What is Six Sigma?
Six Sigma is a term used to define various techniques and management tools to make business processes more efficient and effective. It provides statistical tools to eliminate defects, identify the cause of the error, and reduce the possibilities of error. Thus, Six Sigma creates an environment of continuous process improvement, enabling businesses to provide better products and services to customers. It was developed by Motorola, Inc. in 1986.
Six Sigma can be applied to any process in any industry to establish a management system for identifying errors and eliminating them. It provides methods to improve the efficiency of business structure and quality of processes, enhancing the business’s profitability.
The term “Six Sigma” is derived from the bell curve in statistics, in which sigma represents the standard deviation from the centre. Hence, a process with six sigma will achieve a shallow defect rate. The failure of a business process or product is regarded as a defect. It is considered efficient when a process produces less than 3.4 defects for one million chances.
Six Sigma is used to identify and reduce errors and increase the efficiency of business processes.
The primary objective of Six Sigma is customer satisfaction, and to achieve the goal, various methods are followed to improve the performance of a product or business process.
DMAIC and DMADV are the principal methodologies of Six Sigma that apply to different business environments.
Six Sigma Principles
There are five main principles of Six Sigma:
1. Customer focus
The main objective is to maximise the benefits for customers. Hence, a business must understand the needs of its customers and the drivers of sales. It requires establishing quality standards according to the market or customer demands.
2. Assess the value chain and find the problem
Outline the process steps to find out unwanted areas and gather related data. Define goals for data collection, purposes for data gathering, and expected insights. Verify that the data assists in achieving the objectives, whether more information is needed to be collected or if data cleansing is required. Find out the problem and its root cause.
3. Eliminate defects and outliers
After identifying the problem, make appropriate modifications in the process to eliminate defects. Eliminate any activity in the given process that does not contribute to the customer value. If the value chain cannot reveal the problem area, various tools are used to find out the problem areas and outliers. Eliminating the outliers and defects removes the bottlenecks in a given process.
4. Involve stakeholders
A structured process should be adopted where all stakeholders collaborate and contribute to finding solutions to complex issues. The team needs to achieve proficiency in the methodologies and principles applied. Hence, specialised knowledge and training are required to lower project failure risks and ensure optimal performance of the processes.
5. Flexible and responsive system
Whenever an inefficient or faulty process is eliminated, the employee approach and work practices must be changed. A flexible and responsive environment to the changes in processes can lead to the efficient implementation of the projects.
The departments involved should be capable of adapting quickly to the change. Companies that periodically examine the data and make appropriate changes to their processes may achieve a competitive advantage.
Six Sigma – Objectives
Six Sigma Methodology
The following are the two primary methodologies of Six Sigma, which are used in different business environments:
DMAIC is a data-driven approach used to optimise and improve existing business designs and processes. It is an effective method of controlled change management. The five phases of DMAIC are listed below, and each step involves tools and tasks to help find the final solution.
- Define the problem and the goals of the project
- Measure the different aspects of the existing process in detail
- Analyse data to find the main flaw in a process
- Improve the given process
- Control the way the process is implemented in the future
DMADV focuses on developing an entirely new process, product, or service. It is used when existing processes, even after improvement, do not satisfy the customer’s needs, and new methods must be developed. It comprises five phases:
- Define the purpose of the project, product, or service
- Measure the crucial components of a process and product capabilities
- Analyse data and develop design alternatives, ultimately selecting the best design
- Design the selected best alternative and test the prototype
- Verify the effectiveness of the design through several simulations and a pilot program