Six Sigma as a Business Improvement Methodology

Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects in any process - from manufacturing to transactional and from product to service.

Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects. The term "Six Sigma" refers to the ability of highly capable processes to produce output within specification. As a quality control metric, "Six Sigma" equates to 3.4 defects per one million opportunities (DPMO). Six Sigma's implicit goal is to improve all processes to that level of quality or better.

Six Sigma methodology focuses on the implementation of a measurement-based strategy to achieve the process improvement and variation reduction. This approach is based on two basic Six Sigma models: DMAIC process (Define, Measure, Analyze, Improve, and Control) and DMADV (Define, Measure, Analyze, Design, and Verify). The Six Sigma DMAIC is an improvement system for existing processes falling below specification and looking for incremental improvement. The Six Sigma DMADV process is an improvement system used to develop new processes or products at Six Sigma quality levels. It can also be employed if a current process requires more than just incremental improvement.

Six Sigma methodology allows businesses to achieve a better understanding of customer requirements, raise customer satisfaction, align key business processes in order to achieve customer requirements, utilize rigorous data analysis to minimize variation in key business processes, and substantially improve all existing business processes.

When practiced as a management system, Six Sigma is a high performance system for executing business strategy. The use of Six Sigma ensures that process metrics and structured methodology are applied to improvement opportunities that are directly linked to the organizational strategy. The Six Sigma system helps organizations to align their business strategy to critical improvement efforts, mobilize teams to attack high impact projects, accelerate improved business results, and govern efforts to ensure improvements are sustained.

Typical Six Sigma metrics include Sigma Level, Rolled Throughput Yield (RTY), Defects per million opportunities (DPMO), and First Time Yield (FTY). Six Sigma Financial metrics include Cost of poor quality (COPQ), Activity Based Costing (ABC) and other measurements. Six Sigma Process Control metrics are based on Cycle time and Lead Time data, Mean time to repair (MTTR), Capacity, and Total Amount of Rework Hours. Six Sigma Customer and Employee Perspective includes the following metrics: Customer Satisfaction, On-time Delivery (Customer Perspective); and Total Employees Trained in Six Sigma, Number of Six Sigma Projects Completed, Number of Six Sigma Lessons Learned, and some others (Employee Perspective).

Preferably, Six Sigma metrics should not be distinct from the rest of the business metrics. It should be also noted that simply collecting and calculating Six Sigma metrics may not be enough for success. Successful businesses apply these metrics in the right context and in innovative ways to solve client opportunities. Six Sigma metrics must be aligned with core processes and its critical-to-quality (CTQ) characteristics. Understanding clients' CTQs and ensuring they are measured and addressed are paramount.

The Six Sigma Management System drives clarity around the business strategy and the metrics that most reflect success with that strategy. It provides the framework to prioritize resources for projects that will improve the metrics, and it leverages leaders who will manage the efforts for rapid, sustainable, and improved business results.

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