MENAFN.COM

Jordan Times - 02/12/2005

By Ammar W. Mango

Imagine being on a plane that is about to land. The flight attendant approaches a passenger calmly saying: "Excuse me sir, would you like the pilot to use a three sigma or a six sigma process during landing?"

A six sigma process results in 99.99 per cent safe landing, while the three sigma will result in 99.73 per cent. The difference might seem minor, but it is not. For planes landing at a busy airport like Chicago O'Hare, three sigma will result in two unsafe landings per day. Six sigma, on the other hand, results in only one every four years. A six sigma process results in 3.4 defects per million. Compare that to 64,000 under a three sigma process. A difference not to be taken lightly, especially on something so critical as landing a plane. Luckily plane landings exceed six-sigma quality standards.

Think of six sigma as a tool to ensure "safety" of an organisation, just as the safe landings in the above example ensure safety of a passenger. The quality improvement technique helps organisations become more competitive by reducing the errors in their processes and improving customer satisfaction. The tool is becoming more popular as a way to differentiate an organisation from its competitors.

Jack Welch, ex-CEO of General Electric (GE), found in six sigma a way to stay ahead. He was on a mission to make his company "10,000 times better than the competition," as he put it. He took GE from three sigma, where most of his competitors were, to six sigma. His initiative brought the company 11 per cent increase in revenue and 14 per cent boost in earnings within the first two years. In response to the great successes posted by GE, several companies followed suit. Today, these include Nokia, Toshiba, American Express, and Ford.

Six sigma was founded at Motorola a decade before Welch used it at GE. Bob Galvin, CEO of Motorola at the time, started the company on the six sigma path. After Motorola won the Malcolm Baldrige National Quality Award in 1988 their secret was out and GE and Allied Signal got on the bandwagon.

Companies that successfully implement six sigma report impressive benefits in higher customer satisfaction, improved profits, and lower operational costs. All of them translating to better competitiveness and shareholders value.

The name "six sigma" is derived from the Greek letter. It is a statistical term that refers to the standard deviation from the mean. Six sigma represents a distance from the mean equal to six times the standard deviation. Simply put, six sigma means that the process satisfies customer specifications even when deviating from the mean by plus or minus six standard deviations. In business terms, that comes to 99.99 per cent of production meeting quality standards, a near-perfect performance. That means bringing a business process to a level of capability where it produces no more than 3.4 defects in a million opportunities.

To reach the six-sigma level of performance, a company should follow the DMAIC approach, which consists of five phases: Define, Measure, Analyse, Improve, and Control. The Define phase of the methodology is highly dependent on project management and strategic planning best practices. The rest of the phases are very analytical, driven by data and statistics. Six sigma is implemented through a continuous flow of projects. Each project starts with the selection of a process to improve. Once the work on a process is complete, focus is given to the next process, based on its priority. Furthermore, six sigma utilises many of the tools already in use by earlier performance improvement initiatives like project management and lean manufacturing.

Six sigma can also be used for designing new products and services. The approach is called "Design for Six Sigma (DFSS)." The term refers to designing a product based on customer wants and needs, translated into specifications by implementing a variation from the DMAIC approach called the DMADV, which stands for: Define, Measure, Analyse, Design, and Verify.

Six-sigma implementation is not cheap or easy. Many companies who tried have failed, mainly because of a flawed implementation approach. One of the prerequisites is top management commitment. Many of the decisions for improvement require drastic changes in the way the company does business, and these changes can only be adopted with upper management approval.

One of the highlights of six sigma is its dependency on numbers and data. Practitioners follow W. Edwards Deming's advice. The quality expert once said: "In God We Trust, All Others Bring Data." Making any statement about the company requires a data driven proof. Therefore, six sigma insists on measurement of existing processes and analysis of its data before designing or implementing improvements.

Many look at six sigma as the modern successor of Total Quality Management (TQM), sighting a few similarities between the two techniques. Some even say they are the same. However, there are major differences between the two is in their implementation and philosophy. TQM focuses on small incremental improvement and is based on bottom up implementation, which means it is not highly dependent on upper management. TQM can be done for a single operation or activity, with engineers leading the whole effort. Six sigma on the other hand requires top down thinking and high level of commitment from upper management. Also, six sigma is about dramatic, not incremental improvements.

Companies who implement six sigma need experts to help them do it successfully. This is why it requires certification. The most notable certification body is the American Society for Quality, a non-profit organisation based in the USA. "Six Sigma Black Belts" are certified to lead organisations in implementing six sigma. Many companies have created their own black belt certification in house to keep up with their growing needs for these professionals. According to the Six Sigma Academy, black belts save companies approximately $230,000 per project and can complete four to six projects per year.