Epic Consultants, Inc. - International Consulting Firm

Six Sigma

WHAT IS SIX SIGMA?

Six Sigma is now the most popular management methodology in history.  Currently local governments, prisons, hospitals, the armed forces, banks, and multinational corporations are applying Six Sigma.

Six Sigma is known as a lot of different things because it had different meanings over time, and also because it is interpreted in different ways.  Let’s see some of the different definitions of Six Sigma around the world:

According to the UK Department of Trade and Industry

“A data driven method for achieving near perfect quality.  Six Sigma analysis can focus on any element of production or service, and has a strong emphasis on statistical analysis in design, manufacturing and customer-oriented activities”

According to General Electric

 “6 Sigma is a highly disciplined process that helps us focus on developing and delivering near perfect products and services. The central idea behind 6 Sigma is that if you can measure how many defects you have in a process, you can systematically figure out how to eliminate them and get as close to zero defects as possible.  To achieve 6 Sigma, a process must produce no more than 3.4 defects per million opportunities.  An opportunity is defined as chance for nonconformance, or not meeting required specifications.”

●  “At its core, 6 sigma revolves around a few key concepts:
Critical to Quality, Defects, Process Capability, Variation, Stable Operations, and Design for 6 Sigma.”

According to Motorola

● At Motorola University, we think about 6 Sigma in three different levels:

 ○ As a Metric  ○ As a Methodology  ○ As a Management System

● “As a metric:  6 Sigma equates to 3.4 defects per one million opportunities (DPMO).  Therefore 6 Sigma started as a defect reduction effort in manufacturing and then applied to other business processes for the same purpose…”

● “As a methodology: 6 Sigma is a business improvement methodology that focuses an organization on:○ Understanding and managing customer requirements

○ Aligning key business processes to achieve those requirements
○ Utilizing data analysis to minimize variation
○ Driving rapid and sustainable improvements

● “At the heart of the methodology is the DMAIC model for process improvement.  DMAIC is:

○ Define  ○ Measure  ○ Analyze   ○ Improve   ○ Control”

● “As a management system: 6 Sigma is a high performance system for executing business strategy.  6 Sigma is a top-down solution to help organizations:

○ Align business strategies to critical improvement efforts
○ Mobilize teams to attack high impact projects
○ Accelerate improved business results
○ Govern efforts to ensure improvements are sustained”

● “6 Sigma drives clarity around the business strategy and the metrics that most reflect success with that strategy.  It provides a framework to prioritize resources for projects that will improve the metrics….”

According to EPIC

● As a Metric:  A metric that demonstrates quality levels at 99.9997% performance for products and processes.  It is a name given to indicate how much of the data falls within the customers’ requirements.  The higher the process sigma, the more of the process outputs, products and services, meet customers’ requirements – in other words fewer defects.

● As a Methodology:  Six Sigma is a rigorous and disciplined methodology that uses data and statistical analysis to measure and improve a company’s operational performance by identifying and eliminating “defects” in manufacturing and service – related processes.

● As a Philosophy (Vision):  A “Vision” and “Philosophical” commitment to consumers to offer the highest quality, at the lowest cost.

Why do Companies Need Six Sigma?

  • Reduces dependency on “Tribal Knowledge”. Decisions are based on facts and data rather than opinion.
  • Attack the high-hanging fruit (the hard stuff).
  • Eliminates chronic problems and improves customer satisfaction
  • Provides a disciplined approach to problem solving and changes company culture.
  • Creates a competitive advantage.
  • Improves profits.

Financial Benefits of Six Sigma

 

  • Creates additional/new revenue
  • Faster return on investments
  • Increases cash flow
  • Increases profitability of existing product/services
  • Increases revenue of existing sources
  • Increases stock price/shareholder value
  • Lowers cost of production
  • Lowers cost of servicing

Operational Benefits of Six Sigma

 

  • Decreases employee workloads for undesirable work
  • Eliminates non-value added activities
  • Improves internal communication between departments and groups
  • Increases employee and process productivity
  • Reduces cycle time of production/process
  • Reduces person-hours
  • Reduces process steps
  • Simplifies processes and workflow steps

ORGANIZATIONAL STRUCTURE

Six Sigma is a project-based methodology that can produce significant benefits to any organization.  In order to increase the opportunity for a successful Six Sigma implementation, the organization or the business must create a structure that supports the selection, development and implementation of multiple projects and multiple project teams.

Roles and Responsibilities

Leadership

The key role of executive leaders is to decide to implement Six Sigma and publicly endorse it, and promote it throughout the organization. They must reinforce the comprehensive scope of Six Sigma to engage everyone’s support and participation.   The executive leadership is also responsible for:

  • Providing training at all levels of the organization.
  • Establishing performance indicators (KPI’s) – Set meaningful goals and objectives for the corporation.
  • Establishing criteria for project selection.
  • Selecting Six Sigma projects to be performed.
  • Ensuring continuous improvement in the process.
  • Eliminate barriers.

Project Sponsor

A Sponsor is a senior level manager with demonstrable interest in the outcome of the project that is responsible for securing spending authority and resources for the project. The Project Sponsor legitimizes the project’s goals and objectives, keeps abreast of major project activities, and is a decision-maker for the project. The Project Sponsor will participate in the project initiation; the development of the project charter, project planning (high level) and the development of the project initiation plan.  The Project Sponsor supports the Black Belts (Project Managers), assists with major issues, problems, conflicts, and policy conflicts. Also removes obstacles; is active in planning the scope, approves scope changes, signs off on major deliverables, and signs off on approvals to proceed to each project phase.

Master Black Belt

The Master Black Belts (MBBs) are typically assigned to a specific area of function of a business or organization.  MBBs work with the Black Belts to ensure quality objectives and targets are set, plans determined, progress tracked, and education provided (training).

The MBB should be well versed with all aspects of Six Sigma, from technical applications to project management.  MBBs need to have the ability to influence change and motivate others.  They are also responsible for:

  • Providing advice and counsel to the Executive Staff.
  • Providing training and support.
  • Developing sustainability for the business.
  • Facilitating cultural change.

Project Champion/Owner

The Project owner is the individual responsible for a specific process.  For example, the customer service manager is the process owner of customer service.  Depending on the size of the organization and the core activities, the organization may have multiple process owners at lower levels of the organizational structure.

Green Belts

Green Belts are employees trained in Six Sigma who spend a portion of their time completing projects, but maintain their regular work role and responsibilities. Depending on their workload, they can spend anywhere from 10 to 50 percent of their time on their project(s). As the Six Sigma quality program evolves, employees will begin to include the Six Sigma methodology in their daily activities and it will no longer become a percentage of their time – it will be the way their work is accomplished 100% of the time.  Green Belts are the problem solvers for the organization, their roles and responsibilities include:

  • Team member of DMAIC teams.
  • Well versed in the definition and measurement of critical processes.
  • Typically works on projects in existing functional area.
  • Involved in identifying improvement opportunities.
  • Involved in continuous improvement efforts.
  • Collects and analyze data.
  • Converts data into usable information.
  • Increases the effectiveness of the decision making process by using data.

Black Belt

Black Belts are the heart and soul of the Six Sigma quality initiative. Their main purpose is to lead quality projects and work full time until they are complete. Black Belts can typically complete four to six projects per year with savings of approximately $250,000 per project.   Black Belts are application experts, and work projects within the business. They are very well versed with Six Sigma Technologies and have the ability to drive results.  Their responsibilities also include:

  • Project team leader.
  • Works cross-functionally.
  • Contributes to the accomplishments of organizational goals.
  • Provides technical support to improvement efforts.

Quality Manager

The Quality leader’s responsibility is to represent the needs of the customer and to improve the operational effectiveness of the organization.   The Quality function is typically separated from the manufacturing or transactional processing functions in order to maintain impartiality.

Roles and Responsibilities

Six Sigma is accomplished one project at a time.  The billions of dollars saved by companies around the world is the cumulative effect of properly selecting and defining business issues that can be assigned to Green Belts and Black Belts for solutions.

Six Sigma projects are a key action that your organization can take in order to accomplish your strategic goals.  Here are some examples of Six Sigma projects:

  1. Reduce the time it takes to close the accounting books (cycle time).
  2. Improve the forecast accuracy.
  3. Control spending over time.
  4. Improve payment processing to vendors/suppliers.
  5. Improve Days Sales Outstanding (DSO) — the average time taken by a company to collect payment from its customers.
  6. Reduce payroll process cycle time.
  7. Improve cash management processes.

Sales Projects

  1. Reduce time required to enter sales orders.
  2. Reduce errors and rework associated with sales orders.
  3. Reduce customer credit worthiness cycle time.
  4. Reduce the number of “bad deals” that are processed.
  5. Improve the cycle time of the entire sales order to cash process.
  6. Increase repeat orders/customers.

Shipping and Receiving Projects

  1. Improve on-time delivery of products to customers.
  2. Improve on-time delivery of goods to our facility from vendors.
  3. Improve documentation accuracy.
  4. Reduce line downtime due to shipping/receiving.
  5. Improve inventory control.
  6. Improve inspection processes.

Call Centers

  1. Increase/decrease (depending on your business needs) average talk time.
  2. Reduce abandoned calls.
  3. Improve employee knowledge.
  4. Reduce number of times customer is put on hold.

Human Resources Projects

  1. Reduce the time required to hire an employee.
  2. Reduce the time to process an insurance claim.
  3. Improve employee on-boarding and orientation processes.
  4. Reduce expenditures for recruiting firms.
  5. Improve timeliness and the value of employee performance reviews.

PROCESS IMPROVEMENT STRATEGY

Voice of the Customer (VOC), Voice of the Business (VOB), Voice the Employee (VOE)

The foundation of Six Sigma requires focus on the Voice of the Customer, Voice of the Business, and the Voice of the Employee.  Six Sigma puts a strong emphasis on the customer because they are the ones assessing our performance and they respond by either continuing to purchase our products or services or by NOT!

So, while the customer is the primary concern we must keep in mind the Voices of the Business – how we meet the business’s need so we can stay in business, and the Voice of the Employee – how do we meet employees needs such that the remain employed by the organization and remain inspired and productive.

VOC, VOB, VOE

  1. Awareness of the needs that are critical to the quality (CTQ) of our products and services
  2. Identification of the gaps between “what is” and “what should be”
  3. Identification of the process defects that contribute to the “gap”
  4. Knowledge of which processes are “most broken”
  5. Enlightenment as to the unacceptable costs of poor quality (COPQ)