigma projects.

The length of training programs varies from one practicing organization to another.

This is also true for certification requirements. The tools and techniques presented in

training programs for Green Belts, Black Belts, and Master Black Belts overlap greatly

since they provide a common communication platform for Six Sigma teams.

The following is a selection of recurring training modules found in researched

training programs that offer Green Belt and Black Belt certification:

• DFSS (DMADV) and PFSS (DMAIC) roadmaps.

• Sampling methods, instrument development.

• Data collection, and “Best Practices” benchmarking.

• Descriptive statistics (histograms, pie charts, scatter diagrams, etc.).

• Inferential statistics [hypothesis testing for t-distribution (student’s “t”),

analysis of variance (ANOVA), chi-square (“×2”), correlation (“r”), etc.].

• Six Sigma process capability calculations.

• Variability-reduction techniques.

• Voice of the customer tools, quality function deployment.

• Design of experiment (DOE).

• Measurement systems analysis.

• Problem definition and selection.

• Problem-solving tools and techniques.

• Process analysis, cycle time reduction.

• Statistical process control (SPC) tools.

• Measurement and assessment tools.

• Project management and monitoring.

• Team dynamics and conflict resolution.

• Team building and facilitation skills.

• Team research and document preparation.

• Team project reporting and presentation.

A strong case is made for the inclusion of team-building/team dynamics training

by George Eckes in Six Sigma Team Dynamics (2003). He points out that “many

groups of individuals who call themselves a team end up failing miserably using

either the DMAIC or the DMADV methodology — often, the reason behind their failure

is poor team dynamics.”

The implementation of Six Sigma across the organization requires careful planning,

resource allocation, and funding for full-time employees trained and assigned

to Six Sigma projects. Other costs will be incurred for consultants and trainers to train

the initial core of selected Six Sigma people, and also to establish an administrative

support and reward system. Forest Breyfogle (1999) believes that:

Six Sigma can be the best thing that ever happened to a company.

Alternatively, a company can find Six Sigma to be a dismal failure. It all

depends on implementation. Organizations need to follow a road map that

leads an organization away from a Six Sigma strategy built around “playing

games with the numbers” to a strategy that yields long lasting process

improvements with significant bottom-line results

There are many opinions about how to successfully implement Six Sigma.

General Electric relies on the strategy of implementation teams under the leadership

of company executives, proven and accepted training programs, and a changing corporate

culture that links a reward system to performance measurement. Some other

considerations are:

• Creating a steering committee to develop an implementation plan.

• Developing measurable goals (ideally based on gap analyses such as benchmarking).

• Developing metrics to monitor Six Sigma project outcomes.

• Training top management levels, establishing a guidance committee.

• Communicating the Six Sigma quality strategy to all employees.

• Training Project Champions, Green Belts, and Black Belts.

• Defining customer requirements and processes.

• Performing benchmarking, identifying best suppliers.

• Identifying and selecting high-profile Six Sigma projects.

• Establishing Six Sigma teams to work on DFSS and PFSS projects.

In addition, Smith and Lee (2002) give good advice:

to deploy strategic Six Sigma initiatives rapidly and with sufficient speed

and scale to enforce optimal success that CEOs [among others] — ensure

that the company is both passionate and consistent about how it stays in

touch with customers [and] — recognize that success with strategic Six

Sigma means making a full-time commitment and applying the manpower

to ensure that Six Sigma projects succeed

Six Sigma requires a superior, criteria-based selection of projects that have a high

probability of success. Please refer to tool # 154, Project Prioritization Matrix. The criteria

for selection may be to increase customer satisfaction, at least 50% defect reduction,

a process cycle time reduction of 50% or more, or an identifiable cost savings

of $100,000 to $250,000 per project. Generally speaking, the number of Black Belts

in some organizations represents roughly one percent of the workforce. The requirements

for full-time Six Sigma employees will vary for the size and type of organization.

At the start-up, one may consider a Project Champion, a Master Black Belt

working with perhaps 15 Black Belts that lead 15 teams, and approximately 150

Green Belts to assist the Black Belts, a ratio of 1:15.

Black Belts working with teams are expected to complete 5-8 projects per year.

For every 10-15 Black Belts, a Master Black Belt is devoted full time for support and

training activities. Green Belts assist in research, form and facilitate teams, and under

the leadership of Black Belts complete their own projects. Project Champions provide

the resources and funding for the teams. They also remove any roadblocks that teams

may encounter. In support of Six Sigma teams, Thomas Pyzdek, the author of The Six

Sigma Handbook (2001), cautions against four ineffective management support

strategies:

• Command people to act as you wish,

• Change the rules by decree,

• Authorize circumventing of the rules,

• Redirect resources to the project.

Hopefully, organizations have gained the experience to avoid these dysfunctional

activities in past TQM efforts.

The establishment of a Six Sigma work ethic within your company will indeed

become a strong driving force. It will significantly increase customer satisfaction and

act as an enabler for an organization to reach world-class status among competitors.

Furthermore, it will also:

• Promote a common language and understanding of teamwork in the quality

arena within the organization.

• Tie directly into existing TQM, ISO-9000, or lean manufacturing activities.

• Assist in cost and cycle time reduction, defect rework, and waste elimination.

• Attack variation at the supplier, process, product, and service levels.

• Support the Malcolm Baldrige National Quality Award criteria.

An essential organizational benefit realized from the establishment and ongoing

implementation challenges of Six Sigma quality is the strategic alignment and muchimproved

level of communications and teamwork among organizational units and the

customer. Other more direct results are:

• Expanded market share;

• Higher returns on resource expenditures;

• Greatly enhanced engineering and manufacturing capability;

• On-time delivery through cycle time reductions;

• Cost reductions and improved financial results.

An important requirement is that all financial performance indicators must be validated

by the organization’s accounting unit. Six Sigma performance and consequent

results are typically related to cost savings, time-to-market, customer satisfaction, and

employee job satisfaction.

Neuscheier-Fritsch and Norris (2001, May) have the following comment:

In conducting postmortems for clients, we have learned that one of the

root causes for teams being perceived as less than successful is that the

CFO [Chief Financial Officer]and his or her staff were not engaged in

blessing the project’s results. Without the organization’s financial blessing,

the improvements were discounted by the senior executives. “These

improvements will not play on Wall Street” and “What do operating personnel

know about translating results to the bottom line?” are a few comments

senior executive made during debriefing

Large corporations have reported some outstanding Six Sigma successes.

Motorola, the originator of Six Sigma, reported $11 billion in savings over the last

decade. The interesting story behind this success is that the company’s drive to win

the Malcolm Baldrige National Quality Award was actually responsible for developing

the Six Sigma approach to quality. Motorola went on to win the award in 1988. Jack

Welch, the former CEO [Chief Executive Officer] of General Electric (GE), claims that

the Six Sigma initiative introduced and supported by his management team has

resulted in more than $2 billion in cost savings. Allied Signal reduced their operations

cost more than $2 billion. Allied Signal’s management team (headed by

Lawrence Bossidy) introduced Six Sigma to General Electric’s CEO Jack Welch, who

then immediately started his own push for Six Sigma at GE.

Regardless of organizational structure or function, deploying Six Sigma in an organization

will improve:

• New business development (timely proposals);

• Supplier base (quality materials);

• Engineering (fewer design changes, document errors);

• Software programs/systems (reliability and compatibility);

• Manufacturing (reduced rework, scrap costs);

• All processes (less cycle time);

• Finance (open accounts and collections);

• Customer service (complaint handling);

• Human resources (staffing and turnover);

• Employees (improved job satisfaction and morale).

Six Sigma requires a great deal more attention to roles and responsibilities

throughout the organization, including upper levels of management, Six Sigma champions,

change agents, and a trained team of Master Black Belts, Black Belts, and

Green Belts. In addition, Harry and Schroeder (2000) point out that Six Sigma stands

for “a disciplined method of using extremely rigorous data-gathering and statistical

analysis to pinpoint sources of errors and ways to eliminate them.”

However, some concerns and precautionary measures must be taken to ensure

that Six Sigma produces the success that corporate managers expect. Six Sigma is not

a short-term program, but an ongoing and challenging approach to perfect quality

based on a long-term performance plan. It must be interlocked with the organization’s

strategy and improvement goals at every level. It will require a significant

amount of time and funding. A decision-making process must be in place to determine

data collection and database administration costs, assess training needs from

the Introduction to the DFSS phase, and define the priority criteria for important

process selection. One important point to note: a small, incremental improvement

from Six Sigma may not justify the costs involved in bring about process changes!

George Eckes, in his book The Six Sigma Revolution (2001), compiled a listing of

Six Sigma concerns that included such issues as “failure to apply the concept of customer

internally, recognizing management involvement, not just commitment,

overemphasis on costs, and ignoring team dynamics as a root cause of project failures.”

Another major concern is overcoming Six Sigma resistance. Again, George

Eckes discusses “four major types of resistance to Six Sigma” in his book Making Six

Sigma last (2001). This is truly the first time that the author found a description of

the types of resistance that not only makes sense but also reflects the author’s experience

gained from consulting work within organizations. The four major types of

resistance are:

1. Technical resistance occurs when Six Sigma produces feelings of inadequacy

or perceptions of stupidity in the stakeholder.

2. Political resistance occurs where the stakeholder sees Six Sigma as a personal

loss. This loss could be real or perceived.

3. Organizational resistance occurs when the stakeholder experiences issues of

control, pride, and a sense of loss of ownership because of Six Sigma.

4. Individualized resistance occurs when the stakeholder experiences fear and

emotional paralysis because of high stress

The literature reflects other concerns often expressed by people who resist and

are still not convinced. It may be appropriate to mention these concerns here:

• Six Sigma implementation costs are too high for organizations that have

fewer than 500 employees;

• Six Sigma is not for organizations with a tight budget or those that have difficulty

providing the necessary resources;

• Six Sigma is not for managers who expect dramatic results within weeks or

who set short-term goals;

• Six Sigma is just another quality program to try out;

• The perception of “Sick Sigma” in the organization by people in the organization

(employees voice their resistance to implementing Six Sigma);

• Too much effort is required to convince the resisters of the value of Six Sigma;

• Six Sigma is attentive only to defects in manufacturing, a quantitative measurement,

and is difficult to apply to service, since service often calls for a

qualitative measurement;

• Six Sigma dismisses other proven quality tools;

• Six Sigma is simply a repackaging of old methods and tools;

• Six Sigma is primarily an evaluation toolkit, not a method to prevent poor

quality;

• Data collected from inside or outside the organization may not be reliable or

valid.

A review of the current literature on quality and process improvement frequently

reflects a relatively new topic — Six Sigma. Created and pioneered in the 1980s by

the Motorola organization, Six Sigma has, in recent years, spread to boardrooms,

training departments, and cross-functional teams in major corporations. Although

Motorola’s original objective for Six Sigma was to focus on the reduction of defects in

the manufacturing processes, it soon became clear that Six Sigma standards could

also be applied to service organizations where the emphasis was placed on the reduction

of errors made in administrative processes (document preparation), marketing

and sales, distribution, and the various database and record-keeping functions.

Six sigma is the the systemic approach, logic, and the use of bundled tools that can produce the

 measurable results organizations often failed to achieve under the umbrella of Total Quality Management

(TQM).

What is Six Sigma? The current texts describe Six Sigma in many different ways

— as an improved quality assurance program, an updated measurement/improvement

process, a new methodology, a philosophy, a strategy, or a quality initiative.

But on stand-alone basis  not one of these terms will fully describe the true power of Six Sigma. A better definition would be that of a new work ethic, a top-to-bottom approach of how the organization performs to meet customer

expectations. Two widely recognized gurus of Six Sigma, Mikel Harry and

Richard Schroeder, authored an informative book on Six Sigma, Six Sigma: The

Breakthrough Management Strategy Revolutionizing the World’s Corporations (2000),

in which they define Six Sigma. They see the strategy as “a business process that

allows companies to drastically improve their bottom line by designing and monitoring

everyday business activities in ways that minimize waste and resources while

increasing customer satisfaction.” In addition, Mikel Harry (2000, July) suggests three

“primary vehicles for delivering breakthrough” drawn as a Venn Diagram showing

three circles that overlap so that Six Sigma is centered and surrounded by MFSS

(Managing for Six Sigma), DFSS (Designing for Six Sigma), and PFSS (Processing for

Six Sigma).

According to Mikel Harry, Managing for Six Sigma (MFSS):

is the underlying foundation of leadership for a Six Sigma initiative regardless

of its nature. It is concerned with the creation, installation, initialization

and utilization of the deployment plans, reporting systems and implementation

processes that support PFSS and FDSS. The ultimate goal of

MFSS is simple: to attain best in class business performance by improving

the operational capability of an organization at an annualized rate of

approximately 78% (Six Sigma learning curve).

 Another definition for Six Sigma by Pande, Neuman, and

Cavanagh (2000) and considers this an all-encompassing statement:

[Six Sigma is] a comprehensive and flexible system for achieving, sustaining,

and maximizing business success. Six Sigma is uniquely driven

by close understanding of customer needs, disciplined use of facts, data,

and statistical analysis, and diligent attention to managing, improving, and

reinventing business processes.

This truly new work ethic requires a cultural change of continuous commitment

and training at all levels in the organization. This also means that resources

are made available in an ongoing effort to reduce variation in every aspect of the

business, e.g. product design, supplier-provided materials, internal processes, services,

and administrative support. As Snee and Hoerl (2003) pointed out, “The

essence of Six Sigma is about breakthrough business improvement, not incremental

improvements. Six Sigma projects are defined to produce major improvement

(30-60% or more) in process performance in less than 4-6 months with a significant

[financial] impact. Such changes greatly change how business is conducted

day-to-day.”

On an operational level, Six Sigma can be linked directly to the measurement

and statistical reporting of variation as measured under the Gaussian Curve.

The curve shows ±4 Sigma. Sigma (ó) is a Greek alphabet letter that

describes a measure of variability, or Standard Deviation (SD).

Motorola determined a long time ago that this measurement under the curve required a 1.5 Sigma process

mean (nominal) shift, which would result in a shifted distribution to account for a

long-term process drift, in either direction, under the curve and its stated specification

limits. Out-of-specification results, with a mean process shift, therefore

would indicate:

66,807 Defects for 3.0 Sigma (standard deviations)

6,210 Defects for 4.0 Sigma

233 Defects for 5.0 Sigma

and no more than 3.4 Defects for 6.0 Sigma [per million opportunities

(DPMO) or parts per million (PPM)]

If the figure of 3.4 defects is converted to a percentage of yield, it would then

show 99.99966%.

Percent yield indication with a 1.5 Sigma process shift is as follows:

At ±3 Sigma or 3 SD, a yield of 93.32% occurs.

At ±4 Sigma or 4 SD, a yield of 99.379% occurs

At ±5 Sigma or 5 SD, a yield of 99.9767% occurs

At ±6 Sigma or 6 SD, a yield of 99.99966% occurs

Six Sigma has come to represent a business culture with a strong focus on the

reduction of variation in the design and process stages to minimize defects or errors.

Since most organizations today are still operating at a 3 or 4 level Sigma, one can see

from the figures above how many defects could reach the customer.

What is the difference between Six Sigma and TQM? Under TQM, teams attacked

a specific problem or process to reduce defects or cycle time. The savings incurred

were often small or could not be validated. Six Sigma tools and procedures, in comparison,

are introduced early in the Design for Six Sigma (DFSS) phase and continue

to be applied to Define, Measure, Analyze, Improve, and Control (DMAIC) in the processing

phase. This difference results in much greater gains since virtually every

department is involved. TQM programs and team problem-solving projects were

linked to or managed by quality assurance professionals, whereas a Six Sigma work

ethic ideally makes every employee a process improver, eventually reducing the number

of “Quality Inspectors” throughout the organization.

Is Six Sigma a passing fad? A number of managers are very slow indeed in accepting

or following the “new Six Sigma hype.” They have seen many of the previous socalled

quality initiatives come and fade away. From quality circles to cross-functional

teams, from lean manufacturing to TQM, many of these organizational-change efforts

did not show significant returns for the training, time, and resources required.

Moreover, the tools themselves often prove to be recycled or outdated. Also, in

today’s world, the priority is still on productivity. Who has time to experiment with a

new system, even when initial results show it to be superior?

Presently, Six Sigma work is performed in many organizations, regardless of size,

products, or service offered. Corporate executives have read highly publicized reports

on savings of billions of dollars realized in organizations such as Motorola, General

Electric, Allied Signal, et al, companies that changed to a work ethic of Six Sigma. Now

they are analyzing case studies for information on training and implementation requirements.

One can gauge the interest in Six Sigma by the number of books, articles, and

consulting agencies devoted to the subject that have appeared in recent years. It is true

that most tools were used in many past efforts, but the clear difference now is how these

tools are bundled/sequenced and rigorously applied by management and teams alike.