Six Sigma: A Comprehensive Overview

Jonathan Trout, Noria Corporation

Six Sigma is a set of methodologies, tools and techniques with the overall goal of process improvement and lesser defects. Read below about Six Sigma methodology, implementation and more.

 

What Is Six Sigma?

Before we define Six Sigma, it's important to understand what "sigma" means. In statistics, sigma is known as the standard deviation, which is calculated by taking the square root of the variance. The variance is the average of the squared differences from the mean (average).

In manufacturing, defects are defined using specification limits separating good from bad outcomes. A Six Sigma process has a process mean that is six standard deviations (sigmas) from the nearest specification limit. Six standard deviations give you enough of a buffer between the natural variation of a process and the predefined specification limits. In other words, if you've determined a product needs to have a thickness between 10.22 and 10.28 inches, then the process mean should be around 10.25, with a standard deviation of less than 0.005 (10.28 is six standard deviations away from 10.22).

Now that we know the technical definition, we can look at Six Sigma as it pertains to manufacturing. Six Sigma is a set of methodologies, tools and techniques with the overall goal of process improvement and minimizing defects. More specifically, it seeks to improve the quality of produced products from a process by identifying and getting rid of the causes of defects and minimizing variability in both manufacturing and business processes.

A successful Six Sigma implementation leads to an increase in performance and a decrease in process variation, which in turn can lead to increased profits, improved product quality and a boost in employee morale. Statistically, 99.99966 percent of all opportunities to produce any feature of a part are expected to be free of defects, or 3.4 defects per million opportunities (this accounts for a 1.5-sigma shift in the mean).

You may run across varying definitions of Six Sigma, but they all share a few common ideologies. All Six Sigma processes should include the following:

  • The use of teams designed to execute well-thought-out and well-designed projects directly affecting the company's bottom line.
  • Training on statistical thinking offered to all levels of employees while providing a select few with advanced training in higher-level statistics and project management (known as black belts).
  • A base methodology of using the DMAIC approach for implementation (discussed below).
  • Upper-level management is willing to adopt Six Sigma methodologies as a business strategy.

Six Sigma can be broken down as a philosophy and a methodology. The philosophy side of Six Sigma considers all work as processes that can be defined, measured, analyzed, improved and controlled. These processes must have an input (x) that produces an output (y). Simply put, if you control the input, you can control the output.

The methodology aspect of Six Sigma comes to life as the DMAIC approach – define, measure, analyze, improve and control. Essentially DMAIC lays out the roadmap each team should follow, beginning with identifying the problem and ending with putting a long-term solution into practice. We'll further discuss DMAIC below.

Six Sigma uses both quantitative and qualitative lean manufacturing tools like statistical process control (SPC), process mapping, FMEA and more.

Sigma Levels
Sigma Levels (Z) Defects per Million
Opportunities (DPMO)
Percent
Defects (%)
Percent Success
(Yield %)
Capability (CP)
1 691,462 69 31 0.33
2 308,538 31 69 0.67
3 66,807 6.7 93.3 1.00
4 6,210 0.62 99.38 1.33
5 233 0.023 99.977 1.67
6 3.4 0.00034 99.99966 2.00

Six Sigma: An Analogy

One of the best analogies for understanding Six Sigma and how it relates to variables is that of parking a car in a garage. If your car is wider than the garage, you can't enter it. Next, take a car with a width that is slightly less than the width of the garage. By using a cautious approach, the car can be parked in the garage, but it probably will be scratched up over time due to carelessness. Finally, imagine a car with a width that is half the width of the garage. Anyone can now park the car in the garage, even those coming off working a double shift who can barely keep their eyes open.

In this analogy, the car width represents your organization's current processes and their capabilities. The width of the garage represents the specifications of your customer. Let's take a closer look at the principles of Six Sigma, how you can implement it and how it has helped other companies.

 

The 5 Principles of Six Sigma

The five principles of Six Sigma are somewhat of a culmination of the principles of lean manufacturing blended with Six Sigma. Lean manufacturing emphasizes the reduction or elimination of the eight types of waste. Six Sigma seeks to reduce product variation and defects using statistical analysis. When these are implemented together, you get the five principles of Six Sigma.

  1. Focus on the customer: Regardless of your business, you should always strive to put your customers first. Before you make any changes – big or small – to your processes, it's important to ask, "How will this affect our customers?" Any decision you and your team make should bring you closer to providing maximum value to your customer.
  2. Customer focus
  3. Find the problem: This step focuses on finding the root cause of problems in your current value stream. Six Sigma only works once you've stepped back and taken a look at the current state of your processes and identified areas of waste. Take any assembly line process, for example. How do a bunch of pieces of plastic, glass and computer chips become an iPad? Consider every step, starting with the procurement of parts to assembling them and distributing the final product. This all-encompassing review allows you to determine the steps that add value and those that don't.
  4. process in motion
  5. Get rid of waste: Now that you've examined your value stream and identified areas of waste, it's time to take out the trash. Remove any problems with your workflow – non-value processes or opportunities for defects. If your value stream map isn't readily revealing areas of waste or where problems lie, you can use lean tools to dive deeper. A popular tool for identifying waste is a fishbone diagram (discussed here).
  6. Put the process in motion: Next, put the new and improved processes to work. Do this by providing training for each employee on the new standards, procedures or practices. All personnel should know how the changes directly affect their daily processes and how those will now change.
  7. create culture
  8. Create a culture of change and flexibility All the work put into implementing Six Sigma methodology is negated if every level of the organization isn't willing to change. Encourage employees to accept change and help dispel any fear that comes with change. Fear associated with Six Sigma often stems from the elimination or automation of processes normally performed by employees.
 

Implementing Six Sigma: DMAIC vs. DMADV

Six Sigma is implemented using one of two methodologies: DMAIC or DMADV. DMAIC (define, measure, analyze, improve and control) is used when an organization wants to improve its existing processes. DMADV (define, measure, analyze, design and verify) is employed when an organization is creating new processes. The two methodologies are similar in a few ways. They are both used to:

  • Reduce the number of defects
  • Find quality solutions to identified issues by using data and statistical tools
  • Help meet organizations' financial and business goals

Let's take a look at a snapshot of how the two methodologies defer from one another.

  • DMAIC: Organizations using DMAIC start with the define phase by outlining what problem(s) they want to solve. Next, the team measures and maps out current processes, gathers data, and identifies the root cause of any issues. The analyze phase follows, where the team analyzes data as they work to validate waste and defects of the current process. Once the analysis is complete, the team strives to implement new and improved processes geared toward minimizing waste and defects. The last step is the control phase, in which the team documents and lays out the new processes for each employee to implement.

    DMAIC focuses on:

    • Defining your organization's business processes
    • Measuring the performance of current processes
    • Finding the root cause of problems
    • Reducing defects by improving current processes
    • Implementing controls to alert when the processes are no longer working
  • DMADV: Organizations needing to create new processes should start with the DMADV methodology, with the goal of meeting customer needs in mind from the beginning. During the design phase, the team should measure the end goals and deliverables. Next, assess the factors that are vital to executing the desired deliverables. Once these factors are measured, the team can analyze the best possible options to obtain the desired outcome. Now, team members are ready to design the processes that should meet the customer's deliverables. Finally, everyone should verify the end results to ensure the goals were met.

    DMADV focuses on:

    • Defining and measuring customer needs
    • Determining process options that will meet customer needs from the beginning
    • Designing a business model centered around the customer's needs
    • Verifying the business model meets the customer's needs
 

Six Sigma and the Martial Arts Structure

The success of a Six Sigma program ultimately relies on the team as a whole. Properly implementing Six Sigma requires a significant amount of training, especially if you are going to lead a team. While it's a good idea for team leaders to earn a Six Sigma professional certification, it helps if team members have at least some level of certification to gain basic knowledge and understanding of the process. Six Sigma uses belt levels to denote skill level, experience and knowledge, similar to those found in martial arts.

    white belt
  • White belt: The beginner belt of Six Sigma, the white belt certification is meant for professionals who want to start learning about Six Sigma methodology and how it can affect their organization. White belts range from plant-floor workers to C-level managers and usually require several hours of training. Once certified, white belts can help lead teams with problem-solving and implementing Six Sigma workplace culture.
  • yellow belt
  • Yellow belt: The yellow belt certification builds on the basic knowledge learned from the white belt. Yellow belts become familiar with tools and jargon frequently used with Six Sigma, and typically go through 10 to 15 hours of training. Yellow belts work under green- or black-belt-certified instructors and are tasked with creating process maps and data gathering. White- and yellow-belt training is recommended for all levels of employees.
  • green belt
  • Green belt: Green belts are the heart of any Six Sigma team; most of the work output from a Six Sigma project team is done by green belts. Green belts usually dedicate 25 to 50 percent of their time to Six Sigma projects and are considered experts in Six Sigma methodologies, philosophies and principles. Certification requirements can vary depending on the employer, but green belts generally are required to complete a certain number of classroom instruction hours, pass a written test and participate in a Six Sigma project before becoming certified.

    Green belts normally lead the process of identifying waste and implementing improvements throughout the organization through gathering and analyzing data. Green belts should have strong analytical and communication skills, and typically are employees in a mid- to upper-level management role.

  • black belt
  • Black belt: Black belts practice Six Sigma full time and are tasked with managing multiple teams made up of green, yellow and white belts. In addition to the prior three levels of certification, black belts must pass a written test and complete two Six Sigma projects. Once certified, black belts will have mastered process improvement and statistical analysis techniques, developed a high-level ability for dealing with people, and act as a mentor and leader for multiple teams. Black belts should also be able to teach Six Sigma principles to team leaders as needed.
  • Master black belt: The final level of Six Sigma certification is a master black belt. This indicates an employee has completed extensive training and testing, mastered Six Sigma concepts and leads teams with discipline and focus. This level is accomplished after five years of working as a black belt or after completing 10 Six Sigma projects.

    In addition to serving as teachers and mentors to black and green belts, master black belts are tasked with communication with senior-level executives and solidifying potential Six Sigma projects. Master black belts normally don't act as a full-time member of any team. They typically take on the role of mentor or consultant for multiple teams to help them overcome obstacles and answer any questions that may arise.

 

Six Sigma Case Studies

It's one thing to read about the inner workings of implementing Six Sigma and imagining how it could help eliminate waste and minimize defects within your organization, but let's take a look at some of the most famous examples of how it has helped some well-known brands.

Ford Motor Co.

Ford began implementing Six Sigma in 2000, making it the world's first automaker to put Six Sigma into practice on a large scale. Ford wanted to implement a Six Sigma initiative based on improving four factors: cost, quality, customer satisfaction rates and environmental impact.

  • Cost reduction: Ford's production process was costly due to the use of resources that weren't absolutely necessary.
  • Quality improvement: Ford held a quality level of 99 percent which, although an acceptable figure, still allowed nearly 20,000 instances of defects. With Six Sigma's goal of adopting a 99.99966 percent quality level, the number of defects per million is limited to around seven, leading to significant quality improvement for Ford.
  • Low customer satisfaction ratings: Customer satisfaction almost always stems from product quality. By implementing Six Sigma to improve quality, Ford tackled customer satisfaction rates by streamlining processes and improving production issues.
  • Lowering environmental impact: Six Sigma, by design, is a green philosophy. Through Six Sigma, Ford committed to a green work culture, reducing costs associated with consumption of vital resources.

Once Ford trained its leadership, nearly 10,000 people were certified as green, black and master black belts, with 2,500 of those individuals holding a black belt certification. Ford's goal was to reduce the number of defects to one per every 14.8 vehicles produced. After investing $6 million in training licenses, as well as thousands of hours in training, new equipment and software, the company hit its goal. This change rippled through other processes and, coincidently, improved the four factors mentioned above.

Six Sigma contributed $52 million to Ford's bottom line in 2000 alone. Ultimately, the company has eliminated more than $2.19 billion in waste to date since implementing Six Sigma techniques like data-driven process improvement, completing nearly 10,000 improvement projects to date. Ford has also increased its customer satisfaction rating by five points.

Ford's Six Sigma success wasn't without some hiccups along the way. The company ran into a few obstacles that needed to be worked through in order to implement a successful Six Sigma program. Ford experienced issues with employee commitment from all levels. Skepticism also made it difficult for the automaker to put its nearly 350 high-level managers and leaders through weeks of training. Along with a lack of commitment, Ford also faced time and money concerns when it came to training employees.

Lastly, Ford was ill-equipped to manage the amount of data needed to implement a Six Sigma initiative. It was forced to create and implement new measurement systems to collect enough data for a proper picture of the current value stream. Working through these issues required full commitment from everyone at the company. Once all personnel were onboard, significant results inevitably followed.

Starbucks

It took just 40 years for Starbucks to go from a single coffee shop in Seattle to more than 29,000 stores across 80 countries. This rapid growth has forced the coffee giant to transition from a calm, relaxing coffeehouse atmosphere to more of a fast-food-style operation. As the company continues to grow, its customers have forced it to adopt two practices for which it has become known: speed and accuracy. People want their coffee made fresh and ready within minutes.

Starbucks management sought to find a way to offer the speed of a fast-food restaurant without sacrificing the human element and personal touch of a mom-and-pop coffeehouse. After going through Six Sigma training, company management came up with two process changes, transforming how people order coffee and their in-store experience.

To accomplish the first change, Starbucks provided new training to its baristas. Assuming a more proactive role as customers came to the cash register to pay, baristas took orders before the customer actually paid for them. This significantly sped up wait times. Additionally, Starbucks developed a mobile app, allowing customers to preorder drinks and pay for them before arriving at the store. Ready-to-go drinks are then organized by name and are waiting at the bar when customers arrive.

Keeping the human element in mind, management also encouraged baristas to engage with customers and make each transaction personal. Finally, for customers who use the mobile app regularly, Starbucks implemented a rewards program.

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