Why YOU Need Lean Six Sigma – Part 6
Defining Six Sigma, Lean, and Lean Six Sigma
It is important that you first look at how these methodologies have developed:
Back in the 1970s, leading manufacturers were losing market share to their overseas competitors particularly those from Japan. Japanese companies were using total quality control (TQC) and Lean principles at that time.
The companies had used these tools to improve manufacturing performance and to design “customer-centric” products. To counter this, USA organizations began adopting total quality management (TQM).
As a consequence of this, Jack Welch of General Electric began spreading the word of a new quality game changer called Six Sigma.
Like a virus, the world of quality took Six Sigma back to their own organisations because of the benefits that are delivered and its flexibility in terms of being able to apply it to any functional business area.
These days, Six Sigma has become a central integrated part of just about every organizations quality strategy and it lays at the heart of all the major sectors of the world’s economy: Financial Services, Health Care, defense, government, and manufacturing.
Six Sigma is a statistical problem solving methodology and management philosophy, one 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 absolutely 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 do not remember an organization’s general performance over time. Statistically, attaining Six Sigma implies having processes that produced only 3.4 defects per 1,000,000 opportunities.
As an example here, if a lending institution provides one million loans, only 3.4 of them are closed with errors.
To make this clear to you, check out the graphic below. It outlines 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.
There are only a few industries, such as the pharmaceutical and airline industries that 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 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 why the increasing customer satisfaction, profit, and customer value.