The Six Sigma Method: How it Works and What it Does

Six Sigma is a method used for process op­tim­isa­tion and quality man­age­ment in companies. It was developed by Motorola in the 1980s. Six Sigma sets itself apart through its math­em­at­ic­al approach in which it measures the key aspects of a process to assess its per­form­ance. It iden­ti­fies causal re­la­tion­ships in order to improve processes through various methods and to reduce error rates.

In the following article, you’ll learn about the math­em­at­ic­al prin­ciples Six Sigma is based on, how Six Sigma is used in business practice, which key per­form­ance in­dic­at­ors are involved, and how it compares to other well-known man­age­ment methods such as lean man­age­ment.

Six Sigma’s name il­lus­trates the idea behind the method. In math, the Greek letter sigma denotes the standard deviation of a Gaussian (normal) dis­tri­bu­tion, and six is a par­tic­u­larly good number in this context.

In business processes, you do not always achieve the exact desired results. Instead, there is a variation as with the Gaussian (normal) dis­tri­bu­tion. This dis­tri­bu­tion or the number of errors in a process can be quan­ti­fied as a sigma level. The less variance there is, the better the per­form­ance of the process is and the higher the sigma value will be.

A level of 6 (i.e. a six sigma) rep­res­ents a value near 0, the best error rate. In this case, the prob­ab­il­ity that a product is defective is 0.00034%. For com­par­is­on, most companies have a sigma level of 3 to 4.

Although the main focus of Six Sigma is reducing the error rate, companies that re­struc­ture their or­gan­isa­tion around these prin­ciples benefit from ad­di­tion­al (and sometimes indirect) ad­vant­ages as well. There are five key ad­vant­ages commonly as­so­ci­ated with Six Sigma:

1. Sus­tain­ab­il­ity: These methods enable companies to achieve success over the long term. This is due to the processes being clearly struc­tured and providing a basis for con­tinu­ous im­prove­ment as well as for keeping up with changes in market con­di­tions.
2. Customer sat­is­fac­tion: Six Sigma places high value on the customer’s per­spect­ive. After all, companies need to un­der­stand their customers’ needs if they want to be able to obtain eco­nom­ic­ally be­ne­fi­cial results from their processes.
3. Increased value: By im­ple­ment­ing the Six Sigma method, companies increase their value for customers. In­tro­du­cing these metrics enables companies to have a clearer idea of their customers’ needs and to target these needs spe­cific­ally.
4. Corporate culture: Suc­cess­fully in­teg­rat­ing Six Sigma into an or­gan­isa­tion will lead to better com­mu­nic­a­tion between managers and employees, since everyone will speak a common language based on the Six Sigma model.
5. Being a learning or­gan­isa­tion: Sharing in­form­a­tion within the or­gan­isa­tion is crucial in Six Sigma. The philo­sophy of lifelong learning is embedded in this meth­od­o­logy and addresses the chal­lenges facing companies today in terms of global com­pet­i­tion and di­git­al­iz­a­tion.

The Six Sigma method includes a variety of different man­age­ment tech­niques for quality man­age­ment and process op­tim­isa­tion. This set of tech­niques is often referred to as the Six Sigma toolkit.

The most well-known and important tool is the five-phase model, commonly referred to as the DMAIC cycle:

This five-phase model of the DMAIC process can be modified for use with new processes as well. Replace the “Improve” phase with an “Engineer” phase in which the results from the analysis are used to establish a new workflow.

In a Six Sigma im­prove­ment project, employees take on different roles. Since one of the main ideas behind the method is that each project member must be clear about what their tasks are, a hierarchy is defined to cat­egor­ise different roles and their re­spons­ib­il­it­ies.

The ter­min­o­logy for the roles is based on the belts used in Asian martial arts: Yellow Belt, Green Belt, Black Belt, Master Black Belt and Champion. Managers and employees can obtain a cer­ti­fic­a­tion for each Six Sigma belt.

Yellow Belt: The Yellow Belt is the entry-level cer­ti­fic­a­tion and provides an overview of the basics of Six Sigma. Employees with the Yellow Belt cer­ti­fic­a­tion may assist in projects. This is usually for spe­cial­ists or managers who want to acquire ad­di­tion­al cer­ti­fic­a­tions in the future.

Green Belt: Those who have completed the Green Belt cer­ti­fic­a­tion have advanced meth­od­o­lo­gic­al knowledge and are able to manage their own re­spons­ib­il­it­ies in a Six Sigma project.

Black Belt: Those with Black Belt cer­ti­fic­a­tion can lead complex Six Sigma projects and have the advanced technical expertise and social skills required to implement large-scale changes to processes. They con­trib­ute greatly to the success of a project and work to motivate managers at the lower-ranking belt levels.

Master Black Belt: Those with Master Black Belt cer­ti­fic­a­tion are re­spons­ible for the process, as agreed upon with man­age­ment, and handle the strategic direction of Six Sigma within the or­gan­isa­tion. They are in charge of managing employee qual­i­fic­a­tions and define the Six Sigma standards for the company.

Champion: Champions (also referred to as sponsors) come from middle or upper man­age­ment and are not involved in the day-to-day business activ­it­ies involved in the project. They select, start, and monitor projects and support those involved through every phase of the project.

Whether an im­ple­ment­a­tion of Six Sigma succeeds depends on many factors. Antony and Banuelas have iden­ti­fied the most important key factors for a suc­cess­ful im­ple­ment­a­tion. The following factors are listed in des­cend­ing order:

1. Man­age­ment in­volve­ment
2. Un­der­stand­ing the meth­od­o­logy
3. Linking Six Sigma to the business strategy
4. Linking Six Sigma to customers
5. Project selection
6. Or­gan­isa­tion­al in­fra­struc­ture
7. Corporate cultural change
8. Project man­age­ment skills on the part of those involved
9. Linking Six Sigma to suppliers
10. Training project members in the Six Sigma method
11. Linking Six Sigma to personnel planning

Sooner or later, newcomers to the subject will begin to wonder how Six Sigma differs from lean man­age­ment and whether there are any overlaps or possible com­bin­a­tions of the two. As a matter of fact, Six Sigma has been sup­ple­men­ted with ideas from lean man­age­ment to create Lean Six Sigma.

However, in their original forms the two methods are quite different, despite the fact that they are both used for process op­tim­isa­tion. At the same time, they can be combined to suit company re­quire­ments, as they do not conflict with one another.

Lean Six Sigma combines lean man­age­ment’s focus on speed with Six Sigma’s standard for attaining the highest quality. This combined method has been taught in man­age­ment training courses since the turn of the century. Processes are thus divided into five phases following the Six Sigma method, and care is taken in each phase to minimise waste. Ad­di­tion­al lean tech­niques are in­teg­rated into the method to tailor it to in­di­vidu­al use cases.

Six Sigma was created by Motorola in the USA in the 1980s to minimise error rates in the pro­duc­tion process. Other major players on the in­ter­na­tion­al scene such as Kodak, ABB, and IBM gradually adopted the method and developed it even further. Six Sigma finally got its big break in the 1990s after Jack Welch in­tro­duced Six Sigma at General Electric in 1996 and achieved great success with it.

Initially, Six Sigma was only used in the man­u­fac­tur­ing industry. However, it has since spread to the service industry.

By 2000, companies were starting to combine Six Sigma with lean man­age­ment. These days, this strategy is referred to as “Lean Sigma”, “Six Sigma + Lean” or “Lean Six Sigma”.

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