Financial and Strategic Management

How do 6 Sigma works?

Six Sigma is a disciplined, statistical-based, data-driven quality control program. It is a methodology for continuous cycle time improvement (the reduction of manufacturing defects to a level of no more than 3.4 per million) by eliminating defects in any product, process, or service.

A typical Six Sigma project determines the existing state and enhances the performance of the business process to a new and statistically significant improved state with the use of statistical tools. There can be two

First, the process already exists but it is not working “reasonably” well; Second, there is no process in existence at all.

Situation 1: The process already existing but it is not working “reasonably” well. This scenario focuses on the use of DMAIC (which stands for Define, Measure, Analyze, Improve, and Control):

1. Define problem statement process goals in terms of key critical parameters on the basis of customer requirements or Voice Of Customer (VOC) and setting project boundaries.
2. Measure a complete picture of the current state of the process and establishes a baseline through measurement of the existing system in the context of goals and collecting the data regarding possible causal factors.
3. Analyze the current scenario in terms of causes of variations and defects and determining the root cause.
4. Improve the process by systematically reducing variation and eliminating defects and root causes.
5. Control future performance of the process and support and maintain the gains realized.

Situation 2: This is the situation when there is no process in existence at all and it has to be designed using the Design For Six Sigma (DFSS) approach.

DFSS approach typically requires IDOV:
1. Identify process goals in terms of critical parameters, industry & competitor benchmarks, Voice Of
Customer (VOC)
2. Design involves enumeration of potential solutions and selection of the best
3. Optimize performance by using advanced statistical modeling and simulation techniques and design
4. Validate that design works in accordance with the process goals. Sometimes a DMAIC project may turn into a DFSS project because the existing process may require complete re-design making room for a new process due to lack of effectiveness of the existing system. Such a development may be discovered during the ‘improvement phase’ of DMAIC.

It is extremely important to remember that Six Sigma is not just about the quality of the product but has also take into account the customers and the market. For instance, in the year 1988, Polaroid had a sale of over US$
2 billion, and was an excellent player in the stock exchange. In the year 1997, it became a Six Sigma company.

However, in late 2001, it had to file bankruptcy because it just kept on focussing on the improvement of quality of its products and completely failed to assess the customer needs.

Consider a pizza delivery shop that guarantees the order delivery within 30 minutes from the time of accepting an order. In the event of a delivery time miss, the customer is refunded 100% money. It implies that such pizza the shop will have to make 99.9997% deliveries within 30 minutes to be called a six sigma shop.

There are certain parameters called a Critical To Quality (CTQ) and its example with reference to pizza shop will be:
1. CTQ Name: Timely Pizza delivery
2. CTQ Measure: Time in Minutes
3. CTQ Specification: Delivery within 30 minutes from the order acceptance time
4. Defect: Delivery that takes longer than 30 minutes

About the author

Shreya Kushwaha

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