What is Six Sigma (6σ)?
Six Sigma (6σ) is a quality-control process that businesses use to eliminate defects and improve processes to boost their profits.
It is a tested technique for making business processes more effective and efficient. Six Sigma is an organizational structure that concentrates on continuous improvement.
How Six Sigma Started?
Six Sigma actually has its roots in the 19th Century of mathematical theory, but Bill Smith, an engineer at Motorola along with Dr. Mikel Harry and CEO Bob Galvin, developed the Six Sigma quality improvement process in 1986. The idea of Six Sigma is to improve quality so that the number of defects becomes so few that they are statistically insignificant.
After success in Motorola, Six Sigma principles caught the eye of various companies located around the globe when General Electric company earnings increased by million because they implemented Six Sigma principles in their manufacturing process.
Six Sigma has been refined and perfected over the years into what we see now. Six Sigma is often viewed as a series of improvement initiatives so it’s a long-term commitment.
Six Sigma is a top-down solution to help organizations to:
- Align their business strategy to critical improvement efforts.
- Mobilize teams to focus on high-impact projects.
- Accelerate improved business results.
- Govern efforts to ensure improvements in systems and processes.
Benefits of Six Sigma
There are many benefits associated with Six Sigma for businesses which are summarized below:
- Increased productivity,
- Improved quality of products and services,
- Reduction in waste,
- Reduced operating costs,
- Enhanced employee engagement,
- Improved on-time delivery,
- Greater customer satisfaction
In order to achieve Six Sigma, organizational processes need to keep their defects to a maximum of 3.4 per million (99.99966%) opportunities.
Phases of Six Sigma – DMAIC
The five phases of Six Sigma follow an approach that industry professionals call DMAIC.
Various tools for Six Sigma can be used to improve any type of business process. However, six sigma projects must pass through the five phases of DMAIC.
Six Sigma DMAIC elements are as below:
- D – Define opportunity
- M – Measure performance
- A – Analyse opportunity
- I – Improve performance
- C – Control performance
DEFINE
The first step is to summarize the six-sigma project plan and the Six Sigma team sets the goal for improvements and identifies the problem with the existing process.
At the top level, the goals will be the strategic objectives of the organization, such as a higher ROI or market share. At the operations level, a goal might be to increase the throughput of a production department. At the project level goals might be to reduce the defect level and increase profits.
MEASURE
The goal of the Measure stage of DMAIC is to gather data that covers the scope of the project. This includes determining the parameters for measuring process performance.
ANALYSE
Here we determine the root causes of any defects and analyse the system to identify ways to eliminate the gap between the current performance of the system or process and the desired targets. We need to apply statistical tools to guide the analysis and validate the conclusions. The team uses analytics to identify the reason for process errors.
IMPROVE
In this phase, we establish ways to eliminate defects and correct the process.
The Improve stage focuses on improving process performance by implementing improvements. The project team determines possible solutions and methods of implementation at this stage. To ensure effectiveness and reduce risk, the team tests the action plan before they are implemented. Some examples of six sigma tools DMAIC used at this stage are the Design of Experiment (DOE), kaizen events, poka-yoke, and prototyping.
CONTROL
The objective of the last stage of the methodology is to develop metrics that help leaders monitor and document continued success.
- Six Sigma strategies are adaptive and on-going.
- Adjustments can be made and new changes may be implemented as a result of the completion of this first cycle of the process.
At the end of the cycle, additional processes are either addressed or the initial project is completed.
Service Industry
We need to de-mystify Six sigma tools and applicability for service organizations. The benefits are
- Improves customer focus
- Sets direction and goals
- Fosters continuous development
- Generates improvement in systems
There are various certifications that are named ‘belts’ available in Six Sigma: they are white, yellow, green, black, and master black. Those in executive roles may pursue becoming a Six Sigma champion, who mentors black and green belts and makes business decisions. https://www.sixsigmacouncil.org/
Humayun Atif | CMA, CPA, CA (FIN), MS-IT, CA Articles from Big 4, Certified Forensic Accountant (USA), Six Sigma & Oracle Certified.
Atif is passionate about Business, Tech, and the written word. He is also a published author of the book ‘IFRS Made Easy’. Atif has worked with some of the world’s largest brands in Canada and Dubai. He is a tax and IFRS coach and the founder of accountingblogger.com
