Why YOU Need Lean Six Sigma – Part 6
Defining Six Sigma, Lean, and Lean Six Sigma
It is essential that you first look at how these methodologies have developed:
Six Sigma
In the 1970s, leading manufacturers were losing market share to their overseas competitors, particularly those from Japan. Japanese companies used total quality control (TQC) and Lean principles.
The companies used these tools to improve manufacturing performance and to design “customer-centric” products. USA organizations began adopting total quality management (TQM) to counter this.
Consequently, Jack Welch of General Electric began spreading the word about a new quality game changer called Six Sigma.
Like a virus, the world of quality took Six Sigma back to its organizations because of the benefits delivered and its flexibility in terms of applying it to any functional business area.
Six Sigma has become a central integrated part of every organization’s quality strategy, and it lies at the heart of all the major sectors of the world’s economy: Financial Services, Health Care, defence, government, and manufacturing.
Six Sigma is a statistical problem-solving methodology and management philosophy that dictates that business in-process decisions should be based on data.
The DMAIC Approach
Six Sigma contains five distinct problem-solving phases known as the DMAIC approach:
Define the problem statement, the goal, and the financial benefits
Measure the current performance of the process and collect the required data
Analyze the root cause of the problem
Improve the process to eliminate errors and instability
Control the performance of the process, ensuring that the improvements are sustained
The fundamental goal of Six Sigma is to reduce operational variance by improving the overall quality and performance levels of business processes.
This is crucial in the service sector because customers are highly likely to take notice of service variance or “screw-ups”!
Unfortunately, it is a fact of life that most customers need to remember an organization’s general performance over time. Statistically, attaining Six Sigma implies processes producing only 3.4 defects per 1,000,000 opportunities.
For example, if a lending institution provides one million loans, only 3.4 are closed with errors.
To make this clear to you, check out the graphic below. It would outline the relationship between a sigma score, the accuracy of the process – which is the probability of getting the transaction done right the first time, and the number of defects if there were one million of those transactions:
Note that as the process capability increases, so does the sigma value providing evidence that there is a lower probability of making a mistake.
But let’s get real here.
Only a few industries, such as the pharmaceutical and airline industries, need to attain these Six Sigma accuracy levels in their processes. This is simply due to the consequences of getting their products or services wrong. History has taught us that minuscule errors in those industries can lead to the loss of human life.
So although I shall continue to refer to Six Sigma, only the four sigma level giving a 99.379% accuracy, is still a highly noteworthy accomplishment in most sectors.
The strength of Six Sigma is based on its quality culture infrastructure, and this methodology has well-defined roles and responsibilities such as Green Belts, Black Belts, and Master Black Belts; training; language; and a particular data-driven mindset.
To summarize, Six Sigma is a problem-solving methodology that uses human assets, data, measurements, and statistics to eliminate waste and defects, increasing customer satisfaction, profit, and customer value.
