Source: cio.com by Don Branthwaite
Six Sigma is a statistical term coined by Phillip Crosby used to describe the state of zero defects or as close as the experts estimate it is possible to come to perfection. Six Sigma certification translates to 3.4 defects per million or 99.9997% perfection.
Traditionally, companies have deemed quality in terms of being 99% accurate. However, 99% accuracy is insufficient in a global environment as this translates into the loss of 17,000 pieces of mail every hour by the United Postal Service and the accidental dropping of 30,000 newborn babies in hospitals every year in the United States. Many high technology companies are operating at Four Sigma which is 99.4% accuracy and translates to 6,000 defects per one million opportunities. To compete with the Japanese firms, Four Sigma is inadequate, thus Six Sigma was adopted in 1987 by Motorola Inc. through the efforts of CEO Robert Galvin. Six Sigma certification is deemed necessary to survive in the high technology industries. Six Sigma quality is not just product quality it also means getting everything right throughout the corporation. Everything from the invoices through internal and external communications, information systems, sales support and down to the level of janitorial services must adhere to the quality standards of Six Sigma.
Implementation of Six Sigma
Quality is something that must be practiced at all levels of the organization, from the CEO to the shop floor. Management has to be ready to accept that past quality performance is not sufficient and this belief must permeate throughout the organization. At Motorola, an all-pervasive, continuously improving quality campaign dependent on education and training ($100 million annually), and total management commitment was necessary to instill a new corporate culture with quality as the fundamental goal. This initial campaign included videotapes, blue and white Six Sigma certification posters hung throughout every building and a required course (Understanding Six Sigma) for every employee.
Management must learn to sustain the level of intensity at all times to ensure that quality towards Six Sigma is maintained. Once a quality drive is initiated, management must keep the momentum going by making everything appear new and exciting. By working with motivated and properly trained employees adhering to six steps, a common vision will exist.
Aside from the commitment of management and a maintained momentum, six fundamental steps have been outlined that must be achieved before Six Sigma can become a reality within any organization :
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Identify the product or service provided to the customer. The way the Information Services
department views an issue, such as the number of lines of code needed to create a new application is meaningless to an end user who is worried about how to fill out an invoice properly. The product is a user friendly invoicing system not a coded program and the IS department must make the system work efficiently though it may take more lines of programming code. |
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Identify the customers and what they consider important. This helps determine specific customer requirements and any failure to meet the requirements is a defect. It also determines essential elements that are paramount to each individual customer. If the critical factor for Motorola is accuracy, then the essential element for them would be for all part numbers to be correctly recorded. |
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Identify what you need to provide in your product or service so, that it satisfies the customer. Once the customers' needs have been defined, employees must determine the resources necessary in terms of funding, planning time, and expertise thus addressing needs to ensure complete satisfaction. |
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Define the process for doing the work. This analysis should be taken down to the task level. The people who will ultimately perform the jobs should have empowerment to define and improve the process to achieve quality objectives. |
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Mistake-proof the process and eliminate wasted effort. This trouble-shooting process takes several steps :
- Identify the potential errors that may occur at each step of the task and lower the probability that those errors will occur. These methods include simplifying tasks, design of experiments, training to eliminate specific errors and standardization procedures.
- Eliminate wasted effort. If a new product can incorporate a part of a design that already exists, then the original design should incorporate the existing part if it is appropriate. In manufacturing for example, a team of IS, engineering, manufacturing and design might find a way to take a 50-step process down to 25 steps, thus eliminating opportunities for errors.
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Ensure - continuous improvement by measuring and analyzing the improved process. This step
involves formulating and publicizing actual performance versus goals for defects and tying them into a bonus structure. At Motorola, senior managers of each plant meet eight times a year to review the progress made towards Six Sigma certification. |
The result is that improvement will occur because the elimination of defects occurs at the source of the defects within the design stage rather than adjusting machinery after the fact to improve the defect rate. To succeed at a Six Sigma certification level, the suppliers also must be encouraged to follow along the same quality lines. If suppliers cannot adopt Six Sigma quality then they should be eliminated from the shrinking supplier list. Motorola's communications sector bought from 5,000 suppliers in 1983, 1,600 in 1989 and they will eventually be down to 400 since there are few companies that will be able to meet the quality demands of Six Sigma certification.
Barriers to Six Sigma Implementation
Within manufacturing, Six Sigma certification is easy to quantify: either the defects are within the 3.4 per million range or they are not. For Six Sigma to work within non-manufacturing processes, several biases must be overcome. For Motorola, there was a belief that non-technical work could not be described or analyzed as a repeatable process. Workers also felt that the units of non-technical work being produced were not necessarily identical. Training was essential to overcome these biases. Within non-technical groups, teams were learning how to describe and analyze their work and identify opportunities for error. Within Motorola's publications division, overall quality increased from 4.5 to 5.6 sigma based on reducing typographical and translation errors in all publications. Although each publication was different, typographical errors common to all projects can be quantified and improved towards Six Sigma quality.
The costs of training and changing the corporate culture to adopt Six Sigma certification is a tremendous resource and financial undertaking. The annual costs of training for Motorola is over $100 million. Xerox is investing $1,300 for each of their 100,000 employees. These initial costs may seem prohibitive, however they translate into substantial cost savings and increased sales due to customer demands of high quality.
Impact of Six Sigma
The concept of Six Sigma was introduced in 1987 and by 1988 there were dramatic financial
improvements for Motorola. In 1988 versus 1987, sales were up 23% to $8.3 billion and profits were up 44.57 to $445 million. It is estimated that nearly $2 billion dollars have been saved by Motorola in reduced costs of defects and inspection since the launch of Six Sigma in 1987. These quality improvements have allowed Motorola to maintain its leadership role in paging systems at a time when they were being threatened by the Japanese. Motorola's pagers are also top sellers in Japan due to the quality of the product. Elco Industries Inc. of Rockford Illinois has seen vast improvements since the introduction of quality management towards Six Sigma certification. Manufacturing queue times have reduced 57% over a two-year period, nonconformance costs were slashed by 52% and shippable on-time percentages increased from 85% to 97%. Hewlett-Packard has saved an estimated $600 million in warranty repairs and five times that much in manufacturing costs since quality goals became paramount.
Strategic Implications
The Oxford English Dictionary defines the word quality as 'degree of excellence.' Within world class organizations, companies cannot survive without quality. Six Sigma is the epitome of quality and must be adopted by all manufacturing companies if they wish to remain in business. Companies competing with Japanese firms must adopt Six Sigma since the Japanese have already set this standard.
Consumers will no longer accept products with 'built in obsolescence' if there are quality products available from a competitor. Companies that have already adopted Six Sigma certification will insist that their suppliers adhere to the concept as well. Companies like Motorola cannot possibly achieve complete Six Sigma if it has to deal with suppliers that provide a product with less than Six Sigma quality. Six Sigma certification will soon be the cost of doing business in an environment of global competition. The companies that invest the resources in changing the corporate culture with training and complete commitment to Six Sigma will be poised to succeed in the emerging high technology markets.
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