Six Sigma To Success
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Globalisation and instant access to information, products, and services has redefined the way companies function — old business models no longer work. The competitive environment leaves no room for error. Organisations must delight their customers and constantly look for new ways to exceed expectations. But how do they do it?The answer may lie in Six Sigma, now a buzzword in corporate management circles. Six Sigma Six Sigma is a management philosophy that propagates setting extremely high objectives, collecting data and analysing results to a minute degree so as to reduce defects in products and services. Sigma is the Greek symbol for standard deviation in Statistics. This standard deviation measures the number of variations in a process.
“Six Sigma is a disciplined approach to business process improvement,” explains associate vice-president, Infosys Technologies Ltd. Dr. Vivekanand Kochikar. “It helps achieve significant quality and performance improvements without requiring significant investment.”
Although Six Sigma was started in Motorola in its manufacturing division, it eventually evolved and was used in other non-manufacturing companies such as AlliedSignal and GE. It has since been used by Ford, Caterpillar, Microsoft, Seagate, Siemens and also Merrill Lynch. Six Sigma is now used in several management initiatives and can be applied to any sector where the control of variation is desired, such as services, call centres, medical and insurance procedures.
Incidentally, Mumbai’s super-efficient dabbawalas were given a Six Sigma rating by Forbes magazine. About 5,000 dabbawalas work daily in a finely tuned system to deliver tiffins in an exercise that begins at 9 am and ends at 5 pm. According to the article, only one mistake for every eight million deliveries is their norm.
How it works
Six Sigma is a data-driven, customerfocused management methodology that improves the process performance, decreases levels of variation and maintains consistent quality of the output. This results in a reduction in defects and improvement in product quality, profits and customer satisfaction.
The philosophy behind Six Sigma is that by measuring how many defects are in a process, you can figure out how to systematically eliminate them and get as near to perfection as possible. For a company to achieve Six Sigma, it cannot produce more than 3.4 defects per million parts (or opportunities).
In almost any sector, including accounts, customer-service, logistics and marketing, every process can be analysed in terms of its adherence to Critical To Quality (CTQ) parameters. This is because defects can be present whether it’s a customer transaction, an engineering design, a banking transaction, or even in the time it takes to treat a patient at a hospital.
Thus, any process that deviates from an ideal level can cost extra time, labour, and material. “Over time, Six Sigma serves as a mechanism for cultural transformation in organisations by making managers more data-oriented and using sound techniques in decision-making,” said managing director, Naresh N Shahani of Breakthrough Management Group India. “Many organisations today do not promote managers or staff until they have been trained in Six Sigma.”
Benefits
“Six Sigma helps companies focus on the customer,” said Shahani. Its system helps companies identify and manage the key input variables that have a major impact on output. This helps them optimise processes and save money by eliminating defects and reducing variation in processes. Typically, companies use a projectbased approach in implementing Six Sigma.Each project helps the company save from Rs. 10 to a crore, depending on the size of the company and the project.
Methodologies
Six Sigma DMAIC: It is a process that Defines, Measures, Analyses, Improves, and Controls existing processes that fall below the Six Sigma specification.
Six Sigma DMADV: Defines, Measures, Analyses, Designs, and Verifies new processes or products that are trying to achieve Six Sigma quality.
Design For Six Sigma: Six Sigma can also be used to create a brand new business process from scratch using Design For Six Sigma principles.
Training
There are three levels of training in the Six Sigma quality system: Black Belts, Green Belts and Yellow Belts. An external Six Sigma expert trains Master Black Belts. Black Belts are the on-site experts who will develop and lead cross-functional teams, and advise management on prioritising, planning and launching Six Sigma They are the ones who are directly responsible for the execution of projects in a Six Sigma organisation. The Master Black Belts then train black, green, and yellow belts. Green Belts are the organisation’s employees who execute Six Sigma in their jobs. They have less Six Sigma responsibility and their efforts are focused on projects that are directly related to their daily work.
Success factors
Since Six Sigma employs a strongly data-driven approach and places emphasis on measurement at every stage, ensuring the availability of reliable data is critical. If the process selected does not meet this requirement, the methodology is unlikely to work. Six Sigma is heavy on Statistics, but process change is about mindset too, and so the people aspect receives considerable focus. Shahani emphasises that establishing the Six Sigma management system is critical to success. “The company needs to also make a commitment to have full time Black Belts. These Black Belts should be selected carefully from within the organisation and their career planned carefully to send the right signals to other employees.”
Concurs Suresh Tiwari, Vice President, HR, Eli Lilly (India): “The selection of Black Belts is important. In the initial phase of implementation, there is a mix of uncertainty, and a resistance to change. Therefore, in addition to the senior management’s commitment, the quality of the Black Belt is also very critical. The Black Belt should have leadership qualities in addition to technical capabilities to remove the barriers fast.”
Constant communication and involvement of all stakeholders at all stages are a must to ensure the project stays focused and does not lose momentum. Only then will the project be able to draw the energy for its sustenance from all the stakeholders involved, rather than from just the identified owners or champions.
Says Kochikar, “It is advisable to clearly articulate the benefits in terms people can relate to. For example, rather than simply portraying reduction of defect density as a goal, it is a good idea to translate that reduction into the cost savings the customer will get.” The senior management needs to also be absolutely in accord and committed to bring this discipline. Six Sigma initiatives are long-term and hence require ample commitment, dedicated resources and willingness to look at everything critically. Shahani agrees: “Management’s commitment and their role in setting goals and identification of the right projects is critical.
Pertinent issues
Today large and small companies have launched Six Sigma initiatives. However for many it is just joining the bandwagon. According to Tiwari, at times people think every problem will have a Six Sigma solution, which is not the case. “There are certain problems, which need a quick-fix solution and then there are problems related to culture and people that cannot be addressed using Six Sigma,” he adds. However, some companies, which took the effort to build the necessary infrastructure early on, have reaped the benefits of Six Sigma over the years and saved crores of rupees.
Six Sigma has evolved into a global movement to enhance the mechanisms for improving businesses. If companies want to remain competitive, they must invest in their core competencies. And seeing the positive results of Six Sigma on a firm’s competitiveness, it is indeed a proposition that makes smart business sense.