Use of six sigma a practical approach

Use of Six Sigma : A Practical Approach
Use of Six Sigma: A Practical Approach
Dr. Rita Jain1
Abstract
Six sigma originally developed in 1986 by Motorala, the business
management strategy is now used in many different industries in an effort
to improve the quality of products or services produced by the business
through the removal of effects and errors. The strategy involves creating
groups of people within the business or organisation who have expert
status in various methods, and then each product is carried out according
to a set of steps in an effort to reach specific financial milestones. A six
sigma process is defined as one in which 99.99966% of products created
are expected to be statistically free from defects.
Key words: Six sigma, Strategy, Financial milestone.
Introduction
ix Sigma is a management philosophy developed by Motorola that
emphasizes setting extremely high objectives, collecting data, and
analysing results to a fine degree as a way to reduce defects in
products and services. The Greek letter sigma is sometimes used
to denote variation from a standard. The philosophy behind Six
Sigma is that how many defects are in a process, one can figure
out how to systematically eliminate them and get as close to
1HOD, Dept. of BBA, S.S.Jain Subodh P.G. College, Jaipur
S

Professional Panorama: An International Journal of Management & Technology
Use of Six Sigma : A Practical Approach 125
perfection as possible. In order for a company to achieve Six Sigma, it
cannot produce more than 3.4 defects per million opportunities, where
an opportunity is defined as a chance for nonconformance.
There are two Six Sigma processes: Six Sigma DMAIC and Six Sigma
DMADV, each term derived from the major steps in the process. Six
Sigma DMAIC 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. All Six Sigma processes are executed by Six Sigma Green Belts or
Six Sigma Black Belts, which are then overseen by a Six Sigma Master
Black Belts, terms created by Motorola.
Six Sigma proponents claim that its benefits include up to 50% process
cost reduction, cycle-time improvement, less waste of materials, a better
understanding of customer requirements, increased customer
satisfaction, and more reliable products and services. It is acknowledged
that Six Sigma can be costly to implement and can take several years
before a company begins to see bottom-line results.
Interestingly while Six Sigma has become a very widely used 'generic'
term, the name Six Sigma is actually a registered trademark of Motorola
Inc., in the USA, who first pioneered Six Sigma methods in the 1980's.
The original and technically correct spelling seems to be Six Sigma,
rather than 6 Sigma, although in recent years Motorola and GE have each

since developed their own sexy Six Sigma logos using the number six and
the Greek sigma characters.
Definition
Six Sigma is a method that provides organisation tools to improve the
capability of their business processes. This increase in performance and
decrease in process variation lead to defect reduction and improvement
in profit, employee morale, and quality of products or services. Six Sigma
quality is a term generally used to indicate a process is well controlled
(with process limits+ 3sfrom the centre line in a control chart and
requirement /tolerance limits+ 6s from the centre line).
Six Sigma is a discipline data driven approach and methodology for
eliminating defects (driving towards six standard deviation between the
mean and nearest specification limit) in any process from manufacturing
to transactional and from product to service.
Practical Approaches of Six Sigma
Six Sigma According to Motorola
Six Sigma has evolved over the last two decades and so has its definition.
Six Sigma has literal, conceptual, and practical definitions. There are
three different levels of six sigma:
 As a metric
 As a methodology
 As a management system
Essentially, Six Sigma is all three at the same time.

Six Sigma as a Metric: The term "Sigma" is often used as a scale for levels
of 'goodness' or quality. Using this scale, 'Six Sigma' equates to 3.4 defects
per one million opportunities (DPMO). Therefore, Six Sigma started as a
defect reduction effort in manufacturing and was then applied to other
business processes for the same purpose."
Six Sigma as a Methodology: As Six Sigma has evolved, there has been
less emphasis on the literal definition of 3.4 DPMO, or counting defects in
products and processes. Six Sigma is a business improvement
methodology that focuses an organisation on:
1. Understanding and managing customer requirements
2. Aligning key business processes to achieve those requirements
3. Utilising rigorous data analysis to minimise variation in those
processes
4. Driving rapid and sustainable improvement to business processes."
At the heart of the methodology is the DMAIC model for process
improvement. DMAIC is commonly used by Six Sigma project teams and is
an acronym for:
 Define opportunity
 Measure performance
 Analyse opportunity
 Improve performance
 Control performance

Six Sigma Management System
Through experience, Motorola has learned that disciplined use of metrics
and application of the methodology is still not enough to drive desired
breakthrough improvements and results that are sustainable over time.
For greatest impact, Motorola ensures that process metrics and structured
methodology are applied to improvement opportunities that are directly
linked to the organisational strategy. When practiced as a management
system, Six Sigma is a high performance system for executing business
strategy. Six Sigma is a top-down solution to help organisations:
 Align their business strategy to critical improvement efforts
 Mobilise teams to attack high impact projects
 Accelerate improved business results
 Govern efforts to ensure improvements are sustained.."
The Six Sigma Management System drives clarity around the business
strategy and the metrics that most reflect success with that strategy. It
provides the framework to prioritise resources for projects that will
improve the metrics, and it leverages leaders who will manage the efforts
for rapid, sustainable, and improved business results.
General Electric (GE), the first large-scale adopters and advocates of Six
Sigma after Motorola, and considered by most experts to have been
responsible for Six Sigma's rapidly achieved high profile, provide the
following definitions of Six Sigma:

Six Sigma According to General Electric
Six Sigma is a highly disciplined process that helps us focus on
developing and delivering near-perfect products and services. Why
'Sigma'? The word is a statistical term that measures how far a given
process deviates from perfection. The central idea behind Six Sigma is
that if one can measure how many 'defects' are there in a process, one
can systematically figure out how to eliminate them and get as close to
'zero defects' as possible. To achieve Six Sigma Quality, a process must
produce no more than 3.4 defects per million opportunities. An
'opportunity' is defined as a chance for non-conformance, or not meeting
the required specifications. This means we need to be nearly flawless in
executing our key processes.
At its core, Six Sigma revolves around a few key concepts.
 Critical to Quality: Attributes most important to the customer
 Defect: Failing to deliver what the customer wants
 Process Capability: What your process can deliver
 Variation: What the customer sees and feels
 Stable Operations: Ensuring consistent, predictable processes to
improve what the customer sees and feels
 Design for Six Sigma: Designing to meet customer needs and process
capability.
For example, a bank takes 60 days on average to process a loan with a 10
percent rework rate in 2000. In a “Six Sigma” organisation, the bank
should take no longer than 30 days, on average, to process a loan with a

1 percent error rate in 2002, and no more than 15 days, on average, to
process a loan with a 0.10 percent error rate by 2004. Clearly, this
requires a dramatically improved/innovated loan process.
Technical Approach of ‘Six Sigma’ Management
The Normal Distribution
The term “Six Sigma” is derived from the normal distribution used in
statistics. Many observable phenomena can be graphically represented
as a bell-shaped curve or a normal distribution as illustrated in Figure 1:
When measuring any process, it can be shown that its outputs (services
or products) vary in size, shape, look, feel or any other measurable
characteristic. The typical value of the output of a process is measured by
a statistic called the mean or average.

The variability of the output of a process is measured by a statistic called
the standard deviation. In a normal distribution, the interval created by
the mean plus or minus two standard deviations contains 95.44 percent
of the data points, or 45,600 data points per million (or sometime called
defects per million opportunities denoted DPMO) are outside of the area
created by the mean plus or minus two standard deviations [(1.00-
.9544= .0456)x1,000,000=45,600].
In a normal distribution the interval created by the mean plus or minus
three standard deviations contains 99.73 percent of the data, or 2,700
DPMO are outside of the area created by the mean plus or minus three
standard deviations [(1.00-.9973=.0027)x1,000,000 = 2,700]. In a
normal distribution the interval created by the mean plus or minus six
standard deviations contains 99.9999998 percent of the data, or two
data points per billion data points outside of the area created by the
mean plus or minus six standard deviations.
Six Sigma management promotes the idea that the distribution of output
for a stable normally distributed process (Voice of the Process) should be
designed to take up no more than half of the tolerance allowed by the
specification limits (Voice of the Customer). Although processes may be
designed to be at their best, it is assumed that over time the processes
may increase in variation. This increase in variation may be due to small
variation with process inputs, the way the process is monitored,
changing conditions, etc. The increase in process variation is often
assumed for the sake of descriptive simplicity to be similar to temporary

shifts in the underlying process mean. The increase in process variation
has been shown in practice to be equivalent to an average shift of 1.5
standard deviations in the mean of the originally designed and
monitored process.
If a process is originally designed to be twice as good as a customer
demands (i.e., the specifications representing the customer requirements
are six standard deviations from the process target), then even with a
shift, the customer demands are likely to be met. In fact, even if the
process shifted off target by 1.5 standard deviations there are 4.5
standard deviations between the process mean (m + 1.5s) and closest
specification (m + 6.0s), which result in at worst 3.4 DPMO at the time
the process has shifted or the variation has increased to have similar
impact as a 1.5 standard deviation shift.
In the 1980s, Motorola demonstrated that a 1.5 standard deviation shift
was in practice was observed as the equivalent increase in process
variation for many processes that were benchmarked. Figure 2 shows
the “Voice of the Process” for an accounting function with an average of
seven days, a standard deviation of one day, and a stable normal
distribution. It also shows a nominal value of seven days, a lower
specification limit of four days, and an upper specification limit of 10
days. The accounting function is referred to as a three-sigma process
because the process mean plus or minus three standard deviations is
equal to the specification limits, in other terms, USL= µ+3σ and LSL = µ–

3σ. This scenario will yield 2,700 defects per million opportunities or
one early or late monthly report in 30.86 years [(1/0.0027)/12].
Figure 3 shows the same scenario as in Figure 2, but the process mean
shifts by 1.5 standard deviations (the process average is shifted down or
up by 1.5 standard deviations [or 1.5 days] from 7.0 days to 5.5 days or
8.5 days) over time. This is not an uncommon phenomenon. The 1.5
standard deviation shift in the mean results in 66,807 defects per million
opportunities, or one early or late monthly report in 1.25 years
[(1/.066807)/12].

Figure 4 shows the same scenario as Figure 2 except the Voice of the
Process only takes up half the distance between the specification limits.
The process mean remains the same as in Figure 2, but the process
standard deviation has been reduced to one half-day through application
of process improvement. In this case, the resulting output will exhibit 2
defects per billion opportunities, or one early or late monthly report in
41,666,667 years [(1/.000000002)/12].

Six Sigma Process with a 0.0 Shift in the Mean, but the process average
shifts by 1.5 standard deviations (the process average is shifted down or
up by 1.5 standard deviations [or 0.75 days = 1.5x0.5 days] from 7.0 days
to 6.25 days or 7.75 days) over time. The 1.5 standard deviation shift in
the mean results in 3.4 defects per million opportunities, or one early or
late monthly report in 24,510 years [(1/.0000034/12].
Conclusion
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.

References
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Management Strategy Revolutionising the World’s Top Corporations,
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8. Sarah Anne Murphy (2009), Leveraging Lean Six Sigma to Culture,
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Use of six sigma a practical approach

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