Six Sigma Methodology For Fine Tuning Productivity And Profitability

Nothing is more important to businesses than their profit margins. However, improving these margins requires fine tooling at every turn and consideration of every process, person, and decision that goes into a final product or service. Enter the Six Sigma methodology, specifically defined to improve business systems that results in nearly perfect, error free productivity.

Pioneered about 25 years ago by Motorola Corporation’s manufacturing division, which still uses it today, what Six Sigma methodology represents and how it can be applied to any business model is still of great interest. Thus the Six Sigma definition, as it relates to today’s business world, as well as how it has been refined to include a process called Lean Six Sigma, will be discussed here. Though initially developed for manufacturing, Six Sigma Methodology has been proven to work for all business models, large and small, from call centers to medical and insurance services.

The Six Sigma Definition

The definition of Six Sigma is most simply described as six standard deviations for improvement. Sigma is the Greek letter used to indicate standard deviation in the world of statistics. Thus, Six Sigma is a management methodology that uses six indicators along the road to perfection. When the highest level of perfection is reached, there should be no more than 3.4 defects per million opportunities for any transaction, product, or service. As it is derived from using standard deviations of measurement, it relies on statistical techniques to achieve a reduction in defects, along with quality control and measurement.

Moreover, its strategies rely on trained Black Belts and Green Belts, professionals who are specialists in the Six Sigma techniques. They use statistical methods of management to accomplish near-perfection in defect-free products and services for companies around the world, saving them well-documented dollars and increasing profitable gains. Indeed, GE was said to gain $2.4 billion dollars in 2001, while Motorola Corporation, DuPont Corporation, and even municipalities have had similar success through using Six Sigma methodology and techniques.

The Underlying Basics of Six Sigma Methodology

Following are the five basic phases of Six Sigma’s methodology, DMAIC, that if followed precisely, should result in improving any business process. The five principles involve constant review and refining or retuning of every process and are used for existing business products, processes.

1. D represents Defining opportunities; this phase entails first identifying problems existing in processes that must be solved for products to meet or exceed customer specifications or expectations.

2. M represents Measuring performance; this phase, as the name implies, has most to do with formulating a data gathering plan, executing the plan, and then verifying that the data is collected properly.

3. A stands for Analyzing opportunity; this phase involves Black Belt expertise in developing a plausible reason, or hypothesis, for the causes of defects that are occurring. Both statistical and non-statistical methods are used for the analysis and to prove or disprove the hypothesis. If correct it is added to a short list of causes; if not, it is refined.

4. I represents Improving performance; this phase is where the prior work of defining, measuring, and analyzing reaches culmination, and new ideas for improvement are formulated and implemented.

5. C is for Controlling performance; this last phase goes beyond improvement, while including control of the improved process. Adjusting input and output factors is important to monitoring the process, so that control is maintained for achieving near-perfect results.

Using Six Sigma for Brand New Businesses

As mentioned earlier, the Six Sigma methodology can be used to improve any existing business process. However, in many ways, it is easier to implement the Six Sigma methodology when getting a new business off the ground than by applying its rules to those in existence. The latter are often bogged down by many long standing and repetitive problems and unproductive ways of doing things, often resistant to change. The acronym, DFSS (Design For Six Sigma), is used in evoking the advantages of Six Sigma when applied to new businesses and products which have yet to become mired in bad habits.

For new products, the methodology implemented for following the Six Sigma strategy is known as DMADV:

1. D is representative of Definition of consistent goals, very important to getting new business products off the ground.
2. M represents Measurement of critical qualities.
3. A represents Analysis and evaluation of designs.
4. D stands for Details of design.
5. V represents Verification of designs.

What the Statistics of Six Sigma Means, Simply

While statistics can be highly complex and confusing, the principle behind Six Sigma’s standard deviations is that the methodology involves six levels. These levels provide two limits on either side of average for whatever is being measured, such as time.

A simple example would be that if one drove to work one billion times, using Six Sigma would allow one to be within those two limits all but two times. Six Sigma, then, projects the likelihood of having 2 defects out of a billion. This could be applied to orders for products, meaning only 2 mistakes in late shipments out of one billion on-time shipments, for instance.

How Lean Six Sigma Is Used Today

For today’s world, where speed is paramount, that seems to be the component that has been most applied to the basic Six Sigma methodology in formulating Lean Six Sigma. The latter, in a sense, combines the Six Sigma ideas and principles with lean manufacturing.

Lean manufacturing focuses on addressing the flow of processes and elimination of waste through improvement of related issues. Thus, the variation and design aspects of Six Sigma afford complementary disciplines for promoting excellence in business and operations, the heart of Lean Six Sigma. Such companies as IBM have used Lean Six Sigma for transforming not only efficiency, but also growth.

At IBM, the Lean Six Sigma model is used as a key ingredient underlying innovation throughout every aspect of the company, from manufacturing and development of software, to sales and, finally, to service in product delivery. That is significantly wide-reaching and illustrates the usefulness of a Six Sigma methodology that was proven effective years ago and shows no sign of less recognition and relevance for business today.

Six Sigma Methodology – Six Sigma DMAIC strategy introduction Video

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