Six Sigma - That's Greek to me! It's true that sigma is a letter in the Greek alphabet. But Six Sigma does not mean six Greek letters.
The term Six Sigma has four components to it: It's a mathematical calculation, it's a methodology, it's good marketing, and it's a mindset.
Six Sigma is about improving processes. If you're in a business or an organization, you have processes. A process is a series of actions leading toward a result.
Think about your organization. What aspect of your establishment, if it were to improve, would provide the most benefit? Six Sigma involves identifying your processes in that area, and using proven statistical tools to improve them.
If your processes aren't clearly defined, then they probably aren't consistent. And if they aren't consistent, then you have lots of variation. And variation is what Six Sigma is all about. As a matter of fact the word "sigma" refers to a way to measure variation. That's where the math comes in.
The reason Six Sigma works so effectively is metrics, or measurements. There is a saying in the Six Sigma world: "If you can't measure it, you can't manage it."
For example, there was a company that wanted to increase their sales. When they stopped to think about what their sales process was, they realized they didn't know what their process was! They had no metrics on number of contacts, sales calls, time spent on selling, or any other metric other than sales revenue. As a result, they had very little information on how effective their sales processes were. Therefore, they couldn't manage it very well.
You certainly don't want to get bogged down with too many metrics. You could spend so much time taking and reporting measurements, you wouldn't have any time to produce! Having the right metrics is important.
You also need to know how to analyze the metrics. Here's an example. Big businesses have the benefit of high volume. Making a small improvement, multiplied by thousands of iterations, amounts to big savings. You might conclude, based on dollars saved or earned, that big companies stand to gain the most from Six Sigma improvements. And you would be correct. Many of the projects we have mentored have achieved millions of dollars of savings - on a single project.
Now look at percentages. If a $1M company saves or gains $50,000 that's a 5% improvement. That's substantial for a small company. Yet a $50,000 improvement would be a mere drop in the bucket for the big guys. Therefore, when you look at percentages, you could say that small companies stand to gain the most!
It all depends on what comparisons you're making. As Einstein would say, everything is relative. Statistics is about making smart comparisons. You might compare one company to another, one customer to another, compare "before" and "after" processes, compare to a standard.
The math of Six Sigma measures variation. If you run a process over and over, you can calculate averages, but that won't tell you how much variation to expect. Say it takes about 20 minutes to get to work. By looking at your drive time over several weeks, calculating Sigma can tell you the likelihood of being early or late. What's the likelihood of getting there in 15 minutes? In 25? In 30?
To get Six Sigma, you calculate sigma, and Six Sigma is simply six times that number. The Six Sigma levels will give you two limits, on either side of the average. If you drove to work one billion times, you could expect to be within these two limits all but two times.
Six Sigma tells you the likelihood of having 2 defects out of a billion. If it's in orders processed, that's 2 mistakes per billion orders processed. If it's in shipments, it means 2 late shipments out of one billion shipments.
The math is where the term Six Sigma comes from, but in some ways it's the least important aspect.
Another part of Six Sigma is the marketing aspect. What do we mean by that? It just sounds cool!
After all, Six Sigma means 2 parts per billion out of spec. What's wrong with Five Sigma? That's .57 parts per million. Isn't that good enough? Or why not go for Seven Sigma? That would be 2 parts per trillion.
But those don't sound as good. Six Sigma just has a certain ring to it. So Six Sigma it is.
Whether we want to have a Five Sigma, Six Sigma, or Seven Sigma process, Six Sigma methodologies are invaluable for identifying processes and understanding why you get the results you get. Ultimately, the Six Sigma methodology is about taking action to improve processes to produce desired results.
The steps of the Six Sigma process are Define, Measure, Analyze, Improve and Control, or the acronym DMAIC. You D efine the problem or opportunity, the process, the people, you define and collect the initial M easurements, you A nalyze the information, both quantitatively and qualitatively, you make I mprovements based on your analysis, and you put in C ontrols to make sure the improvements are sustained.
There are plenty of books written about Six Sigma. It's like that old saying about riding a bicycle though - you can read about it all you want, but until you get on that bike... and the learning curve in business can cost you a lot more than a skinned knee. That's why it's worthwhile to have someone walk you through the Six Sigma process the first time or two.
Six Sigma is another generation of improving processes. More than anything else, Six Sigma is a mindset - the mindset of continuously looking for opportunities for improvement, using a methodology to make the changes, and using the math to quantify the results.
The mindset is part of your culture, and needs to be embraced by the organization at many levels. You want people to think "Six Sigma," to look beyond "good enough," to strive for ever-increasing thresholds for excellence. And while they're at it, to enjoy the process of improving.
For Six Sigma to be successful, implementation is crucial, and sometimes frustrating. Consequently, you may want to speak with other business leaders who have been in the trenches, or use an experienced advisor. Like us!